AI will disrupt everything, but very few companies will win
October 16, 2025
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4 min
It's important to note that, like the disruption in internet-based computing, though the winners will be many in terms of end users and productivity boost, direct winners (or those companies that directly sell into the value chain) will be very few.
How important are the decisions people don’t see to successful active management?
We find it fascinating that some investors conflate active investing with activity. Active management doesn't mean high levels of activity, but rather understanding how to allocate capital, which means there are many times that, not only by being very selective, you are choosing not to invest in many opportunities, but also when opportunities present themselves, you act on them in a very decisive manner because you're well prepared based on all the long-term research that you have done.
How concerned are you about the current levels of market concentration?
There's no question that we have significant concentration in the market today with Magnificent Seven. Historically, investors coined these terms about companies, whether it be FAANG or MAMAA or the Four Horsemen or Nifty 50, It's important to note that what drives success, we believe, is not investing based on these themes, but rather being very selective and understanding the differences among these groupings and choosing those companies that you want to invest in based on quality, growth and valuation.
How easy will it be to convert the massive investment in AI into profit?
We believe that AI is the biggest disruption since the internet-based computing decades ago, and similarly to that change and structural disruption that we had in the marketplace, we believe the biggest benefit of AI will be the productivity boost that we should be observing across all industries and all companies. It's important to note that like the disruption in internet-based computing, though the winners will be many in terms of end users and productivity boost, direct winners, or those companies that directly sell into the value chain will be very few because it requires a platform company and it requires a tremendous amount of research and development and CapEx dollars. To put this into perspective, today, roughly 40% of the entire R&D budget is spent by magnificent seven companies in United States. So if you look at the top 1000 companies and they're spending on R&D, four out of $10 is being done by these select seven companies.1
