Three Stocks That Are Dodging the AI Bullet

Amidst the ongoing chatter about artificial intelligence disrupting industries, Tom Hancock offers a refreshing take. His investment strategy at GMO, a firm known for its Quality Fund that has outperformed 98% of similar funds over the last 15 years, focuses on companies he believes can weather the AI storm.

SAP: The Established Giant

SAP, the German titan known for its enterprise resource planning tools, stands tall on Hancock's list. While AI makes waves, the complexity and risk associated with logistics and supply chains are too significant for most executives to entrust to an AI solution. You've got tariff rates, regulatory hurdles, and plain old trust issues that AI hasn't solved yet. Slapping a model on a GPU rental isn't a convergence thesis.

In Hancock's eyes, the entrenched expertise SAP offers isn't going anywhere. If a company is running logistics wrong, the costs are astronomical. So, ERP systems, companies aren’t switching to something that feels like it was hacked together overnight.

Constellation Software: The Simple Solution

Next up is Constellation Software. This firm thrives on simplicity and that’s its charm. From local governments to healthcare, the demand isn't for complexity but for reliable, straightforward solutions. There's an almost consultant-like relationship that AI, with all its machine learning glory, can't replicate. If the AI can hold a wallet, who writes the risk model?

Constellation Software’s clients appreciate that simplicity and reliability. They don’t want AI-driven analytics. they want something that works.

Jack Henry: Banking on Stability

Finally, Jack Henry’s software for banking payments and processing is another of Hancock's picks. The technical expertise required to replicate their offerings, combined with the high cost of mistakes and regulatory hurdles, keeps them safe from AI's reach. The company’s pricing model, based on transactions rather than seats, adds another layer of security.

Switching isn't just risky, it's expensive. And in banking, where an error can cost millions, banks aren't in a rush to gamble on new AI solutions. Decentralized compute sounds great until you benchmark the latency.

Hancock’s selections suggest that while AI is a force to reckon with, it's not the ultimate disruptor, at least not yet. The intersection is real. Ninety percent of the projects aren't. If you're considering where to put your money, maybe it's time to look at what's not in AI's crosshairs.