GQG Partners' Rajiv Jain Reveals Dumping Nvidia, Alphabet, Amazon Stakes — Calls AI Boom 'Dot-Com All Over Again'

The investment firm's co-founder says cash losses are mounting across the AI sector despite soaring valuations.

Rajiv Jain, the co-founder of the investment firm GQG Partners, known for his patient, long-term investing style, is the latest to discuss a cautionary outlook on artificial intelligence and Big Tech valuations.

In an interview with Barron's, the veteran stockpicker said that earlier this year, his firm sold its shares of Nvidia, Alphabet, and Amazon and pared its stake in Microsoft.

Although admitting he may have been early, Jain said the "all-in on one-way bet on AI," combined with decelerating growth, narrowing free cash flow margins, and increasing competition for many of the sector's heavyweights, was enough for him to move on to more defensive stocks.

He added that too much money is being invested in a technology that is still in its infancy, lacking the network effects and other positive traits that have made other technologies long-term winners.

Jain is known for his successful long-term investments in companies such as Nestle, Visa, and Unilever, focusing on steady growth and solid balance sheets. In recent years, he has leaned toward high-quality firms in emerging markets like India and Brazil.

To him, the AI frenzy and corporate behavior within the sector are giving off dot-com vibes. "This is dot-com all over again, with no sustainable profits."

He called OpenAI's model "flawed because it doesn’t scale well," and that only 3% of the company's users are paying customers.

He argued that AI is comput-intensive and heavy users will end up being low-margin customers: "We think their cash losses are increasing," he said, referring to AI companies.

Jain's comments add to the "AI bubble" rhetoric, sparked by comments from influential business leaders, such as JPMorgan CEO Jamie Dimon and storied investor Warren Buffett.

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