Scottish Mortgage is Baillie Gifford's flagship investment trust (founded 1909, LSE ticker SMT), known for its maximalist growth style — long-term stakes in Tesla, Amazon and ASML plus bold allocations to private companies like SpaceX and ByteDance. It is the UK retail investor's flagship vehicle for global disruptive growth.
Tom Slater runs Scottish Mortgage Investment Trust, a stock fund that bets heavily on a few high-growth companies. His main point: politics and tariffs are background noise; the real story is the global build-out of artificial-intelligence infrastructure. He splits his holdings into builders (chipmakers, rocket companies, big tech) and those hurt by trade disruption (e-commerce, payments). He says the fund deliberately concentrates because most stock-market returns come from a tiny number of winners. This is worth reading if you want to understand why such funds are volatile—and why concentrated bets can lose big when wrong.
Scottish Mortgage's annual review centers on the tension between the unraveling of the old order and the build-out of new AI infrastructure. The report argues that while the US's withdrawal from international agreements, tariffs, and the Strait of Hormuz conflict have impacted certain holdings, the
Tom Slater is the investment manager of Scottish Mortgage Investment Trust, which runs a global equity portfolio known for long-term, concentrated holdings in high-growth companies. The throughline of this issue: reviewing the year through the framework of "the old order's collapse vs. the new order's construction" — geopolitical and trade shocks directly damaged some positions, but the accelerating build-out of global AI infrastructure is the true lens for understanding the portfolio. The weightiest judgment of the entire episode: "When we look back at this period, the most important thing is not the fracture of the old order but the construction of the new: AI has gone from an exciting technology to a global infrastructure build-out on a historic scale." — Tom Slater
Tom Slater argues that, looking back on this year, the most defining event will not be geopolitical and trade shocks, but the construction of global AI infrastructure. He lists the manifestations of the old order's collapse: from the first day the new administration took office, the US systematically withdrew from the international system it had helped create, imposed sweeping tariffs on nearly all trading partners, experienced the longest government shutdown in US history, and struck Iran, which led to the closure of the Strait of Hormuz and disrupted one-fifth of global oil trade — "These are serious developments, and a few positions paid the price directly." But he insists that what will truly be remembered by history is not the fracture: once tariff regimes are renegotiated and Hormuz returns to traffic, the rewiring of the global economy around AI will still be accelerating.
> "the rewiring of the global economy around AI will still be accelerating"
> i.e., "the rewiring of the global economy around AI will still be accelerating."
The data chain supporting this judgment: capital expenditures at the major cloud platforms have more than tripled since 2023; China's DeepSeek proved that advanced AI is not an American exclusive, further accelerating the race. From this he reasons: companies on the infrastructure layer of the AI transition can keep compounding through turmoil, while companies exposed to trade disruption or weak Chinese demand are an entirely different story, and the gap between the two groups is widening — "This is the lens through which to understand this portfolio."
Slater explicitly divides the holdings into two camps: the builders on the AI infrastructure layer are the heavily weighted direction, and the trade-exposed bear the costs. The largest contributor to returns is SpaceX, for three reasons. First, SpaceX is no longer a rocket company but a dual monopoly in launch and global connectivity — Starlink generates the high-margin recurring revenue that even the best software companies would envy, and its assets are in orbit, extremely difficult to replicate. Second, its capabilities intersect with the most fundamental constraint of the AI era — energy: "If Starship achieves full reusability, the economics of deploying AI infrastructure in orbit become extremely attractive" — this is the core rationale for the heavy position. (Note: the original text here states that "SpaceX is now a listed company," which is inconsistent with the fact that SpaceX has still not gone public and appears to be an error in the original; the immediately following reference to holding "several of the world's most valuable private companies" likewise contradicts that statement — readers should be aware.)
> "SpaceX is no longer a rocket company. It's a dual monopoly in launch and global connectivity"
> i.e., "SpaceX is no longer a rocket company. It's a dual monopoly in launch and global connectivity."
On the semiconductor side, TSMC, ASML, and NVIDIA continue to benefit from "hard-to-satisfy demand"; Meta, Amazon, and Shopify have embedded AI into their operations, and the effects are already measurable. But while these capabilities compress costs, they are also compressing the valuations of traditional software companies — the fund is "investing in this shift rather than avoiding it." In the other camp, hit by trade shocks: Chinese retailer PDD's Temu, payments firm Adyen, and the luxury business all felt the impact of the fracture in the trade architecture; the fund exited Wayfair and increased its position in Hermès. China's challenge is not tariffs but a brutal domestic price war — Meituan swung from profit to loss as competitors fought for share in an economy that was barely growing. Slater considers this painful, but the survivors will develop capabilities that are extremely difficult to match, and "price pressure appears to have eased."
Slater also stresses that the portfolio's breadth goes beyond what appears on the surface: MercadoLibre, Stripe, Nu, and Revolut are building digital financial infrastructure; Zipline has moved from pilots to commercial-scale drone delivery; vaccine company Moderna is recovering after a difficult year.
Slater concludes with a market law: the vast majority of wealth creation in the stock market comes from an extremely small number of companies, and portfolio construction must be built around this reality. He states plainly: "If you don't hold those outliers, or you sell them too early, you will almost certainly underperform." The volatility that comes with concentration is real, and he does not avoid it; but the alternative — a portfolio constructed to minimize short-term discomfort — means holding less of what you believe in and more of what you don't. His conclusion: the world is changing faster than it has over the past few decades, and he would rather invest in the companies driving change than hide from it. (Readers should note that this is a self-justifying argument from the position-holder's side: the author uses the law of wealth concentration to argue for the rationality of a highly concentrated portfolio, but does not discuss the downside risk of concentrated holdings when judgment fails.)
| Position | Guest's Stance | Key Data |
|---|---|---|
| SpaceX | Bullish (largest return contributor; core holding) | Dual monopoly in launch + Starlink; orbital AI infrastructure economics become attractive once Starship is fully reusable |
| TSMC | Bullish | Benefits from "hard-to-satisfy demand" |
| ASML | Bullish | Same as above |
| NVIDIA | Bullish | Same as above |
| Meta | Bullish | AI embedded in operations; effects already measurable |
| Amazon | Bullish | Same as above |
| Shopify | Bullish | Same as above |
| PDD (Temu) | Risk warning | Hit by the fracture of the trade architecture |
| Adyen | Risk warning | Hit by the fracture of the trade architecture |
| Luxury business (brand not named) | Risk warning | Hit by the fracture of the trade architecture |
| Wayfair | Exited | — |
| Hermès | Increased position | — |
| Meituan | Risk warning | Swung from profit to loss amid price war; price pressure has eased |
| MercadoLibre | Bullish | Digital financial infrastructure |
| Stripe | Bullish | Digital financial infrastructure |
| Nu | Bullish | Digital financial infrastructure |
| Revolut | Bullish | Digital financial infrastructure |
| Zipline | Bullish | From pilots to commercial-scale drone delivery |
| Moderna | Neutral to positive | Recovering after a difficult year |
1. "If you don't hold those outliers, or you sell them too early, you will almost certainly underperform." — Tom Slater (wealth creation in the stock market is highly concentrated in a small number of companies; a portfolio must bet on winners and hold them for the long term)
2. "SpaceX is no longer a rocket company, but a dual monopoly in launch and global connectivity." — Tom Slater (a business-model leap from launch service provider to orbital assets plus recurring revenue, intersecting with the energy constraint of the AI era)