How investors could profit from artificial intelligence

By Frank Schwarz, Portfolio Manager of the Mainfirst Global Equities Unconstrained Fund

Artificial Intelligence signifies a paradigm shift for the economy. Technology companies in particular, which are driving the rapid development of AI, are likely to become more attractive to investors worldwide.

For a decade now, our Team Global Equities has been interested in manufacturers of graphics processing units (GPUs) and we have been investing in some of today’s market-leading chip makers since as far back as 2015. GPUs today provide most of the computing power for AI applications. The strategic focus on long-term trends is paying off now.

Nvidia is a prime example of this development. The company is the undisputed market leader in graphics processors and AI chips. It has managed to establish itself as a global player and boasts enormous scalability of data centres and AI models. Nvidia’s partnerships with technology and research institutes facilitate constant innovation, which underpin the group’s dominant position for years to come. Despite strong revenue growth in 2023, Nvidia has enormous further potential as data centre and AI model scaling has just begun.

Another company that is benefiting from this development is SK Hynix. The South Korean company is the leader in the development of High Bandwidth Memory (HBM). Its chips are particularly relevant for AI applications. Other important links in the AI value chain are TSMC from Taiwan and ASML from the Netherlands. The latter is a major player on account of its leading role in the development of lithography systems.

However, the more digital services are used, the greater the risk of cyberattacks on companies, state agencies and private households. Cybersecurity and the cloud therefore also play an important role in the current positioning of the Mainfirst Global Equities Unconstrained Fund.

With its cloud computing platform AWS, Amazon provides companies and developers with powerful computing environments for training and implementing AI models. In addition, Amazon has invested USD 4 billion in the AI start-up Anthropic and plans to develop Small Language Models (SLMs) for AI training on private data.

For Microsoft, its involvement in AI revolves around its cloud platform Azure. With Azure, Microsoft has created a basis for companies to gain access to AI technologies. Microsoft’s investment in OpenAI is changing the way we use technology and enables the software giant to integrate AI into Microsoft products to a greater extent.

As the whole world becomes more dependent on cloud services from Amazon, Microsoft and other companies, demand for security solutions is also growing. The company Zscaler, for example, is able to identify and analyse threats with the aid of AI. Since companies are increasingly moving their operations and data to the cloud, the role of providers such as Zscaler is getting increasingly important to ensure these resources are protected.

Another promising player in the cybersecurity sector is the US company CrowdStrike. Through the use of AI, the company has succeeded in making a mark for itself in the fast-paced and complex world of cyber threats and has gained a decisive market advantage.

Shaping the future: investment in AI development and innovation

The AI boom is only starting. What needs to be done now is to implement and develop the new technology both on the hardware and software side. The pioneers in their respective specialist areas are likely to be at the forefront of development. The fact is that AI applications are among the most important developments of the past 20 years and offer one of the most interesting investment opportunities out there. By getting in on the right trends early and supporting the innovators in this area, not only can we fully exploit the potential of AI but also play an active part in shaping the digital future.

Frank Schwarz
Frank Schwarz

Press contact

Wim Heirbaut

Senior PR Consultant, Befirm

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About Mainfirst

MAINFIRST is an independent European multi-investment boutique with an active management approach. The company manages its own mutual as well as special funds in the following asset classes: equities, bonds, and multi-asset. The Portfolio Management teams act independently in the implementation of their investment ideas and consistently follow their respective investment strategies and philosophies. This approach, combined with an authentic corporate culture, provides the optimal basis for generating alpha and creating long-term value for our investors. Sustainability aspects are explicitly incorporated into all MainFirst funds and are fully integrated into the decision-making process for active security selection.

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