Forget the railroad, buy the seaside: Fund manager urges investors to look to AI’s secondary boom

Laurence Hulse, founder of the Onward Opportunities investment trust, says investors should look beyond expensive AI infrastructure companies and consider businesses using AI to improve their operations. He compares the current AI boom with the Victorian railway era, arguing that companies benefiting from the infrastructure may capture profits without its high costs and thin margins. His view comes as the Nasdaq Composite has fallen 8.1 per cent over the past month, putting pressure on the AI trade.

Onward’s largest holding is RentGuarantor, in which the trust has a 20.4 per cent stake; the company uses AI for back-office work and tenant checks, and its share price has risen 225.2 per cent since January. The trust’s net asset value is up about 75 per cent since its launch in March 2023, and three of its holdings have attracted takeover interest. Hulse also favours active stockpicking in a market shaped by higher interest rates, citing UK flooring company Likewise, whose sales grew 36 per cent year on year after rival Headlam’s collapse.