Beyond the hype: finding AI’s long-term winners

Brian Barbetta, Global Industry Analyst
4 min read
2025-04-30
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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.

  • We believe that investors can position themselves to benefit from the transformative potential of AI, which has significant implications for many companies and sectors as well as for the job market and regulators. 
  • Our team’s current investment framework focuses on AI enablers, providers of cloud services, and applications. To identify winners, deep research, long-term thinking and patience are critical to assess whether the total economic impact of the technology matches the market capitalisation of the opportunity. 
  • As AI continues to rapidly evolve, investors need to consider its long-term implications for technological disruption and geopolitics, and the significant scope for job growth in certain areas, including research and development.

In my view, the transformative potential of generative AI for society should not be underestimated. It is already driving productivity gains and radical business disruption across numerous industry sectors. Large language models can predict our next word and computers can achieve increasingly higher levels of accuracy at many written tasks. The implications for workforces are far reaching as this technology starts to be able to outsmart humans at certain tasks. 

The opportunities this evolution offers investors are just as impactful. We expect to see high levels of intra-industry disruption from AI in the next five years, most notably within the media and software sectors, but also across health care, retail, construction, real estate, auto and transport, among others. 

How can investors find companies with the right business models to navigate this potential? We think staying disciplined and focused on key success factors is crucial. 

A framework to find the potential AI “winners”

Investing in the future of AI requires a process. Our AI-focused investment model has three core areas of focus:

  • Enablers – companies at the base layer, such as core infrastructure and hardware manufacturers, which are enabling AI by creating semiconductor chips and foundational models. We think that some of the most obvious winners are at this base layer, especially if they are able to plug hardware shortages to drive pricing power and revenue growth.
  • Cloud services – companies such as providers of cloud services that are running the code and firms developing the tools that businesses need to implement AI. We see some interesting investment opportunities in this segment as companies start to build durable moats due to their scale, and also benefit from their access to the hardware and models that AI is being built on.
  • Applications – digital assistants and software that drive productivity and facilitate entertainment. Opportunities are emerging within these businesses as they leverage generative AI to bring new solutions to customers and grow their individual markets, along with consumer spend.

Taking a long-term view of AI

Adopting this type of focused approach can help investors look beyond the hype that has inevitably grown around the AI space.

How do we try to avoid this hype? By assessing if the total economic impact of the technology we are investing in matches the market capitalisation of the opportunity we foresee developing.

Investors should also pay close attention to governance and regulatory concerns stemming from the ever-wider use of AI. These might relate to the harm AI can potentially cause in the form of malware, influencer campaigns and misinformation, or that might result from social knock-on effects due to AI replacing human interaction or overtaking large segments of the labour force. Further, there is increasing scope for AI to impact geopolitics. Technological disruption might be seen through an increase in hacking, the use of AI in military applications and access to hardware.

One impact of AI where there seems to me to be some misconception relates to jobs. Rather than the technology being responsible for job losses going forward, I believe that while some forms of labour will be replaced, companies will also increase their investment in research and development. As a result, products and services will emerge that might not have existed otherwise, in turn leading to job growth in new areas.

In the meantime, patience is important. I believe sustainable opportunities across both public and private markets might take a bit more time to reveal themselves. Yet when they do, they will compound quickly, and over a longer period of time. The “Magnificent 7” tech businesses are evidence of this, some of which were trading at cheap valuations several years ago based on their growth trajectory. 

Technology companies represent the sector most likely to benefit from continued AI development. But ultimately, those companies able to implement the technology across the largest market opportunity should be the businesses that will benefit the most.

Our key takeaway for investors? To harness AI’s significant transformative potential, a long-term mindset, based on thorough research to find the most promising evolving opportunities can help to navigate short-term risks amid the hype.

Expert

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