The Future of Investment in AI

So for our next session continuing kind of our snaking narrative towards from the infrastructure player from meta we want to talk about the future of investment in AI where the investment strategies what does that look like giving the big macro and potentially and also the mic micro vision of what that might look like. And we've got a great Nordic investor for you to listen to today. So, Jeppe Christiansen with my I feel my Danish is horrible. Excuse me. Maj Invest will now speak and give you a bit of a presentation and an insight to that.

So, I'd like to welcome Jeppe on stage for this session. Now, thank you. Thank you. Uh you can all hear me. I can kind of feel.

Um and I looked forward to come here and speak. I'm not an engineer. I'm not uh a computer scientific guy. I'm just a pure and simple investor. uh and I'll try to give you a perspective of uh how do these things look like if you have that kind of background and also that kind of perspective.

Um and first of all also thanks for inviting me here. Uh I'll try to do my best. It's it's not an easy task and u AI as such my session is called the future of investment in AI. Um I'm not sure I can give you any kind of clear conclusion here. Uh but I can give you some of my ideas about how this look like.

Uh I think it's going to be kind of mind-blowing next five years, might be even next two years. I don't know. It's moving fast. Um I kind of I had a flashback because many years ago like 35 years ago I I worked in the financial sector also and I had a background from K University and studying macroeconomic and stuff like that and I was um working for first a bank and a pension fund and I was asked to take care international uh stuff. So, I went to China um way back.

I mean, it's almost 40 years ago. And I came to China and I traveled there at least for half a year. And I came back and I thought, "Wow, I'd never I will never understand what's going on here. It's so complicated. It's huge.

Speaking 50 languages, uh working hard, saving money, investing like crazy. want to have a better life. I mean, this is this is a powerhouse at some point. I don't know when. I don't know how, but this will eventually turn out to be something really big.

And for sure, I didn't know how to invest. And if I invested in in in China way back, I would have a quite low return, I think. But it it became a powerhouse. this is not about China but it became a powerhouse like no one for soul I didn't so that was one I got this flashback when thinking about AI then I got another flashback to the dot period because I worked in Danskbang there and I still remember uh because it was so hard to understand what's going on and and I still remember what was said by Bill Gates he said u everything will be built around the internet and most people didn't really think about what was it he said but think about you know everything will be built around the internet which came to be true and it kind of accelerated because you got social media on the top and and you got this computer in your hand which is called a phone um smartphone or something. Um then we had the social media kind of internet combined with social media is kind of a 10x thing because it's it's so powerful.

Um then today we have AI. I think AI is some kind of multiple of China.com social media. If you multiply then you're perhaps around where you are. So that's kind of my first remark here. This is uh super interesting and it's going to be extremely powerful.

It already is but it's it will so it's hard to say a lot about. I will try to do my best and I think there are there are things that will not change that much and there are things that will be totally different. The trick is there if you I have some slides. So, and uh I I'll I have seven eight slides. Uh I'll try to walk you through and then I'll kind of sum up afterwards.

Um because I'd also talk about a little bit about things that will not change that much like the growth of the world economy for example. But I come back to that. But u I'm working on my daily work will be in my invest. I'm CEO founder of the company. We are like plus 100 FTs and we have assets of 85 billion DKK.

That's kind of our size. I will show you also we have some products everyone can buy. It's not to sell anything here but we have 75,000 We have 75,000 investors in Denmark and and 250 corporate clients and they buy stuff like this. Um then I'll talk a little bit about things that will change and things that will not necessarily change that much. Uh first I'll talk a little bit about macro financial markets and then I'll talk about some structural trends AI and and give some kind of summary here.

Um and if we start by looking at global growth rates, I happen to believe looking into history of 200 years, the global economy, the market forces are so strong you cannot really understand. It's the global economy is a super tanker. A lot of people think we'll have recession tomorrow or something, but you know, and maybe people think that Donald Trump will change everything. might be here to change a lot, but the underlying growth of the global economy and the market forces, they're way stronger than anything else. And that's why I call global econ economy a super tanker.

We have to bear in mind so better stay invested because this is a good place to be. So better stay invested here. Um think about the mortg market forces the following way. market forces kind of closed down Soviet Union because Soviet Union without market market forces they could not grow the economy. So it kind of closed down.

On the other hand, China opened up because of market forces. I mean Deng Xiaoping went to Singapore, found out that market forces would be quite strong and that's why we're here today. the growth rates since 1980 in China been kind of you know no one in macro would ever think about it that's because of market force so market forces are super strong and they I think they're way stronger than any president in any country in the world sorry Trump but you're behind um right now we have growth rates average will be 3% and I I think we will stay around 3% for a long time might go a bit higher, a little bit lower, but you know the underlying growth is is is super strong. Then of course we have some recessions. We've had in in 100 years we've had two recessions.

Uh then we have some wars which is a different story but World War I, World War II. Uh but we have two major global recessions in 100 years, one every 50 year and one was called the financial crisis and the other one was the one in 30 around 29. uh therefore the the probability of having another recession is not huge. It's like it's more like 2%. A global one.

We can't have regional ones but global ones are very very uh rare. So that's global economy. That was uh my first tip here. So we will not AI will not change a lot here. Uh central banks rates AI will not change a lot.

I'll not go into details here, but we're right now we are in a in a point of of real balance because rates are uh a little bit higher than inflation in Europe and in US. Uh so there are more or less balanced. We had 10 years of zero rates and people came to believe that you would have zero rates forever which of course not true. Uh that was a very specific period just after the financial crisis. where we are now is more or less in a balanced uh place when it comes comes to interest rates.

Um then we have equity markets in general P around 20 uh 19 somewhere like Europe it's closer to 15 in US it's closer to 25 in uh I say in part of emerging markets is like 10 I'm a I mean it's a screaming buy in my from my perspective emerging markets is a kind of a screaming buy because it's so low priced And people tend to believe emerging market is something that's lower quality. Okay, please travel to Taiwan, Korea, places in India, places in China. You'll find out that we're way more advanced than Europe. Uh so you get high quality and low price. Usually that's a good combination for an investor.

Um and they are way low, but this is the average. it maybe US is too high priced I think in many areas but generally speaking global equity markets are more or less in place so that's kind of and I think AI will not change a lot here so I have global growth rates equity prices will not change a lot then we have the structural trends um we we have some you know people people tend to mix things up and call everything will be called a trend but there are not that many structural trends as far as I understand there are three major ones geopolitics I'll not deep go into that but there is some kind of change there I think most of us agree here uh some kind of change I don't know the new world order how it will end up but you know it's it's developing right now um so that's one major trend the other one is the demography we talked about that for years. We live longer and fewer kids and there's a major change also. And then we have the very big one. I think AI is bigger than the two other ones because the consequence of AI is harder to foresee and it will affect way more because AI will affect the way you run your company, the corporates.

It will affect the clients, the customers a lot. So both the company, the customer, it will also change the the way you organize things. So it's going to change almost everything. And if you go into the companies, the suppliers, the producers, usually technology changed blue color work. Now it's going to change the whole thing including white color a lot and the way you organize.

So usually technology will change only blue color now or make it more efficient. Now it's going to change both blue color, white color and the way you organize and it's going to change the customers both the way they act their the way they understand things and the way that you distribute things the way you know the whole thing. It might be you can manipulate way more which is a bad thing but I mean so all part of the equation will will change. Um so I'll soon come to how to invest in it which is a not an easy question. Um, but if we look into the AI universe, I I once a year I go to uh San Francisco very often for a full week and and and hope to visit uh serious companies and and in my invest in fact we invest together with some big big guys in US.

Um, and so we've just been there uh not not long time ago together with a company Icon IQ and we met one of the board members of uh Antropic and got kind of the full story of Antropic which is kind of mind-blowing. Uh, think about a company, no revenue two years ago, soon to become a $50 billion company in terms of revenue with a margin of 50%. Sounds interesting. Um, within two years, I mean, and if you get the story and try to understand then I try to kind of understand, you know, how what is what what kind of world is it we're looking into? And in my kind of interpretation here, it's like we will see a new infrastructure being built.

You can call it AI based infrastructure. I don't know you need but everything will be built around this AI kind of infrastructure. It's not that it's on its own because it's to some extent linked to internet and and and servers and everything. But we will see a new kind of infra infrastructure growing up because you need to to go to a place to to to get data and to get algorithm understanding what you're doing. So this is kind of the center of it.

That's the the the infrastructure. On the top of that you have all the software, the old software and and the new new software. And below you have all the hardware, the energy and everything. By the way, when you have energy, you also need batteries and lots of raw materials, metals, uh you need tons of these and you need energy like crazy. So, there's a lot of hardware and stuff down there and a lot of software and stuff on the top.

And you know from a very top- down perspective I think the best place to be when you invest money will be in the hardware and the energy and the raw material because those things I mean if you want to grow supply here it will take you 10 years and very often those being in that space have super strong pricing power means nice margins because if it's hard to grow supply and there's a lot of supply I mean usually you earn a lot of money so I think everything below there is a super nice place to be as an investor on the top I don't know because competition will be very tough and supply here is easy I mean if Netflix gets 500 00 new 500 million new people want to watch the film. Making the supply for these people is not the biggest problem in the world. It might be you need some stronger infrastructure somewhere but I mean usually supply if it comes to software it's easy to have new clients. I mean zero cost and some income. That's also why people like love to buy software.

But now the world is changing and up there you'll have tons of competition. I'm not sure I want to stay up there or go up there. I don't know honestly and you don't know the the big gain from from AI most of it will probably go to the customer to the client using stuff because prices will tend to go down competition will be might be some to some extent extreme. I wouldn't love I wouldn't like to be sub it might be the stock has uh overreacted I don't know shortterm long term I wouldn't like to be there so that's kind of my perception of what's going on I would like to stay lower there um then uh a couple of facts also because a lot of people talk about the risk of a bubble uh is AI to some extent a bubble here. Well, after looking into it, and I'm not an expert here, but I came to believe it's more an engine than a bubble.

And a lot of people try to kind of compare the com with the AI here and saying, well, uh, entropic OpenAI is kind of a bubble looking like the com and stuff like that. That's in my view is wrong. Couldn't be more wrong because I remember you had no revenue. You're tons of interest and usually no revenue and all the stocks kind of disappeared. Um maybe except for Amazon, but that's also a tra company doing uh trading started trading books and other stuff.

And by the way, they earn most of their money from cloud computing and not from uh being e-commerce. E-commerce is hard to ear and more money from being in e-commerce. But anyway, um but think about look at the adoption rates going from 7 years to 7 days. I mean so the speed today, I mean it's it's crazy. Um so that's one thing.

Uh then the the big thing about why it's not a bobble that's this one. Uh because revenue I mean I I told the story about Antropic revenue is scaling way faster than we've ever seen and you you have real revenue from these new companies. I mean, OpenAI, Antropic, I mean, think about $50 billion revenue with a margin of 50% being built in two years. I mean, it's the size of of noisk in two years. It took nois 100 years by the way.

Two years. Uh, and the growth rate is like I mean, you you can't really And of course, you will have bubbles here. you have stock specific bubbles where people kind of misinterpretate things. I mean personally I still find Tesla to be a bubble but that's another story and there are meme stocks and all the kind of crazy stocks out there. So it's not that I'm not I'm not seeing some kind of bubbles around but there's not a there's not an AI bubble.

Uh and the reason why is this slide here because they produce tons of revenue with nice margins. And of course, you know, usually when you price a stock, it's a combination of earnings and growth rates and and also the time horizon. How long time can you grow like that? And when will you eventually the growth rate will eventually go down to kind of the real growth rate of the economy? When will that happen?

So calculating the right price for for these stocks is very tough. Uh and that's why it's hard to foresee and that's why you probably have to invest in kind of kind of a group of of stocks. Usually in my invest we all always uh advise people to buy now nowadays we advise people to buy ETFs um AI semiconductor ETF having 32 stocks globally in in all kind of of uh uh all kind of hardware related to AI and globally kind of spread because it's very hard to foresee individual stocks being the winner. And it's also very hard to price these stocks. It's super complicated.

So that's kind of how I see it. If um then you know I think that's my last slide here. I have a summary there. I'll come back to that later. Um I have a couple of minutes left.

Uh in in my invest you might say how do you deal with this in in my invest um we have a a team our team we our flagship product called global value stocks we have like um $6 billion in that product um the chief portfolio manager started to look into AI in 2012 12 I mean 14 years ago they built their own neural network system uh took like half a year uh tons of computing power went into that project and it was not used to pick the stocks but it was used to understand the stock market. So kind of you call it a tool or research engine or whatever and it's being developed and built through 14 years now to some kind of perfection if you can call it that because it's going to develop every year every day every week but to some of kind of perfection. So, and the team have used it and and started using using it even more last year. And and by the way, if you look up performance of different categories here, you'll find out that um our value portfolio outperformed last year 8% and this year 4%. Until now, I guarantee you nothing.

But since they started using it, they um they've had seen pretty good performance. And it's not because this the the AI system choose every stock because it does not. But it help you organize your work more efficiently. It helps you you look at the the you know, it organizes information. It it makes you able to use your time the most efficient way and there's only one critical thing here that's your time.

So it you can prioritize your time and the way you work. You can also get a lot of information which you cannot calculate yourself because it's too complicated and the need of algorithm cannot I mean your brain works slower than these IIA models. I think most of your brains work slower but I don't know. Um, so you get this AI engine as a research tool. Uh, and for now it's still the case that it's a it's a tool for risk management.

It's a tool for research. It's a tool for using your time the most efficient way. It might be later on it's taken over your job as a portfolio manager. I don't know. I think it's not going to happen tomorrow because it's multi-dimensional and multi-dimensional problems tend to be quite big.

Uh think about a chess player. How long time it took to to beat a chess player and that's only two variables and you have eight times eight. I mean this is so simple. Think about a economic financial problem. you have like 1,000 variables and you have a long period and you have tons of dimensions.

So even AI can can be difficult to use here. So it's not that AI will take over everything in in portfolio management. But if if you do not work if you if you do not use AI, you're out. It's very simple. You have to use AI in research and information collecting information and in all kind of areas of your job.

So that's what we do in my invest in in most of the organization and it it's a perhaps the most important thing to look at right now. Of course u you know we had some years when people thought it was ESG. It's not ESG. It's not that you should rule ESG out, but it's it was put in the wrong place with a long wrong priority. Now it's kind of way lower and at the very top you have AI.

Um so that's kind of my perspective here and then I will kind of uh uh take my conclusion which is not about AI but that's a more the broad picture. How does it look like and then we have a little bit of time for Q&A. uh but this is more or less what I said uh growth will continue no inflation risk interest rates at a balanced level equities long-term trend will continue no recession Trump crisis I just wrote chaos I don't know maybe I think that's the right word um so so debt crisis I think it's manageable I think it's people are over scared by depth rates in in in Japan, China, US, Italy, and so it's not that it's not a long-term problem, but because it's it's a long-term problem, but shortterm that means until at least 5 years is manageable through QE. And now we know QE works because we used it after the financial crisis. Uh then we have um Chinese financial crisis.

I think it's also manageable. green investment, they've passed the bottom and that's because now we need more energy. uh and and the only thing is that you you should bear in mind only profitable green energy profitable in its own right will survive that means you know you don't I mean the most efficient right now in US will be natural gas a power plant and it usually the need here is electricity because of data centers and and and electric cars and stuff like that electric cars not in US but rest of the world uh but but uh so so what I mean by green investments is first of all profitable green investment uh and mega trends have just uh mentioned as three big ones. So my my end note here will be I cannot tell you exactly um how to invest because of AI but personally I believe you should stick to what's below the infrastructure the hardware energy all that stuff that's the priority number number one and um number two will be you need to use AI in everything you I've got some questions for you. We don't have questions back up on screen yet, but I've got some questions here that's been submitted already.

Um, I think the first one here, which is quite interesting, you mentioned some efficiencies and using AI. Um, do you use AI in any of your due diligence processes today at MindBest? There's a lot. Uh I have one of my colleagues here in the room Yanick sitting over there uh doing a lot of due diligence uh every week every day and uh we would I would need more than 10 Yanick if he did not use AI. Good.

So we 10x Yanik right there. Maybe more. Sorry Janik. Um another another question here is you mention margin. are over OpenAI have more than 500 billion USD commitment.

How does that fit with much lower revenue? Um, very good question. I, you know, I didn't go into Open AI because I think it's a really a difficult company to to uh evaluate. Honestly, I to be very direct I can be here. It it sounds a little bit crazy some of the things they're doing like their commitments of billions of billions of dollars without having any cash but but they got some commitment on their own for their own money.

They get commitments that they commit way more than the capital they have. I don't like that. So you do you still feel it's better than the the previous sort of.com but there is revenue but maybe it's a slightly different yes it's it's very different because this is this is kind of how to grow how to I mean I I think the perception there the understanding the view of of Alman there will be that he need to do it because if he's not a first mover then he someone else will take the room so I think and that's also why there is something here that's kind of a little bit scary because most of those big tech investing in AI they do it because they think it's profitable long term but they also do it because they don't want to be the last one being there and you know when your motive of investing will be not to be not coming too late it's not the same as investing because it's profitable so it I I mean it's it's a little bit tricky here. It's not tricky to understand that this is the future. It's tricky to understand how to evaluate, how to price it.

So the tricky thing here and that's why I say it's it's not a bobble. It might be some of the stocks will be mispriced, but it's not a bobble. It's something else. It's it's it's just hard to price. Super hard to price.

Thank you very much. We've got a bunch more questions, but we don't want to have time for everything. But grab hold of if he's here for a while if you have any questions for him. Thanks so much. Thank you.