The next 20 years: learning from dinner plans and telephones

Everyone knows what the variables are, but navigating those four layers and reaching an agreement can become fiendishly complicated. 

And even once agreed, there’s variability in the outcome – the plans may bear little relation to who actually shows up at the Italian place on the corner at eight.

When we gather at the Global Alpha dinner table, we spend all our time discussing the next five-to-ten years. It’s enough time for company progress to drive substantial change, and a short enough period for us to be able to make specific predictions about how that might play out. 

We can assess the capabilities and attractions of those who will drive change, from maverick founders to professional management teams. We can assess where their decisions will take companies and the returns on offer to shareholders. 

Importantly, we don’t demand agreement around our table. The portfolio always reflects many possible futures. Our healthy debates may occasionally upset a glass, but never an ego.

Learning from the past

Many investors have sat in Baillie Gifford’s seats before us, and there are many more to come. 

20 years of Global Alpha have been built on and into more than a century of investing. What does that accumulated knowledge tell us about what comes next?

It clearly tells us that big trends, even when they are generally accepted as being likely in a decade and near certainties over longer periods, can be undervalued by stock markets.

It tells us that the status quo and the established are always subject to change. And that the greatest certainty in their immovability can provide the greatest opportunity for those who seek to move society on.

Going back a little further than the day Baillie Gifford opened its doors, the British Post Office’s chief engineer Sir William Preece famously dismissed the emerging technology of the day. In 1878, he scoffed: “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” 

Even the drivers of change can underestimate the power of what they are unleashing. In 1943, Thomas Watson, then president of IBM, estimated, “I think there is a world market for maybe five computers.”

In both instances, there were credible reasons for their statements. Preece felt that the established, dense and relatively low-cost infrastructure for transmitting information was likely to see off an upstart technology that would require huge investment to operate with any utility. 

He didn’t predict how willing or able companies would be to fund the build-out of a new generation of infrastructure. The complacency of the incumbent meant that he viewed the messengers, not the messages, as the critical service.

Watson made his prediction based on factory-sized machines. He couldn’t picture the impact of improvements in efficiency and power that would miniaturise computers. 

He failed to capture the outlandish power of compounded improvements. What right, then, do we have to make better predictions than industry leaders and the Disruptors of the day?

Our edge lies not in our expertise or intelligence but in our perspectives and systems of thinking.

It’s hard to make predictions that are far from the crowd. It can be lonely out on the limb. You look stupid when your predictions don’t come to pass. 

And, even if you are eventually right, you will probably appear to be wrong for long parts of the journey. 

Durability of conviction is just as important as the insight itself. How many of us have muttered “I knew that would happen”, or “I thought of that ages ago” in frustration at having failed to make the most of a flash of intuition?

Making the most of big trends

We seek answers by looking both at the broad environment and the knock-on implications of disruptive forces brought by individual entrepreneurs. Views from the top and bottom of the chain produce valuable holdings for the portfolio.

We currently see a few big trends that will drive the investment environment over the next decade. 
The way they will develop is uncertain, and the precise timing of the inflection points they may prompt is inherently unpredictable. 

The direction of travel, however, seems predictable and likely enough to be factored into what we choose to own in the portfolio. 

Here’s what we think will matter most from the many vantage points we are fortunate to view the world from. We have worded these with certainty for clarity, but we test the assumptions behind these trends regularly and with a critical eye.

• The rapid rise of accelerated computing will pave the way for general AI. By 2030, AI assistants will have become the norm. Large swathes of economies and labour will be affected. The World Economic Forum predicts that almost 90 per cent of businesses will be transformed by 2030.
• Geopolitics will continue to fracture and new alliances will form. Trade barriers may rise and fall but there will be a shift towards greater resilience within major economies and regions. Supply chains will shorten and some elements will duplicate.
• Demographics will shift towards the ‘global south’. China and India will be the two most populous countries with over one-third of the world’s population in 2030. Another 700 million people will join the global middle class by 2030, making this group more than half of the world’s population.
• An energy transition will take place… unevenly. Fossil fuels will still be an important part of the mix while incremental energy generation will come from other sources. Distribution grids will be rebuilt to cope with the new supply.

While these are not unique views, their implications seem to be poorly reflected in share prices, particularly when we look at company prospects over the next five years and beyond. There is still an overwhelming tendency in markets to extrapolate the status quo, or the near-term change, and price mostly for that.

The AI phenomenon

We already own several businesses in the portfolio that operate in the artificial intelligence (AI) value chain. Over a quarter of the portfolio has direct exposure to this technology. We expect this to be an important returns engine over the next five years. 

Our holdings span from materials and equipment suppliers to the industry such as the Japanese polishing, cutting and grinding machine maker Disco, whose silicon wafer cutting machine can cut a human hair into more than 30 strands, to companies that are placing AI at the heart of their products and applications. 

We recently added the customer relationship management behemoth Salesforce to the portfolio because of the attractions of its nascent ‘Agentforce’ AI assistants. 

In between those two extremes, we have positions in the major providers of AI infrastructure where, even from today’s large market capitalisations, we see more potential for growth than the stock market valuations give credit for.

Opportunities:

1. AI-natives
   We’re looking for industries that could be fundamentally transformed. Healthcare diagnostics, materials science, agricultural technology and industrial design are areas where we see significant potential for AI to create entirely new businesses.
2. Embedded AI infrastructure 
   We are researching companies developing the specialised hardware, sensors, and edge computing capabilities that will enable this transition. This includes companies working on energy-efficient chips, novel computing architectures and the required physical infrastructure.
3. Applications for everyone
   Companies that make AI accessible and usable for businesses and individuals could capture significant value. We’re exploring emerging platforms that simplify AI implementation, and tools that bridge the gap between technical capabilities and practical business applications.
4. Unique value unlocks
   Scarcity exists in the digital world – data – and it may be about to become much more valuable. Companies with unique data sets and the ability to collect new unmatched data will unlock value that has not been accessible until now. The evolution of protections around intellectual property, privacy and data ownership will be important variables.

A changing world

Trade tensions have risen since President Trump took office again, and US policy has rapidly become less stable than we were used to. 

We view some of what is happening as a symptom rather than a cause. Supply chains that have been optimised for efficiency have been shown to have fragilities, and the world’s most powerful economies are visibly placing self-sufficiency in some industries much higher up their agendas. 

We have been thinking through the implications of these shifts for some time, though the specifics of policy and negotiations will always have the capacity to surprise. 

Opportunities:

1. Regional champions
   If trade barriers rise, we anticipate the emergence of new regional champions. Companies with strong positions in strategic industries could benefit disproportionately. We have repositioned parts of the portfolio already for this and are seeking out further ‘local for local’ opportunities.
2. Supply chain resilience 
   Beyond our existing semiconductor equipment holdings, we’re exploring opportunities in advanced manufacturing automation, logistics and companies developing alternative materials that reduce dependency on geopolitically sensitive resources.
3. Energy transition beneficiaries 
   Geopolitical tensions are accelerating energy independence initiatives globally. We’re seeking emerging players in energy storage, grid modernisation and energy sources that could become the infrastructure of more self-sufficient energy systems.
4. Digital sovereignty
   As digital borders harden, companies enabling data localisation, cybersecurity, and digital infrastructure sovereignty present compelling opportunities. We’re investigating emerging leaders in these spaces across multiple regions that may benefit from fragmentation.

We have several holdings in consumer-facing businesses. This part of our portfolio could be challenged in some of our views of the future. We have considered position sizing and portfolio concentration carefully here and will continue to assess our overall exposure. 

Most of our holdings are platform businesses that offer new and better ways to transact. We think that those attractions will weather the ups and downs of consumer sentiment, though near-term results and share prices may sometimes point the other way. 

The ecommerce platforms Mercado Libre, Sea and Coupang serve rapidly growing middle classes in Latin America and Asia and are carving out what look to us to be durable competitive positions in those markets.

These holdings benefit from the twin trends of a growing middle class and technological disruption. 

Future ready

Ultimately, we aim to own companies that are advantaged across many different backdrops. 

Companies that don’t depend on a single version of the future for their success tend to be more resilient to shocks and are usually nimble and adaptable organisations. We favour businesses that can deliver growth across several versions of the future because of the strength of their business models.

Back to Global Alpha 20 

Source: Baillie Gifford, MSCI. US dollars. Returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised. *Inception date: 31 May 2005

Past performance is not a guide to future returns.

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This communication was produced and approved in June 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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