Two fund managers have identified artificial intelligence (AI) and machine learning (ML) as trends they are embracing for 2024 which could greatly reward market leaders.
Hyperion Asset Management and Munro Partners both hold AI companies, such as Microsoft and Amazon, in their funds.
In a monthly update for the $2.4 billion Hyperion Global Growth Companies Fund, which holds shares in companies such as Amazon, Microsoft and Spotify among its top five holdings, the managers discussed AI’s potential.
“A lot of our portfolio companies have had AI or ML embedded in their products over the last decade. We believe this paradigm shift into AI and ML is real and may have the potential to create a rarely seen opportunity to increase in equity values similar to the emergence of the internet, smartphones, the development of cloud computing and the proliferation of software.
“These unusual moments have, in the past, greatly rewarded market leaders who could capture a large part of the value uplift.”
Meanwhile, Munro holds Nvidia, Amazon, Microsoft and Alphabet in its top five in the Munro Global Growth Fund, and Nvidia was one of its top contributors to performance during December.
“The fund is positioned for a continuing boom in AI, both on the hardware (high performance computing) and software side (digital enterprise),” the firm said.
“The fund’s long positions were strong contributors for the quarter. AI was a dominant theme, with our holdings in software, ServiceNow, Microsoft and Adobe all recently releasing generative AI products that impressed investors and saw their share prices appreciate. Elsewhere, semiconductor enablers, which fall under the hardware side of AI, also contributed to performance, with Nvidia and Applied Materials the standouts.”
It is not only technology companies which are benefitting the fund but other parts of the supply chain such as infrastructure providers, data centres and semiconductor companies.
“As companies globally invest in developing or integrating AI, we expect a boom in demand benefitting infrastructure providers, semiconductor companies and large software firms.
“Traditional methods of enhancing semiconductor performance are shifting from miniaturisation to focusing on advanced packaging solutions and parallel computing. This re-architecture is powering large data centres, and we expect them to make their way into enterprise servers, PCs and smartphones as generative AI evolves into edge computing devices.”
