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.
This covers fund managers Tom Slater and Lawrence Burns answering investor questions, focusing on growth beyond AI: SpaceX, healthcare, luxury goods, and quantum computing. They're bullish on SpaceX (over 15% of the fund), arguing risk is permanent capital loss, not volatility, and lower launch costs unlock new businesses. They call NVIDIA and other chipmakers a 'royalty' on AI (they profit regardless of which model wins). Ferrari and Hermès are seen as lasting scarce assets. Moderna's mRNA tech shows promise in cancer treatment.
At a Glance In a Q&A session, Scottish Mortgage fund managers Tom Slater and Lawrence Burns discussed long-term investment opportunities beyond AI. SpaceX remains the largest holding, accounting for over 15% of the portfolio. Its success stems from a sharp reduction in launch costs: before SpaceX, t
Tom Slater (Fund Manager) and Lawrence Burns (Fund Manager) responded to investor questions during the annual digital conference Q&A session, with the core theme being: Beyond AI, SpaceX, healthcare, luxury goods, and quantum computing form diversified growth sources. The most impactful judgment in the entire session came from Tom Slater — "A large position does not equal high risk; risk is permanent capital loss, not volatility" — thereby justifying the rationality of holding over 15% in SpaceX.
Tom Slater believes that SpaceX’s success stems from an investment philosophy of "letting winners fully contribute returns." The fund currently holds a position slightly above 15%, having gradually reduced concentration through multiple selling windows, but it will not sell early for the sake of portfolio balance. "We do not equate large positions with risk; risk is permanent capital loss," meaning volatility is inevitable, and the key is to fully realize returns on winners.
Lawrence Burns adds that SpaceX’s core logic lies in the continuous decline of launch costs:
Valuation assessment: Current profit and revenue multiples are indeed high, but if multiple Starlink-scale businesses can be built, the next decade could generate strong long-term returns for shareholders.
Lawrence Burns divides AI value capture into two layers:
First Layer—Chip Layer (Highest Certainty): Companies such as NVIDIA, TSMC, ASML, and SK Hynix hold supply chain bottlenecks. Regardless of which AI model (Anthropic, Gemini, OpenAI) or application (autonomous driving, robotics, coding agents) prevails, they benefit. "These companies are royalties on AI development," meaning they collect revenue no matter who wins downstream. The consensus among all AI companies is "more chips are needed."
Second Layer—Organization Layer (Source of Differentiation): Founder leadership (e.g., Shopify's Toby Lütke's early focus on AI), a culture of dynamic adaptation, the ability to attract top talent, and proprietary data (e.g., MercadoLibre using transaction data for advertising and credit assessment) are key. AI is not a democratizing tool but an amplifier for outstanding organizations—in regulated industries, competitors' approval decisions take two years, while agile organizations can iterate quickly, creating a sustained advantage.
Tom Slater adds demand-side signals: The token consumption of OpenAI's largest user group is eight times that of medium users, and the gap is widening; coding use cases have already demonstrated clear economic value; and the shift from conversational models to autonomous agent models will only drive token consumption higher.
Lawrence Burns observes a shift in corporate attitudes: 18–24 months ago, companies were "experimenting" with AI; over the past 12 months, they shifted to "believing it will have a material impact"; and more recently, they have begun "restructuring entire organizations around AI models." His personal token usage has grown exponentially (as model capabilities improve faster than usage time increases), and he believes current returns are extremely favorable—"This is the worst AI we will ever have, and it will only get better."
Tom Slater provides data from the capital side: the computing facility built by xAI (a subsidiary of SpaceX), along with two major deals signed with Google and Anthropic, generate annualized revenue approximately 2–3 times the capital invested. "The returns on current hardware investments are outstanding," meaning this explains why capital continues to pour in.
Tom Slater believes healthcare is an area with vast potential for technological application, yet historically one of the slowest industries to adopt new technology. The fund has positioned itself through a few select companies such as Moderna (mRNA technology) and Indivior (AI screening of natural compounds):
Lawrence Burns explains why he holds "slow-growth" companies like Ferrari and Hermès:
Tom Slater explains that the fund holds quantum computing exposure through PsiQuantum. At this stage, "the investment is in the technology, not the business," with the aim of learning about the team and understanding the probability of success. "A traditional computer is a box of accountants; a quantum computer is a box of toddlers learning to walk," meaning it can solve an entirely new class of problems (such as atomic-level simulations and cellular-level modeling). Once successful, the returns could be enormous, but for now, it remains a small position.
Tom Slater shares a key insight from conversations with founders: while the media worries about AI causing job losses, what founders actually fear is a shortage of human labor. "There is no upper limit to economic opportunities and consumer demand; the more tools available, the more people are needed," meaning that as AI improves efficiency, it will generate even more new opportunities. The likely outcome is that large companies will have fewer employees, but more small companies will emerge (because small teams can accomplish more with AI).
Lawrence Burns adds: AI is an "amplifier for well-organized organizations," not a "fair democratizing tool." In regulated industries, agile organizations can outpace competitors by several "AI generations" (due to approval cycles lasting up to two years), making active stock selection more valuable.
| Position | Guest Stance | Key Data |
|---|---|---|
| SpaceX | Bullish (largest holding, >15%) | Launch cost dropped from $18,000–19,000 to $2,700 for Falcon 9, Starship target $100–200; Starlink annualized revenue $17B, growth ~70%, margin ~40% |
| Moderna | Bullish (long-term hold) | Positive clinical results for mRNA technology in melanoma treatment; demand shrinking post-COVID but new indications advancing |
| Indivior | Bullish (AI application) | Using AI to screen natural compounds for medical use |
| NVIDIA | Bullish (AI chip layer "royalty") | Supply chain bottlenecks; all AI models and applications benefit |
| TSMC | Bullish (same as above) | Same as above |
| ASML | Bullish (same as above) | Same as above |
| SK Hynix | Bullish (same as above) | Same as above |
| Shopify | Bullish (founder leadership) | Toby Lütke focused on AI early on |
| MercadoLibre | Bullish (proprietary data) | Using transaction data for advertising and credit assessment |
| Ferrari | Bullish (alternative growth) | Top 10 returns over the past decade; volume growth + pricing power + margin expansion |
| Hermès | Bullish (same as above) | Brand scarcity, expected to endure for a century |
| PsiQuantum | Early observation (small position) | Quantum computing, strong academic background, targeting commercial-grade quantum computers |
| xAI | Bullish (capital return) | Annualized revenue from computing facilities is roughly 2–3 times capital investment |
| Neutral (customer/supplier role) | Signed a large computing facility deal with xAI | |
| Anthropic | Neutral (customer/supplier role) | Signed a large computing facility deal with xAI |
| Meta | Neutral (capital deployer) | Capable of investing in AI infrastructure |
| Amazon | Neutral (capital deployer) | Same as above |
1. Tom Slater: "A large position is not high risk; risk is permanent capital loss, not volatility" — A SpaceX holding exceeding 15% is the result of letting winners fully contribute to returns, not a risk signal.
2. Lawrence Burns: "Chip companies are royalties on AI development" — NVIDIA, TSMC, ASML, and SK Hynix hold supply chain bottlenecks; regardless of which model or application wins, they benefit.
3. Tom Slater: "What founders worry about is not a surplus of humans, but a shortage of humans" — Economic opportunities have no ceiling; as AI improves efficiency, it will spawn even more new opportunities. The likely outcome is fewer employees at large companies but a surge of small ones.
4. Lawrence Burns: "This is the worst AI we will ever have; it will only get better" — Model capabilities continue to improve, current token usage is growing exponentially, and positive returns are seen on both the user and capital sides.
5. Lawrence Burns: "AI is not a democratizing tool; it is an amplifier for excellent organizations" — In regulated industries, agile organizations can outpace competitors by multiple "AI generations," making active stock selection more valuable.
6. Lawrence Burns: "In a world of technological change and material abundance, things with scarcity and physical attributes may hold enduring value" — Ferrari and Hermès are expected to survive for a century, have low correlation with tech themes, and provide diversified growth sources for the portfolio.
7. Tom Slater: "A traditional computer is a box of accountants; a quantum computer is a box of toddlers" — Quantum computing can solve entirely new problems, such as atomic-level simulations and cellular-level modeling. Once successful, the returns are enormous, but it remains a small-position learning phase for now.
8. Lawrence Burns: "SpaceX is essentially a near-monopoly gateway to the rest of the universe" — As launch costs drop from $18,000–19,000 to $100–200, it will unlock multiple Starlink-scale businesses (orbital data centers, defense, microgravity manufacturing).