Separately, critical energy infrastructure woes have reached the point where trillions need to be spent to rebalance, upgrade and reorient many countries’ energy systems, from generation to transmission to distribution. With TSMC valued at a lower price-to-earnings ratio than the typical global stock, and Micron and Samsung trading at about 1.5 times book value, chip manufacturers provide a way to participate in the exciting growth of AI while remaining disciplined about valuation. While it is very unclear whether many of those screaming about their AI angle will ever produce profits or even revenues from it, they will need to buy a boatload of advanced processors that are surrounded by massive amounts of very fast and high-margin memory chips. They are the weapons and ammo suppliers to all those striving to win in AI. However, Taiwan Semiconductor Manufacturing Company (TSMC), Micron Technology and Samsung Electronics are big beneficiaries of the competitive frenzy that’s just started. We will need to cross a chasm from hype to actual results before the real opportunities emerge.ĪI is already providing a very nice new demand growth wedge for some of our Advantaged Industrials. It now trades for more than 20 times sales – likely to grow rapidly, but then Cisco (the Nvidia of its time) grew rapidly after 2000, too, and that didn’t make it a rewarding investment. Though hardly an underfollowed name, Nvidia now expects revenue for this quarter to be some 55% higher than market analysts estimated just a few months ago. (We’ll use “AI” conventionally as “artificial intelligence” from here on.) A recent guest on CNBC openly admitted that they know AI is a bubble, but they’re buying because they’ve learned from the past 10 years that the bubble can keep going. But today it looks way too hyped and crowded, with profit paths too uncertain. The other “AI”, artificial intelligence, will also have a big long-term impact. We’re speaking, of course, about Advantaged Industrials, which we believe present a fantastic investment opportunity. Yet, they still sell for very attractive, we might even say neglected, valuations. They are solving some of the world’s most important and intractable problems. Many of them have a sustainable edge over their competitors. AI businesses have locked in big sources of long-term demand growth. You are ideally investing for at least three to five years (measuring performance in the unit trust’s currency)ĪI will change the world.You accept the potential for capital loss, but less than in a global equity unit trust.You are comfortable with global market and currency movements.You want to invest in a range of global assets to grow your capital over the long term, without investing fully in global shares. The Global Balanced Feeder Fund is suitable for you if: It aims to perform better than a portfolio which comprises 60% the MSCI World Index with net dividends reinvested and 40% the J.P. The Allan Gray-Orbis Global Balanced Feeder Fund’s goal is to create long-term wealth for investors by investing in a mix of global asset classes. *Applies to account numbers starting with AGUT or AGLP. You are still able to access the funds via the Allan Gray Endowment, Living Annuity, Retirement Annuity Fund or Preservation funds. We have closed the funds to prudently manage our offshore exposure within the offshore limit regulated by the South African Reserve Bank.
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