Buy Hold Sell: The investing megatrends you can’t ignore (and some you should rethink)

The stock market is constantly evolving but, every decade, a few megatrends reshape entire industries - creating huge opportunities for investors who spot them early. 

Today, AI is revolutionising everything from automation to chip design, with the global AI market projected to grow from US$207 billion in 2023 to over US$1.8 trillion by 2030, according to Grand View Research. Meanwhile, the clean energy transition, shifting demographics, and deglobalisation are rewriting economic playbooks.

Getting these megatrends right isn’t just important, it can be the difference between market-beating returns and falling behind. Just look at how Amazon capitalised on e-commerce or how Nvidia surged over 3,000% in the past decade thanks to AI-driven demand.

In this episode of Buy Hold Sell, we’ll break down the biggest megatrends shaping the future, explore why they matter, and discuss how investors can position themselves to ride the wave. We'll also unpack a couple that could be on the decline. 

To do that, Livewire’s James Marlay was joined by Vihari Ross from Antipodes and James Tsinidis from Munro Partners. For good measure, they each share a stock idea set to benefit from their favourite megatrend. 

Note: This episode was recorded on Wednesday, 26 February 2025. You can watch the video, listen to the podcast or read an edited transcript below.

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Edited Transcript

James Marlay: Hi there, ladies and gentlemen. It's James Marlay here, Co-Founder at Livewire, and today we are going global. I'm joined by two global managers, James Tsinidis from Munro Partners and Vihari Ross from Antipodes. We're not going to be talking about the noise coming out of the US, the short term. Today, we're going long term. We're talking megatrends; those big powerful themes that can drive growth well into the future. James, we're going to kick it off with you. What are one or two of the megatrends that you are most heavily invested in and why do you like them?

Key megatrends

James Tsinidis: So we really like climate as an area of interest and a big structural growth trend. As you said, there's a little bit of short-term stuff around Trump, but long-term, obviously emissions are still going up. They've been going up for decades now. They need to come down and they need to come down over the next 30 or so years to get to net-zero hopefully by 2050, but it's probably going to be 2070. It's going to cost about $50 trillion to do that. But you should really think about that as an opportunity. So who are the companies that are going to facilitate that energy transition and who are the companies are going to benefit from that spend? Where's that going to show up in company revenues?

James Marlay: Okay, climate and energy transition, they're not new ideas. And at times there has been some debate as to, "Is this real? Is this a genuine opportunity?" What gets you over the line? Why are you so convinced?

James Tsinidis: Yeah, so if you think about that $50 trillion of spend, think about where it's going to be spent. And obviously to your point, some of it, you don't know if it's real or not, but some of it you can see already - it's real. So about 25% or so we think is going to be spent on decarbonising buildings, and you can see that that's happening today because all the big companies are basically spending to get into six star energy buildings, right? Munro Partners is doing it as a firm to get to net-zero, so we're investing in better premises. And what are those building owners doing? They're investing in the heating and cooling to make it as efficient as possible, the lighting and so on and so forth.

So yeah, we see that spend as being real. That's just an obvious tangible example of things that are happening today, but you can obviously see it in EVs as well. You can see it in solar growth, wind to an extent as well. You can see the money is starting to flow. But not all these industries are getting that money today, not all of these industries are getting the profits today, but you can see some that definitely are. The building industry is one that I'd point to as being obvious.

James Marlay: Very good. Vihari, same question for you, what's the megatrend that you're most heavily invested in and why do you like it?

Vihari Ross: So for us, the heaviest trend is AI. And attached to that is obviously the transition of data to the cloud at the same time. Again, it's not a new concept and it's all the markets wanted to talk about over the last 12 months. But really, we are at the nascence of this multi-year investment cycle. We know just data centre capex alone over the next few years is $1.5-$2 trillion. So there's a lot of hype around it, but when it's early, there's that range of outcome risk of how this is going to play out, and we're conscious of finding pragmatic ways of playing it as opposed to getting caught up in the hype around it.

If we look at past cycles where there's been a big tech change, the initial focus is on those enablers, building that infrastructure layer, the hardware layer. And then if you think about a lot of the companies that really made money over time were the ones that could then use that technology to build a competitive advantage. We think about the tech bubble. Google came almost a decade later. Azure wasn't even invented until 2008. Meta listed in 2012. This is a long runway of platforms that were built off of the backs of that infrastructure at the time. And so it's really about the focus shifting around how companies are going to utilise this new technology and win over time. Right now, it's around that investment cycle and the ROI focus, but it'll shift to really that monetisation cycle - how can people use this technology for the next leg of growth?

How long is the runway?

James Marlay: Well, let's stay with you on AI. You mentioned that some of the beneficiaries of the technology boom in the late '90s, early 2000s only emerged a decade later. How long do you see the runway for the rollout of this AI? How long is this growth opportunity?

Vihari Ross: Yeah, our view is that we really are at that nascence. We think it is a 20-year cycle, it's here to stay, it is real. I think the thing that has become apparent though, is that when something is so early stage, how might this trend and the investment cycle around it change and evolve? I'd be completely remiss to not mention DeepSeek in the context of this. This is a technology that's piggybacked off that very expensive frontier model development that's taken place. We don't think that that necessarily changes the need for frontier model development and that capex cycle, but it does mean innovations. Maybe it's being cost-effective or utilising the technology in a more efficient way is not plausible, and it might change that return on investment focus for these mega companies that are looking to develop those models. So I think that's it.

And now, of course, the Chinese weren't sitting still, as it turns out, in the background. I think that's probably the best example of that range of outcomes is really something to be conscious of when extrapolating short-term results into the future with any of these long-term tailwinds.

James Marlay: And that's common, as in the early pioneers often are the most expensive, the technology is nowhere near where it's going to get to, so it's more expensive and not as good as it's going to end up.

Vihari Ross: Yeah, even thinking about companies back in the '70s, things like the Nifty 50, the market was quick. If you actually think about those companies, it was maybe about five or six years of strong growth that they had and then that was extrapolated into “will always be like this”. And it might not always be like this. Being conscious of the disruption or the shift that's going to take place, and who's actually going to win, is what we're focused on when it comes to a big cycle like this.

James Marlay: Okay. James, on climate, how long is the runway?

James Tsinidis: Yeah, it's at least 25 years to 2050. We're probably not going to get there in time, unfortunately, because we're just not decarbonising quickly enough. Emissions are still going up. Coal is still being built and being burnt. So unfortunately, it looks like 2050 is going to be a stretch. But it's at least a three-year tailwind for growth for these companies in terms of decarbonising the planet. So yeah, long runway ahead for growth.

New megatrends

James Marlay: Okay. So we've talked about climate and AI, two megatrends that most of our viewers will be familiar with. What's a new one that's catching your attention? What do you think is a new megatrend or a new long-term growth opportunity that you've picked up on?

James Tsinidis: Just to stick on the climate side, there's obviously multiple different areas going on. It's such a big area, it's affecting the whole world and so many different industries. I think the biggest new trend is actually the resumption of power demand growth in the US. So you've had 20 years of basically no growth in power. You're basically in a bear market. And part of that is because of globalisation. A lot of industries have left the US, Europe's the same, obviously left to go to China and Asia. And now with Trump 2.0 that's flicked back the other way. And so this onshoring in the US is a big new trend we think, and it's going to last for many years because all this infrastructure needs to be built again. It's over its use-by-date in terms of age. And so if you just think about the power grid within climate as an example, as a sub-area to look at, that's going to start to inflect power in terms of the demand on the grid. And there's going to be a lot of investment opportunities behind that for those enablers of that. So think about grid companies, electrical companies, et cetera, as the beneficiaries.

James Marlay: Vihari, same question for you, a new trend, a new opportunity that's emerging in 2025?

Vihari Ross: Yeah, I'm going to sort of copy James here, and it's an extension of what we've just talked about, and that is around which of the companies they're going to start benefiting from the democratisation of access to AI. DeepSeek I mentioned. The reducing costs of this technology, the flip side of that is that the number of companies that can participate in this shift is going to broaden out. And if you think about it, companies that have the opportunity to benefit from automation, the opportunity to benefit from significant efficiency gains, financials that have huge datasets, healthcare in the detection of disease and the treatment of disease in a precise way, even industrial companies that will benefit from that automation investment cycle, those are the types of companies that are going to really benefit and be competitively advantaged by utilising this as a productivity tool.

I think that's actually going to start to emerge, particularly in the context of the market concentration that we've seen in the last one to two years. I think the market will, in 2025, start to look at where else this can be deployed and who can actually benefit from this in a meaningful way.

James Marlay: That sounds like it's a good thing.

Vihari Ross: Yeah, I think this could generate significant cost-savings and significant opportunities for some of those left-behind companies to start to catch up in market performance.

Which trend has run too hard?

James Marlay: Okay. We talked about a couple of the megatrends and the opportunities you like. What's overcooked? What's run too fast? What are you reducing exposure?

Vihari Ross: So we are conscious of that exuberance. Like I said, in that market concentration, there is a lot of expensive, large cap quality, and I sort of joke and say "It's no growth quality or no growth, growth." The multiples are really high. There's actually lots of examples of them in the US market, companies like McDonald's, Starbucks, Chipotle, Costco, Nike, Estee Lauder, those big name companies that are just trading… if you think of that exchange of what are you paying and what are you getting in return, where that exchange just simply doesn't make sense right now.

James Marlay: It sounds like a similar conversation that Australian investors are having around the banks.

Vihari Ross: Yes. I mean, our Australian banks are the most expensive banks in the world. You can get much better capital returns of growth elsewhere.

James Marlay: James, same question for you, what are you decreasing exposure to, something where there's maybe a bit too much hype or an imposter?

James Tsinidis: I'll pick up on the same thematic as Vihari, the GLP-1 drugs, anti-obesity drugs, so basically looking for the victims, I suppose, of that with the decreased consumption of food and alcohol as well. So I think there's probably some shorts there. We're short a few things in that space. They're expensive stocks generally.

James Marlay: And you think that's a knock-on effect from those GLP-1 drugs?

James Tsinidis: Yeah, correct. Just reduced consumption.

First trillion-dollar industry?

James Marlay: We're going to give you both a bit of a thought experiment if we're talking about megatrends. What could be the world's first trillion-dollar industry?

James Tsinidis: So the industry that it's going to get there pretty quickly, is probably almost there, is semiconductors - because you're getting huge capex from the internet companies into data centres. So that's probably the obvious one that's getting there the quickest.

James Marlay: Okay. Vihari, same question for you, you want to nominate an industry?

Vihari Ross: Yeah, I think James and I are going to swap here again, but I'm going to nominate that the energy transition capex cycle, and I'm going to specifically nominate one that's actually being overlooked. I think everyone's very aware of what is taking place or not taking place in the US, the drive in the EU, but China is adding two Japans every three years in terms of its energy consumption load. And Japan is actually one of the top five energy users in the world - so it's a huge amount of energy load that's being added to the Chinese economy, and it's very much moving in the direction of being renewable. They're actually going to be 40% renewable by the end of this year, and for them to make their carbon transition shift, they're spending... and that actually only reduces their carbon emissions by about 25%... more than US$10 trillion over the next five years.

So there's a substantial cycle there and there's a lot of different ways of playing that, perhaps in companies that enable the deployment of the grid, that harnessing of natural resources, building a grid across China which enables them to create baseload power as well. So I think that's a really substantial and overlooked component of that energy transition story.

James Marlay: Does that mean investment in Chinese's equities? Are they US-listed?

Vihari Ross: You can play it through things like commodities as well, that you do need, things like aluminium to build a grid. So we do have investments there, but we also have an investment in a company called NARI that's a key enabler of technology solutions to the state-grid in China, structural grower, has nothing to do with the geopolitics between the US and China, and trading at 20 times with double-digit growth. So there's a lot of stuff out there to be found if you're willing to look.

Guest picks

James Marlay: Okay, very good. Well, let's bring it to a head. We're going to get you each to nominate a stock that you like, but it has to come from your favourite megatrend. So James, what's your favourite megatrend? Give us your stock.

Constellation Energy (NASDAQ: CEG)

James Tsinidis: So my favourite megatrend is climate, decarbonisation. Stock is Constellation Energy. It's the biggest nuclear generator in the US. The demand for nuclear power obviously goes up. They have an existing install base, and then at the same time you're closing coal and gas, so that basically high capacity factor, nuclear becomes even more important when you're adding more and more solar and wind to the grid because that's obviously intermittent. So they've got a really nice position so that basically generation that they do have becomes more valuable. So they're priced for that and their earnings grow subsequently.

James Marlay: Okay. Vihari, same question for you, what is your favourite megatrend first?

Keysight Technologies (NYSE: KEYS)

Vihari Ross: So mine's AI, and I'm going to nominate Keysight. That's probably one of the most important companies people have never heard of. It's a business that essentially provides testing and measurement solutions. And if you think about the end users here, we're talking about hyperscalers, we're talking about defence and aerospace, we're talking about telcos in that transition to 6G. So you've got these big investment cycles taking place, but they can't actually take place without simulation, without testing, without design, all of that work, that tens and thousands of hours of work that takes place before you get this final product that everyone's clamouring over and getting very excited about. So this is a business that because of those structural shifts around AI, it's a bit of an under the radar way of playing it. It's a company that originally was spun out of HP and very much overlooked. Their order book is pivoting positively. And so you're getting a stock that's trading at 20 times. In the AI space, that's incredibly compelling. Their growth profile is pivoting upwards as well, to 10-15% per annum. So that's my pick for you.

James Marlay: Okay, thank you very much. Well, ladies and gentlemen, a few of the well-known megatrends, probably a few you haven't heard before. I hope you enjoyed that episode of Buy Hold Sell. Remember, check into the YouTube channel. We're adding fresh content just like this every week.