The dominant investment strategy behind the AI trade is undergoing a shift, according to a report by Business Insider citing Atreides Management chief investment officer Gavin Baker, as markets move beyond short-term supply constraints toward longer-term value creation
For much of the AI-driven rally, investors focused on identifying bottlenecks across the semiconductor and infrastructure supply chain. As hyperscalers accelerated spending on AI buildouts, companies supplying scarce components saw significant share price gains, particularly where supply shortages allowed for pricing power.
Speaking on the TBPN tech-focused podcast, Baker said that phase of the trade is now evolving as investors reassess where durable returns will ultimately be generated.
He suggested that the market’s focus is gradually shifting away from near-term scarcity dynamics and toward identifying companies with sustainable competitive advantages once supply chain constraints normalise.
Baker pointed to Japan’s Ajinomoto as an example of how bottleneck-driven assumptions can shift. The company, which produces a key input used in advanced semiconductor manufacturing, has attracted investor attention in recent months amid expectations of pricing power. However, Baker noted that the firm has signalled limited willingness to raise prices, challenging some of those assumptions.
He added that this dynamic highlights the risk of overextending bottleneck-focused narratives, particularly where pricing power proves more limited than initially expected.
The comments reflect a broader debate among investors over how the AI investment cycle will evolve as infrastructure buildouts mature and competition increases across the supply chain.
