Value Investing in AI Narrative-Driven Markets

The report argues that value investors must look beyond AI hype to focus on business models capable of generating durable cash flows in a reshaped economy. It warns against value traps in structurally disrupted industries while identifying opportunities in infrastructure and pragmatic AI adopters.

Key Takeaways

• 1.Distinguish between technological and economic inevitability: AI's widespread adoption does not automatically translate into durable business returns.
• 2.AI beneficiaries are polarized into infrastructure providers ('picks-and-shovels') and pragmatic adopters who use AI to improve margins and productivity.
• 3.Value investors must beware of 'value traps' where low multiples mask structural decline caused by AI-enabled disruption.

Table of Contents

• How AI will impact the corporate world: Winners, losers and the middle ground
• Winners
• Losers
• How should value investors approach AI?
• What is actually happening in markets?
• Lessons from the internet

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