Key Takeaways
- • Munro Partners, which runs $5.2 billion in assets for CI Global Asset Management, remains bullish on Nvidia, which the firm has owned since 2018, according to co-founder Nick Griffin.
- • Griffin argues AI is a multi-decade structural trend, saying the industry is three years into AI adoption and expects it to continue for about 20 years, with demand exceeding supply for compute.
- • Griffin expects Nvidia to grow earnings by roughly 70% next year, viewing the company as "like the Apple of this opportunity" and about five years into its growth journey.
- • Munro sees revenue flowing to data centre build-out enablers, including semiconductor, power, heating and cooling, and construction companies, while private credit firms KKR, Blackstone and Apollo are helping finance the build-out.
- • Munro bought SpaceX for the CI Munro Alternative Global Growth Fund at its IPO and sold it above US$200 a share after it hit the firm's target.
Summary
Nick Griffin, co-founder of Munro Partners, explained in an interview with The Globe and Mail why his firm remains bullish on Nvidia and artificial intelligence. Munro Partners, founded in 2016, runs $5.2 billion in assets for CI Global Asset Management, including the CI Munro Global Growth Equity Fund, which has outpaced the MSCI All Country World Total Return Index in Canadian dollars since 2020. Griffin said the firm seeks to identify big structural trends early, citing examples such as Visa and Mastercard benefiting from the shift to credit cards, Apple from smartphones, Amazon from online retail, Nvidia from high-performance computing and Eli Lilly from GLP-1 drugs. He described the process as a game of few winners and said the firm uses a stop-loss review process to test whether its investment case was mistaken.
On AI, Griffin said usage is growing rapidly and the technology is compute-intensive, with demand outpacing supply, so he expects the data centre build-out to continue for a long time. He said revenue is flowing to companies enabling that build-out, including semiconductor, power, heating and cooling, and construction firms, which he described as the "shovels of the AI boom." He also noted cloud service providers are now earning good returns and that KKR, Blackstone and Apollo Global Management are helping finance the build-out.
On Nvidia, Munro has held the stock since 2018. Griffin said he has faith in chief executive Jensen Huang's ability to anticipate industry direction and that the market struggles to believe Nvidia's guidance of at least 70% revenue growth in its next fiscal year, whereas Munro thinks earnings can grow about 70% next year as well. He said Nvidia's earnings growth will continue as long as the data centre build-out does.
Griffin also discussed other themes. Munro invests in jet engine makers, including Howmet Aerospace, GE Aerospace and Rolls-Royce Holdings, given constrained aircraft supply and strong aftermarket economics. On SpaceX, Munro bought shares at its IPO through the CI Munro Alternative Global Growth Fund and sold them above US$200 a share when the target was reached. Griffin said he expects the stock to be flat for a year or two, while noting SpaceX's satellite and potential AI data centre businesses, its Starship reusability prospects and its Grok large language models.
On AI, Griffin said usage is growing rapidly and the technology is compute-intensive, with demand outpacing supply, so he expects the data centre build-out to continue for a long time. He said revenue is flowing to companies enabling that build-out, including semiconductor, power, heating and cooling, and construction firms, which he described as the "shovels of the AI boom." He also noted cloud service providers are now earning good returns and that KKR, Blackstone and Apollo Global Management are helping finance the build-out.
On Nvidia, Munro has held the stock since 2018. Griffin said he has faith in chief executive Jensen Huang's ability to anticipate industry direction and that the market struggles to believe Nvidia's guidance of at least 70% revenue growth in its next fiscal year, whereas Munro thinks earnings can grow about 70% next year as well. He said Nvidia's earnings growth will continue as long as the data centre build-out does.
Griffin also discussed other themes. Munro invests in jet engine makers, including Howmet Aerospace, GE Aerospace and Rolls-Royce Holdings, given constrained aircraft supply and strong aftermarket economics. On SpaceX, Munro bought shares at its IPO through the CI Munro Alternative Global Growth Fund and sold them above US$200 a share when the target was reached. Griffin said he expects the stock to be flat for a year or two, while noting SpaceX's satellite and potential AI data centre businesses, its Starship reusability prospects and its Grok large language models.
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