AI is reshaping the future of software services, but does it spell the end for data providers and digital business models? In this investment letter, Zak Smerczak, Analyst and Portfolio Manager, Global Equities, explains why Comgest believes software companies built on proprietary data and continuous innovation are difficult to replace.

Attention scarcity has reshaped both society and markets, eroding deep thinking and pushing investors toward shorter horizons, herd behaviour and concentration risk. In this investment letter, Franz Weis, Comgest’s Chief Investment Officer, argues for grounding long-term investments in company fundamentals, historical earnings and resilient moats.

The AI boom has concentrated global equity markets in a few US tech giants, but as long-term investors Comgest focuses on building resilient, diversified portfolios through an unconstrained approach that targets quality growth across sectors and geographies.

Digitalisation, cloud computing, and AI are driving global data centre expansion. Big tech companies need more computing power for their AI services, increasing data centre infrastructure and environmental impact. In this investment letter, Comgest ESG Analyst Liudmila Strakondonskaya emphasises the need for effective governance and decision-making to balance AI growth with ESG considerations.

Over the past two years, the AI "Gold Rush" has led to the MSCI World Index becoming concentrated in just a handful of AI-related stocks. In this investment letter, Comgest’s Global Equity team explains why we typically focus on AI infrastructure companies with high barriers to entry and strong pricing power, while avoiding early-stage AI models and software due to intense competition and potential commoditisation.

Investors often focus on tangible assets like inventory and machinery, but human capital—employee knowledge, skills, and experience—is oftentimes undervalued. French leather goods company Hermès exemplifies how human capital is the quiet force behind long-term success.