Polar Capital Technology - Annual Overview from QuotedData
16th January 2025
AI captain
Polar Capital Technology's (PCT's) manager contends that it has never been a better time to be an active manager in the artificial intelligence (AI) driven technology sector, with potential winners diversifying from the magnificent seven (Mag7) technology stocks (a group of seven major technology companies that have demonstrated significant influence and performance in financial markets, particularly in recent years - Apple, Microsoft, Aplhabet, Amazon, NVIDIA, Tesla and Meta Platforms) to a range of sectors and companies. Reflecting this, the fund's active share is as large at 50% as it has ever been, on the expectation that the spread in performance between large-cap and small- and mid-cap technology stocks will narrow considerably.
AI innovation, capex and adoption rates have all continued their rapid growth since our last note six months ago, which should act to quell fears of an AI-induced technology valuation bubble. The pace of corporate adoption has been particularly impressive, with several use-cases pointing to vast efficiency and productivity gains, suggesting a snowball in adoption. The skills of an active manager such as PCT's in picking AI winners (and identifying incumbent casualties) makes its 12.3% discount to net asset value (NAV) look good value.
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