The next 10 years in markets will be driven by this theme (it's not AI)

Note: These quotes were taken from Vihari Ross' presentation at Livewire Live 2024 on 17 September 2024.

Sitting in the audience at Livewire Live 2024, there was a missed opportunity to have a counter on stage for the number of times 'AI' or 'Artificial Intelligence' was mentioned. It is, without doubt, the flavour-of-the-month thematic that many investors believe is here to stay. 

Potentially even bigger than AI is a theme that investors have been talking about for years at this point: the energy transition. And while the megatrend has its critics, Vihari Ross, Portfolio Manager at Antipodes Partners believes this will be the theme, not AI, to power the next decade.

"As much as we are enamoured with AI, this cycle is bigger and it's durable and it's happening right now," Ross told the packed audience at Livewire Live.

Of course, the challenge with all these megatrends is to first not fall for the hype and then, once the trend is established, pick the right stocks at the right price - I.e. the long-term, structural growers that are actually generating revenues from the thematic. Remember, the price you pay is as important as the theme you invest in and the company you buy. 

A good example of this, according to Ross, is the comparison between Tesla (NASDAQ: TSLA) and Hyundai (KRX: 005380).

Tesla is a pure-play electric vehicle company that is losing market share in its key market, facing competition struggles in its once-biggest growth market, and margin pressure across the board from new entrants. It also trades on an NTM P/E ratio of 74.9x - 15x what Hyundai's stock is attracting even though the latter carries a 5% dividend yield and is gaining share in key markets like India and the US. 

To learn more about Ross' shocking prediction, the scale of investment from corporates and governments that is occurring to fund it, and where the most compelling stock valuations lie, watch the video above. 

Timecodes

• 0:00 - Intro
• 0:22 - What do you think AI looks like?
• 1:17 - The energy cost of AI-driven searches continues to go up
• 2:41 - A substantial scale of investment is required
• 3:26 - The shocking prediction: The energy transition will be the investment cycle to power the next decade
• 3:38 - Which energy sources will do the heavy lifting?
• 4:05 - The energy transition is being backed by government policy here and abroad
• 5:43 - It's not about jumping on the bandwagon
• 7:01 - A tangible example on overpaying for hype: Tesla vs Hyundai