This top London fund manager says AI isn’t in a bubble – here’s why he’s actually right
As debates rage over whether the artificial intelligence boom is inflating a dangerous bubble reminiscent of the dot-com era, one prominent London-based fund manager is pushing back.
Mike Fox, the longtime manager of the Royal London Sustainable World Trust at Royal London Asset Management, has spent more than two decades overseeing sustainable investment strategies.
His fund’s top holdings include some of the biggest beneficiaries of the AI surge: Taiwan Semiconductor Manufacturing Co. (TSMC), Microsoft, Nvidia, and Alphabet.
In an interview with Interactive Investor published Wednesday (18 March), Fox argued that the unprecedented spending on AI compute power is not reckless hype but a rational response to transformative potential.
“The fact that we own these in our top 10 suggests that we are more comfortable with the amount of capex that’s being spent at the moment. It is unprecedented. It is huge,” Fox said.
“However, if AI and its potential is true, then what we will see is huge demand for compute, as effectively labour gets replaced by computation. And if that happens, we think the scope for growth in compute power, and therefore the need for capex, is entirely justified.”
Fox, who began his career in the late 1990s and witnessed the dot-com boom and bust firsthand, drew a sharp contrast between today’s AI leaders and the profitless darlings of that earlier era.
“Yeah, I think there’s a massive difference,” he said. “There were completely profitless businesses in the late 90s, and the valuations were ludicrous. Today, you look at the rating that something like Nvidia trades (on), it’s on a similar multiple to BAE Systems in the UK. There’s no obvious high level of kind of valuation that there was before.”
The fund maintains around 60% exposure to the US market, with smaller allocations to emerging markets and Europe, reflecting what Fox sees as superior governance and disclosure standards in American companies. Clean energy remains a core theme, especially as AI-driven data centers drive surging power demand.
“Everything is energy transformed – you can’t do anything without energy,” Fox noted, underscoring why sustainable energy plays are integral to positioning for AI’s long-term growth.
While many investors fret over AI capex potentially overshooting reality, with some surveys showing fund managers flagging it as a top tail risk, Fox’s stance aligns with a growing cohort who view the current dynamics as a productivity boom rather than speculative mania.
Profitable giants like Nvidia are delivering real earnings growth tied to tangible demand for chips and cloud infrastructure.
The fundamentals of profitability, justified demand, and reasonable valuations suggest this boom has legs, and sustainable investors like him are betting accordingly. Whether the sceptics are proven right remains an open question, but for now, the data centres keep humming.
