Mike Lippert, the manager of the Baron Opportunity Fund, has seen impressive returns this year thanks to his investments in artificial intelligence (AI) stocks. The fund has returned 33.6% year-to-date, compared to the S&P 500’s 11.8%. Lippert believes the AI theme will continue to drive returns for the next three to five years and has shared his top picks for companies in the industry that will deliver the biggest returns. These are Microsoft, Nvidia, and Amazon.
Lippert has been investing in AI for a decade and uses both qualitative and quantitative analysis to make his investment decisions. For Microsoft, he believes their partnership with OpenAI will allow them to integrate AI into their widely used products, such as Office 365, to make them more efficient. Microsoft is also incorporating AI into their $20 billion cybersecurity business to help programmers develop code.
Nvidia has a massive lead in the semiconductor industry with its CPU and GPU products and Lippert believes they are well-positioned for accelerated and parallel computing. Amazon, while perceived to be behind OpenAI and Microsoft, has the advantage of access to ecommerce data to make shopping experiences better for customers. Their digital ad business, powered by AI, is also seeing year-over-year growth above 20%.
The Baron Opportunity Fund has differentiated itself by focusing on companies that are developing groundbreaking technology in areas such as electric vehicles, genetics-impacting medicine, cloud computing, and AI. Lippert believes these are generational shifts that will continue to drive returns for years to come.
