By Mark McSherry
(UPDATE 5) — Baillie Gifford’s flagship investment trust, the £15.5 billion Scottish Mortgage fund, has outlined third-quarter changes to its portfolio of companies to recognise the “inevitability” that artificial intelligence (AI) will be “a new foundation of the global economy.”
Scottish Mortgage investment specialist Hamish Maxwell said in an update to investors: “This is not about chasing AI market hype. It’s about recognising inevitability. Picking the right companies matters far more than trying to time the market.”
Maxwell said Scottish Mortgage owns shares of TSMC and NVIDIA “which provide the processing power that makes AI possible.” He said Databricks and Snowflake “are storing, managing, and analysing the data underpinning thousands of modern businesses.”
He said new investment Anthropic “represents an intelligence layer by developing core AI models.”
Maxwell said there are AI applications “in the real world” from Aurora and Horizon Robotics in autonomous systems, to Tempus and Figma, applying AI to medicine and design.
“Our task is to identify the winners early and hold them through the volatility that always accompanies true leadership,” said Maxwell.
Edinburgh-based Baillie Gifford has about £212 billion under management. Shares of FTSE 100 member Scottish Mortgage have risen 30% over the past year to around £11.40 to give the listed fund a stock market value of around £12.7 billion.
Maxwell said Scottish Mortgage is not “just” about AI – it is about “identifying the structural shifts that redefine how industries operate, from energy to healthcare to finance.”
He said transport is undergoing “one of the most profound revolutions” in the world.
“It includes electrification, where our holdings CATL and Redwood Materials are driving advances in battery chemistry and recycling,” said Maxwell.
“Then comes autonomous driving, led by BYD, Tesla, and Horizon Robotics, bringing automation from concept to reality.
“And novel modes of transport – firms like Nuro, Aurora, Joby, and Zipline – are pioneering entirely new ways to move goods and people.
“Together, they show that technological disruption is not limited to digital platforms – it’s also reshaping the physical world …
“Recent trading reflects how the global economy is evolving. Our investments span geographies, and we have found new exceptional growth potential at attractive valuations in China. Importantly, many of these additions are truly global in their outlook.
“We’ve bought new tools for the digital world, including Figma, now the go-to platform for designing websites, apps, and digital services and AppLovin which helps mobile developers to reach audiences through data-driven advertising.
“At the frontiers of artificial intelligence, we’ve invested in Anthropic, one of the very few global teams capable of training the next-generation AI models. It’s still early-stage, but the company stands out for its technical strength, commitment to safety, and growing commercial potential, including coding.
“We’re also backing platforms that understand the next generation of internet users – such as private company Xiaohongshu, or Little Red Book, a fast-growing lifestyle and e-commerce community for young, urban Chinese consumers.
“In clean mobility and energy, we’ve added CATL, the world’s leading battery maker, and increased BYD, a global champion in electric vehicles.
“These investments were funded by selling Wayfair, an online marketplace for home goods, and Kinnevik, a digital-focused investment company both based on relative conviction.
“And by trimming the likes of Amazon, gaming company Roblox, and Cloudflare where conviction is maintained, but some capital was recycled into the new generation of transformational growth.
“In the cases of NVIDIA and Tesla, we were particularly mindful of their high valuations when we trimmed them as well.
“Over the long term, Scottish Mortgage has delivered very strong returns, driven by outliers such as NVIDIA, Spotify and SpaceX, the rocket and satellite pioneer. This is a reflection of the power of innovation-led investing.
“While results over the past 3 to 5 years still reflect the sharp rise in interest rates and associated compression of growth company valuations, more recent performance shows clear signs of renewed growth.
“Strong returns have come from businesses building real capabilities across sectors and geographies. Strengthened NVIDIA, ASML and TSMC reflects an accelerating computing demand.
“While Cloudflare, Snowflake, Meta, Roblox, Spotify and MercadoLibre had benefited from renewed confidence in their scalability and profitability of innovation across the global market …”