‘Nvidia is the Hermès’ of the chip industry, says Baillie Gifford, while doubling down on TSMC and ASML
For Jensen Huang, the CEO of Nvidia, and his management team, “it’s about winning in the trenches,” according to Mark Urquhart, a partner at investment management firm Baillie Gifford. Urquhart, who has tracked the chip market for nearly 30 years, leads the firm’s Long Term Global Growth team, which typically holds companies for exceptionally long periods, averaging 8 to 10 years. He spoke to CNBC’s “Squawk Box Asia” about his roster of high-conviction holdings, which span Nvidia, TSMC, and luxury brands such as Moncler. Staying with Nvidia Nvidia remains one of Baillie Gifford’s highest-conviction holdings, despite the recent tech selloff. The firm has owned the stock for almost a decade, Urquhart said, long before AI became the world’s dominant investment theme. “We’ve always liked the management team there. Think Jensen [Huang, CEO of Nvidia] is… a really special individual and entrepreneur.” While investors will be closely watching Nvidia’s third-quarter earnings on Wednesday , Urquhart said the company is focused far beyond the next earnings print. “They won’t be thinking about this quarter. They’ll be thinking about 2030 and 2035, because that’s how they’re wired.” “This is a company that has now, in the last three years, doubled revenues every year, which is pretty much unprecedented at the scale they’re at,” he added. “Nvidia is the Hermes of this market, you know, they are, they are the best there will be.” However, when it comes to competition, Urquhart said investors should not underestimate Asia. “Asia is coming for their lunch,” he said, pointing to the “DeepSeek moment” earlier this year, where Chinese model-makers claimed to have developed AI systems on lower-spec chips. While the U.S.-China chip rivalry has sparked uncertainty, he noted that Nvidia’s push to regain access to China will likely end in a middle ground. “I think there will be a compromise.” ASML and TSMC Beyond Nvidia, the investment manager also highlighted some names in the semiconductor supply chain. Urquhart said the firm backs ASML and TSMC because they are the rare “long-term winners” in the memory chip market, which he described as “fast-moving” and “commoditized.” He noted both companies have leadership teams “who think in decades,” which is exactly what Baillie Gifford wants. On TSMC, he argued its position is essentially irreplaceable. “Many, many people have tried to replicate TSMC, but it’s impossible,” citing its decision to bring its engineers from Taiwan to meet its standards when constructing its Arizona chip fabrication plant, or fab. “It’s one of the best companies in the world in terms of its execution, its strategy.” Urquhart also underscored the difficulty in challenging ASML’s position, calling the top of the lithography supply chain “the most scientific part” of semiconductor manufacturing and the hardest to replicate. Luxury and consumer names: Moncler, Moutai, Netflix Baillie Gifford is also leaning into consumer and luxury names like Moutai and Moncler , among others, which he deemed “very hard to replicate.” While he noted that handbags and down jackets from luxury brands are objectively not difficult to manufacture, the brand name remains the main draw for most consumers. “None of these things are that hard to make…. but it’s not a Birkin, it’s not a [Hermès] Kelly, it’s not a Moncler, it is the brand ultimately.” “There is a waiting list for Birkin and Kelly bags for a reason: that they are the very apex of their industry.” Netflix , meanwhile, remains a long-standing holding because the company has repeatedly confounded predictions of its demise. “If you went back through most of our ownership, people have worried about Disney coming for them, HBO coming for them… but actually, Netflix is the guy that’s been the hardest to replicate.” — CNBC’s Martin Soong and Chery Kang contributed to this report.
