20th July, 2026
The Empty Side of the Field
Watching Messi score his first World Cup hat-trick recently, I found myself thinking back to weekends spent watching my kids play soccer.
At that age, the game is wonderfully simple. Wherever the ball goes, every kid follows. Half the field sits empty. Coaches shout, parents laugh. Everyone’s watching the ball. Nobody pays attention to the empty space.
Today’s stock market isn’t so different. Attention is finite. Wherever it flows, something else gets left behind. Every crowded trade creates a neglected one — two sides of the same field.
Over the past year, investors have been captivated by artificial intelligence, and for good reason. We think AI is one of the most important technological developments of our lifetime, and the companies building the infrastructure behind it have created real value. In many cases, the attention is deserved.
Earlier this year, when geopolitical tensions in the Middle East triggered a sharp correction in semiconductor stocks, we saw opportunity rather than risk. We expressed our view to investors at an event in Brisbane: the long-term demand drivers hadn’t changed just because markets had gotten nervous. So, we added to several positions, a decision that is so far looking positive. If anything, we could have leaned in harder.
Our conviction in AI hasn’t changed. Where we’re finding the next opportunity has.
Attention Has Become Exceptionally Concentrated
Investor Rob Arnott put it well: “When bubbles start in one place, there’s an anti-bubble somewhere else.”
Whether today’s AI trade becomes a bubble isn’t really the point. When everyone runs toward one opportunity, something else gets left behind — and that’s where we’re increasingly looking.
The numbers make the concentration hard to ignore. Semiconductors alone accounted for nearly 55% of global equity market returns this year. Add technology hardware and that climbs past 80%. Include industrial companies benefiting from AI infrastructure spend, and roughly 96% of total market gains came from just three industry groups1.
Thousands of listed companies compete for capital every day. Almost all of the market’s gains came from a narrow slice of it.
What happened elsewhere is just as telling. Software, consumer discretionary and healthcare all detracted from market2.
The market hasn’t simply turned enthusiastic about technology —based on recent outcomes, the market has been driven by one part of technology: the companies supplying the picks, shovels and infrastructure powering AI.
Looking for Open Space
None of this means the AI story is over. We still own businesses benefiting directly from AI infrastructure spending, and we remain optimistic about their long-term prospects.
But investing isn’t about identifying yesterday’s winners. It’s about identifying tomorrow’s.
As capital keeps crowding into the same handful of industries, we’re finding more to like elsewhere — businesses with large addressable markets, disruptive models, and founders still running the show. Regardless of what happens with AI, we believe these businesses can keep compounding value for years.
They rarely make headlines. They’re not discussed endlessly on financial television, and they’re rarely at the centre of the conversation. In our view, the most attractive investments rarely begin with consensus. They begin with neglect.
The crowd is still chasing the ball. We’re looking at the space they’ve left behind.
1 & 2. MSCI ACWI All Cap Index calendar year to 30 June 2026 contributions to return.
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Contributors:
Munish Malhotra
