We recently spent a week on the West Coast of the US meeting with a number of technology companies in Silicon Valley and Seattle, all deeply involved in artificial intelligence and the broader AI ecosystem.
When a new theme like AI reaches the forefront of public markets, it creates a rush to call the top. Negative headlines, particularly around Nvidia, travel quickly. We base our investment decisions on facts and our fundamental research into the companies driving innovation and disruption has led us to consistently maintain our conviction in AI. In September 2023 (We are not selling Nvidia) and again in February 2025 (DeepSeek: New AI apps and the inexorable demand for computing capacity), we provided arguments and evidence for our positive long-term view amid the waves of negative sentiment.
Our recent company meetings in the US and the breadth and depth of our discussions have reinforced our conviction that AI is still in its early days and will continue to be one of the most compelling structural investment opportunities of the coming decade.
Nvidia’s competitive moat
Our recent meetings, including conversations with Nvidia and several of its customers and competitors, have deepened our confidence in both the company and the opportunity in AI. Nvidia continues to dominate the AI headlines. We first bought it in February 2022 and it is the largest holding in our World Stars Global Equity strategy.
We have written extensively about Nvidia’s competitive positioning. While the technology sector is often seen as highly competitive with low switching costs, Nvidia has built a robust and durable ecosystem that is misunderstood by many outside the industry. There is a popular tendency to compare today’s leaders with past giants like Kodak, Blockbuster or BlackBerry, companies that were disrupted and displaced as they failed to adapt to innovation and change. Such analogies ignore that companies like Alphabet and Meta have continued to innovate and improve what they do and have been able to grow revenues and profits in their core businesses despite competition being ‘just one click away’. The threat to leaders is not incremental competition but entirely new paradigms. That is why companies like Alphabet and Meta are pouring billions of dollars into AI to ensure that they lead the next wave of innovation and are not overtaken by it.
Our meetings with Nvidia have reinforced several key components of its competitive moat and why competition is not ‘just one chip away.’
First, Nvidia’s pace of innovation. Customers and competitors consistently praised Nvidia’s rapid product cadence and clear long-term roadmap, which enables them to plan their infrastructure spend with visibility and confidence. Nvidia’s backwards compatibility and hardware fungibility extend the lifecycle of its products, giving users flexibility as their workloads evolve from training large models to deploying them for inference.
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