Mid Wynd International Investment Trust Plc

Is the Market Wrong About AI Losers?

Lazard Asset Management Limited (London)

Alistair Boyle

Alistair Boyle is a Portfolio Manager/Analyst on the Global Quality Growth team. He began working in the investment field in 1996 at Deutsche Bank. Prior to joining Lazard in 2025, Alistair held roles in Global Equities at HSBC and JPMorgan, and co-founded Redburn Partners, the UK¿s leading independent global research firm, where he was a partner for 17 years. Following Redburn¿s merger with Rothschild & Co in 2020, he established Retail Capital Markets at Peel Hunt and later became a private investor and consultant to Smith Market Insight, a macro research firm. Alistair has an MA in Politics from the University of Edinburgh.

20 7448 2002

Alistair.Boyle@lazard.com

Just seven stocks drove nearly 70% of the S&P 500’s return in Q3. Those companies were Apple, Alphabet, NVIDIA, Tesla, Broadcom, Microsoft and Oracle. All are perceived to some degree to be AI winners. Meanwhile, the market has been brutal towards companies it believes to be likely victims of the AI revolution. Could it be wrong?

Market Returns Are Highly Concentrated

Let’s look at one area – what I like to call “knowledge is power” stocks. These are companies with valuable proprietary data that they sell to organisations like accountancy firms and insurance companies and to professionals in sectors such as health and law.

The market believes these businesses are heading downhill fast. Platforms like ChatGPT can scrape the internet for data and give people answers in seconds for little or nothing. Okay, they will be wrong 15% of the time, but 85% right is fine, isn’t it?

Tell that to a lawyer who is examining case law for a trial and doesn’t want to be sued for professional negligence – or to a car insurance company wanting accurate guidance on the risk of a 70-year-old driver with a long no-claims history.

These “knowledge is power” companies all own unique data sets that add value to their clients and that the AI platforms cannot scrape or replicate. They also have trusted tools for accessing and processing that data which are embedded deep within their clients’ organisations.

Proprietary Data Remains Strategically Valuable

Let’s look at just two, starting with RELX. The UK-listed multinational provides critical technical information and analytics to professionals in fields such as risk management, law and healthcare. Its insights enable better decision-making and improved productivity.

RELX has billing ties with nearly all major US law firms and a global presence in over 180 countries¹. This deep integration makes upselling new product enhancements easier while making it harder for rivals trying to enter the market.

RELX’s legal services, such as LexisNexis, use AI and machine learning to help lawyers automate workflows, streamline case law searches and simplify complex queries. Access to the LexisNexis platform is priced by our calculations at approximately $150 per lawyer a month². By comparison, early low-quality AI tools were charging $300 per month³ without the content set that RELX owns. It underlines that RELX customers are willing to spend more than they do today to access productivity tools, leaving RELX in a great position to upsell.

In the past year, while the MSCI ACWI is up just over 19%⁴, RELX is down more than 5%, despite already seeing an acceleration in earnings from AI and analytics tools⁵.

Wolters Kluwer is similar in many ways, but its share price is down nearly a third in a year⁶. The Dutch-based multinational provides often critical information for accountants, doctors, lawyers and other professionals. It has been embedding AI into its solutions for a decade and is continuing to invest. Wolters, while having been a little slower on product roll-out than RELX, is launching several exciting new AI products that we think will support growth, and in some places enhance organic growth from here.

Our analysts have conducted many meetings with not just the management teams but the boards and, importantly, the technology teams at Wolters and RELX, to get a sense of how fast they are moving to integrate technologies. We see these as sticky businesses with high moats of content, embedded customer relationships, trusted reputation, and businesses that have been great at leveraging technology to get more insight out of the data sets they own. Now they have AI to do even more of this. All of which means we think it will take a lot to disrupt them.

There are rivals to these data companies which talk up their power to disrupt through the application of AI, but they cannot match what these two businesses have. We do not see them bridging the moats anytime soon.

Valuation Gaps Suggest Opportunity

As investors, we look for what we call “quality companies”. These generate high returns on capital – typically much higher than those of the market on average. These businesses can use that capital to invest in defending and deepening their competitive advantages. The “knowledge is power” companies have incredible data resources built over years, distribution advantage through their existing relationships and reliability. Now they have AI.

They have not been standing still. They have been investing in the new technology themselves. In our meetings with management teams, they are very clear – AI can accelerate growth, helping curate data more effectively for clients. We believe the investments they are making will generate extra revenue to justify the spend. We cannot say that with anything like the same confidence for some of the companies the market is pricing as AI winners.

We think the market has got it wrong about many AI losers, overestimating the threat posed by AI wannabes and creating an opportunity for investors like us.

The big question is: “When will the market reprice?” We don’t know. But markets can reprice suddenly. Look at ThermoFisher. It has had a tough first half of the year, but an upgrade to its growth strategy and a change of mood among investors have seen its shares bounce over 22% in just a month⁷.

At a time when the wider market is trading at pretty much a decade-long high in terms of price/earnings valuations, 12%⁸ of our portfolio of “quality” stocks has never traded so cheaply. 80% of the portfolio is at just over half its average P/E.

To us this highlights the opportunities now arising from the market’s obsession with AI winners. The AI sun has been shining brightly, on a small section of the market. We think it’s time to look at those companies left out in the shade.

Alistair Boyle is a portfolio manager at the Mid Wynd International Investment Trust plc.

First published in: IFA Magazine on 10 October 2025

Notes
1 Source: RELX, as at 23 July 2025

2 Source: Lazard research

3 Source: Lazard research

4 Source: Bloomberg

5 To Oct 21st 2025

6 Down 30.5% to Oct 28th 2025

7 28 Oct 2025

8 30 Sept 2025

Further Information

Company Secretary

Juniper Partners Limited 
Tel: 0131 378 0500 
Email: cosec@junipartners.com
Post: Juniper Partners Limited, 28 Walker Street, Edinburgh EH3 7HR

Registrars

Computershare 
Tel: 0370 707 1186 
Web: https://www.computershare.com/uk/

Investment Manager

Tel: 0800 374 810 
Email: mwy@lazard.com

Press Enquiries

Tel: 0115 907 8410 
Email: martin.stott@bulletin.co.uk

Directors

David Kidd (Chair) 

Hamish Baillie 

Diana Dyer Bartlett 

Anulika Malomo 

Alan Scott

Complaints*

Complaints are to be sent to
the Company Secretary.

Email: cosec@junipartners.com

Tel: +44 (0) 131 378 0500

Post: Juniper Partners Limited, 28 Walker Street, Edinburgh EH3 7HR.

*As a shareholder of the Company, you are not able to refer complaints about the management of the Company to the Financial Ombudsman Service (FOS). We welcome feedback and ask that any comments be passed on to the Company Secretary.

Risks

The value of your investment may rise or fall, and your capital is at risk.

Any investment in an investment trust involves risk. You should be aware of the following risks when considering investing:

Past performance
Past performance is not a reliable indicator of future returns and does not guarantee future results.

The value of your investment
The value of shares, and any income from them, can fall as well as rise and investors may not get back the amount invested.

Market volatility
The value of the Company and any income from it can fall or rise because of movements in stock markets, currencies and interest rates, each of which can move irrationally and be affected unpredictably by diverse factors, including political and economic events.

Emerging and Developing Markets
Emerging and developing markets can face significant political, economic or structural challenges. The portfolio may experience delays in buying, selling and claiming ownership of investments and there is an increased risk that the portfolio may not get back the money invested.

Concentration
In view of the concentrated nature of the portfolio, the level of risk is expected to be higher than for broader based portfolios and the value may be more volatile.

Smaller companies
Securities of smaller companies may be less liquid, and exhibit more volatile returns, than the securities of larger companies.

Currency
The Company’s assets may be priced in currencies other than the portfolio base currency. Changes in currency exchange rates can therefore affect the Company’s value.

Charges from capital
Where charges are taken wholly or partly out of the Company’s capital, distributable income may be increased at the expense of capital, which may constrain or erode capital growth.

Leverage
The Company may operate with a significant amount of leverage. Leverage occurs when the economic exposure created by the use of derivatives is greater than the amount invested. Leverage may result in large fluctuations in the Company’s value and therefore entails a high degree of risk including the risk that losses may be substantial.

Important Information

Shares in the Company are a form of equity investment.

This information has been issued and approved by Lazard Asset Management Limited (“Lazard”), 20 Manchester Square, London, W1U 3PZ. Lazard is investment manager to Mid Wynd International Investment Trust plc (the “Company”) and is authorised and regulated by the Financial Conduct Authority.

This is a marketing communication and does not in any way constitute investment advice or an offer or an invitation to deal in securities.

Further information about the Company, including a Key Information Document, is available on the Company’s website www.midwynd.com.

Before investing, potential investors should also read the Company’s Investor Disclosure Document, in particular the ‘Risk Factors’, the Company’s Key Information Document (“KID”) and its most recent Annual or Interim Report.

Forecasted or estimated results do not represent a promise or guarantee of future results and are subject to change. Past performance is not a reliable indicator of future results.

The value of investments and the income from them can fall as well as rise and you may not get back the amount you invested.

Investments in securities, derivatives and commodities involve risk, will fluctuate in price, and may result in losses.

Certain assets held in Lazard’s investment portfolios may trade in less liquid or efficient markets, which can affect investment performance.

There can be no assurance that the Company’s objectives or performance target will be achieved. Any investment is subject to fees, taxation and charges within the Company and the investor will receive less than the gross yield.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any other securities or financial products. This report has not been approved, reviewed, or produced by MSCI.

Further Information

Tax Rates
The tax treatment of each investor may vary, and you should seek professional tax advice. The contents of these materials are confidential and should not be disclosed other than to the person or persons for whom it is intended.

Regulation
The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority.

Information Subject to Change
The information and opinions expressed here are as of the published date and are subject to change without notice.

Non-Mainstream Pooled Investment (NMPI) status
The Company currently conducts its affairs so that its shares in issue can be recommended by financial advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s (“FCA’s”) rules regarding non-mainstream investment products and intends to do so for the foreseeable future.

Shares in Mid Wynd International Investment Trust plc are excluded from the restrictions in the FCA rules which apply to non-mainstream pooled investment products, because they are shares in an investment trust.

The shares in the Company may also be suitable for institutional investors who seek a combination of capital and income growth.

Private investors should consult an independent financial adviser specialising in the acquisition of shares and other securities before acquiring shares. Investors should be capable of evaluating the risks and merits of such an investment and should have sufficient resources to bear any loss that may result.