Trump state visit with US tech bosses puts focus on high-flying tech sector – can it continue outperforming?
AI remains dominant theme.
President Trump is due to attend a state dinner at Windsor Castle this week as a guest of the King. Expected to attend alongside Trump are Jensen Huang, the boss of Nvidia; Sam Altman, the CEO of OpenAI; Larry Fink, chairman and chief executive of asset manager BlackRock; and Stephen Schwarzman, the boss of private equity giant Blackstone. Their presence has ignited speculation about the tech sector and possible collaboration between the US and UK.
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “The fact that the King is entertaining not only the president but the decision makers at some of the world’s biggest tech and finance companies has prompted speculation about investment in UK tech and infrastructure. Big tech has been driving gains in the US market this year, but it’s not certain how long that world-beating growth can continue.”
The Association of Investment Companies (AIC) asked the managers of investment trusts with large tech holdings for their views on prospects for the Magnificent Seven, the best tech opportunities outside those companies, and risks to the tech sector.
Acronym investing may grab headlines and memes, but we don't think it's a useful way to build long-term portfolios.
Gary Robinson, Co-Manager of Baillie Gifford US Growth Trust
Do the Magnificent Seven still have legs or have they become too expensive?
Gary Robinson, Co-Manager of Baillie Gifford US Growth Trust, said: “Acronym investing may grab headlines and memes, but we don't think it's a useful way to build long-term portfolios. Given the concentration of the standard US indices, the evolving economic and political world, and the fact that we are entering a new technological paradigm that will impact every part of society, selective exposure to the most transformational long-term growth companies in the US is more important now than ever.
“Not all exposure is created equal. It is tempting to own the Magnificent Seven passively and declare the job done. But history suggests that the application layer will throw up entirely new giants (think Amazon, Uber, Airbnb). Identifying them early and holding them through volatility is the task of active investment.
“At the same time, some of the largest AI platform companies are still compounding at scale and reinvesting at unprecedented levels. We stay selective, but the combination of reinvestment, infrastructure advantages and strong cultures still creates durable value for some of the largest US platform companies such as Amazon and Meta.”
Craig Baker, Chair of the Alliance Witan investment committee, said: “We’re more underweight the Magnificent Seven collectively versus our benchmark, MSCI ACWI, than we have ever been, but we still have significant exposure to some of the tech giants, notably Microsoft, Amazon, and Nvidia, which are our three largest holdings. Alphabet and Meta are also in our top 20 holdings, but we don’t own Tesla or Apple. In a multi-manager structure like ours, you will always get different views on stocks. We view that lack of consensus as a strength rather than a weakness. After all, no-one can see clearly into the future.
“It’s possible the Magnificent Seven, or some of them at least, may continue outgrowing and outearning the rest of the global stock market for many years to come, but even Sam Altman, boss of OpenAI and one of the leading evangelists for the new technology, thinks we might be in a phase where investors are overexcited about it. So we believe it’s prudent not to go all in on big tech. Far better, in our view, to have some exposure but also exposure to lots of other companies in other industries around the world – that way our shareholders get some of the upside if the AI optimists are right and not all the downside if they’re wrong.”
Ben Rogoff, Lead Fund Manager of Polar Capital Technology Trust, said: “Approximately one third of the trust is represented by the so-called Mag Seven versus more than 50% in our benchmark. We still see them as natural monopolies with valuations largely explained by their share of very large profit pools.
“However, we see AI as potentially disruptive to some and believe we are beginning to see more of a two-way fundamental debate on each of the Mag Seven companies (perhaps with the exception of Nvidia). As AI becomes more pernicious to incumbents, we expect Mag Seven to become less of a conduit for AI. As such we expect to further reduce our exposure over time on a stock-by-stock basis.”
We have described ourselves as 'AI maximalists' believing that AI represents the next general purpose technology. As such, we expect significant portions of the market (and the world) to be reimagined around AI.
Ben Rogoff, Lead Fund Manager of Polar Capital Technology Trust
Where are you seeing the best opportunities outside the Magnificent Seven?
Ben Rogoff, Lead Fund Manager of Polar Capital Technology Trust, said: “We have described ourselves as 'AI maximalists' believing that AI represents the next general purpose technology. As such, we expect significant portions of the market (and the world) to be reimagined around AI.
“This should create myriad investment opportunities as existing profit pools are challenged, and new ones created. Our investment focus today is on the infrastructure necessary to deliver widespread AI and therefore on the recipients of the intensive capital investment made by hyperscalers and others – from chips and chip-making equipment, to networking and power components.”
Gary Robinson, Co-Manager of Baillie Gifford US Growth Trust, said: “Again, we don’t look at the seven companies labelled the Mag Seven as a homogeneous group. They aren’t. We approach every investment from a bottom-up perspective, on a company-by-company basis. We are finding exceptional opportunities everywhere, and it’s notable that there is a significant opportunity cost of just investing in a highly concentrated index. For example, over the last year to end August, 290 companies in the Russell 3000 Growth index outperformed the median Mag Seven return. Furthermore, a lot of the most exciting growth opportunities in the US are private companies, which we can access in the Baillie Gifford US Growth Trust.
“Thinking about the new AI paradigm, two seams stand out. First, the application layer: businesses turning frontier models into real services for consumers and enterprises. Second, the enablers: networks, data and security that form the new stack. That’s why we own names such as Cloudflare, DoorDash, Shopify and Roblox, in the public space and, thanks to the investment trust structure, private leaders like Databricks, Stripe, SpaceX, Anthropic (a recent purchase) and Runway AI.”
Craig Baker, Chair of the Alliance Witan investment committee, said: “Outside the Mag Seven our top holdings include Diageo, which has been suffering from a well publicised downturn in the drinks market. But having parted ways with its chief executive in July, the company published full year results in August which showed sales beating analyst expectations and an accelerated programme of cost cutting.
“Some of the lesser-known US tech companies outside the Mag Seven that we own are Arrow Electronics, Intuit and Service Now.”
What is the most exciting stock or sector in your portfolio at the moment and why?
Ben James, Investment Specialist at Baillie Gifford US Growth Trust, said: “We are excited by all our holdings, of course, but the opportunity that AI is bringing is particularly notable. We’re excited by AI-enabled networks and logistics. Cloudflare, for example, is evolving from a cybersecurity provider to a developer platform that can run AI services close to users, with the potential to become the fourth cloud provider.
“DoorDash uses data and machine intelligence to shrink delivery times and expand its addressable market. In private markets, Zipline’s autonomous delivery shows how software and robotics can create entirely new categories of demand, and we have recently participated in a fundraising round for Anthropic, the AI startup behind chatbot Claude. This is one of the fastest-growing tech companies in history – more and more businesses and individuals are using Claude to solve their most challenging problems.”
What are the biggest risks facing the tech sector?
Ben Rogoff, Lead Fund Manager of Polar Capital Technology Trust, said: “In terms of risks, we would remind investors that we expect volatility – as seen earlier this year with DeepSeek and tariffs – may return.
“Between 1995 and 1998 – early in the internet infrastructure build – there were seven corrections of over 15% in the NASDAQ despite this being a strong period for market returns. We think this volatility is normal during early stages of a new technology cycle when innovation curves are at their steepest.
“Beyond volatility, we believe the most significant risks relate to AI model progress. While models have shown remarkable progress during the past three years since ChatGPT launched, any change in model improvement trajectory could challenge the current cadence of infrastructure investment and the ultimate size of the AI market opportunity. While we are confident that so-called ‘scaling laws’ remain intact, we monitor this as closely as we can.”
Ben James, Investment Specialist at Baillie Gifford US Growth Trust, said: “On a technical level in the near term, the bottlenecks are power and computing resources, plus intense competition for scarce AI talent, overlaid with regulatory and geopolitical uncertainty. The companies best placed to thrive are not simply those with capital, but those with ambition, adaptability, and founder-led urgency.
“Tobi Lütke’s decision at Shopify to abandon delivery operations and redeploy the organisation towards AI is a case in point. That willingness to pivot, to stop being the best implementation of the old paradigm and commit fully to the new, distinguishes long-term winners.”
- ENDS -
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Notes to editors
- Source: theaic.co.uk / Morningstar (as at 12/09/25). Average investment trust discount excludes 3i.
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