Businesses linked to advances in artificial intelligence are set to extend their winning streak as soaring demand for the technology drives productivity and profits, according to David Steinthal the Chief Investment Officer of L1 Capital International.
“We’re very bullish around AI and think it will have long term positive implications for the world and reshape many industries,” Steinthal explained in Tuesday’s investment seminar.
“And we continue to have significant exposure through the big cloud companies and the AI platforms, [Microsoft’s] Azure, AWS [Amazon Web Services] and Google Cloud Platform.”
David Steinthal is “very bullish” on AI and says L1 Capital International is watching longer-dated bond yields for signs investors are worried inflation is returning.Â
The debate around AI valuations and return on invested capital has polarised parts of the market, but Steinthal says L1 Capital’s International Strategy can benefit from the new technology’s sprawling nature in multiple ways.
“We’re seeing it at every company we speak to,” he said. “They’re very focused on how AI can help them, but it’s still early days in terms of getting a commercial benefit from those investments. So, the investment comes first in terms of building the AI infrastructure, and then the services on top of that and implementation at a corporate level.”
Among the fund’s top 10 holdings are data centre giants Microsoft, Amazon and Google-parent Alphabet, alongside semiconductor manufacturer Taiwan Semiconductor Manufacturing Company.
Aside from AI, Steinthal is unconcerned about the possibility of traditional payments space dominated by Visa and Mastercard facing competition from stablecoins run on a decentralised blockchain.
“We think they’re more opportunity than threat,” Steinthal said of the stablecoin mania that has dragged down the valuations of traditional payments operators in 2025.
Macro risks, long-dated bond yields
On the macro-economic front, Steinthal acknowledged that L1 International sees signs of weakness in the US economy and said much of the market’s focus is now on how a rate cutting cycle will support a softening jobs market without sparking a renewed bout of inflation.
“The risk is that if we do get rate cuts – and it’s highly likely that we get at least one, maybe two – does that further juice the economy and cause inflation to further increase?” he said.
L1 International and the market are watching longer-dated bond yields in the US and Europe for signs that investors are demanding more compensation for the risk of holding longer-dated debt on maturities of 10 years or more.
“Long term [interest] rates really haven’t moved much at all during 2025, they’ve actually traded in a very narrow range, but if they start to increase, that will have an impact on equity values and the economy,” Steinthal warned. “We’ve seen long-term rates increase in certain markets like France, where there’s political instability. If we get more concerns in the US, that would be a negative.”
As of Tuesday afternoon, the yield on US government 10-year bonds was 4.25%, with British 10-year government bonds (gilts) climbing to their highest level since 1998 at 5.64%.
In France 10-year government yields climbed to 3.53% amid political infighting over the nation’s debt pile and budget plans.
Managed Fund
L1 Capital International Fund
Global Shares
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