February 2025

When hype fades, fundamentals endure

Leading artificial intelligence stocks have rallied as the AI boom captivates global sharemarkets. AI has great potential, but history shows emerging technologies are likely to produce many more corporate losers than winners. 

Seduced by hype, investors risk overpaying for AI and other speculative tech companies. Some chase popular AI stocks ever higher – the companies that get all the early attention but ultimately don’t have the bite to match their bark.

PM Capital thinks differently about AI. We scoured the world for companies that have the potential to gain from AI’s rapid implementation, without the extreme valuations and risk. 

This led us to Siemens AG, a leading multinational tech conglomerate. As the world’s largest provider of hardware and software for factories, we believe Siemens is well positioned as more companies worldwide invest in industrial automation and digitisation that incorporates latest AI technology.

Siemens is also benefiting as companies return home more of their global manufacturing operations to reduce supply-chain risk – a trend known as ‘onshoring’. This means new investment in AI-enabled factories.

In healthcare, Siemens Healthineers provides further AI exposure through its global leadership in medical imaging. AI is revolutionising medical imaging through AI-powered tools that rapidly identify medical conditions.

We also like the outlook for Siemens’ smart infrastructure business as large buildings and infrastructure assets seek to become more energy efficient through AI and other technologies. 

Siemens shares have almost doubled since our initial investment in 2019². The German-based company remains a key holding in PM Capital’s Global Companies Fund because industrial digitisation, healthcare technologies and smart infrastructure potentially have years of growth ahead due to AI.

Our investment in Siemens shows why it pays to avoid the ‘poodles’ with new technologies and search for long-term winners. They’re harder to find, but have the fundamentals to justify their valuation when AI hype inevitably fades. 

To learn more about PM Capital’s investment approach, or access our latest market and company insights, visit www.pmcapital.com.au/insights.

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Sources

¹Siemens is the majority owner of Siemens Heathineers AG, a separately listed company.

²PM Capital’s initial position in Siemens was €90-100. Siemens AG (SIE) traded at €193 on 13 January 2025

Disclaimer

This information has been prepared by PM Capital Limited (ABN 69 083 644 731, AFSL No. 230222) as responsible entity and issuer of the PM Capital Global Companies Fund (ARSN 092 434 618) and PM Capital Australian Companies Fund (ARSN 092 434 467) (together the ‘Funds’). It is general information only and is not intended to provide you with financial advice, and has been prepared without taking into account your objectives, financial situation or needs. You should consider the Product Disclosure Statement (‘PDS’) and the Target Market Determination of the Fund which are available at www.pmcapital.com.au/steps-investing.

Past performance is not a reliable indicator of future performance. All investments contain risk and may lose value, please refer to the PDS for more information. 

For fund investor use only. The views expressed herein are part of a wider fund investment strategy and should not be considered in isolation.