FOCUS 2026: Decades of growth, lasting principles - Will Danoff, Nidhi Gupta, Matt Drukker and Michael Hickey
Will Danoff, Nidhi Gupta and Matt Drukker are joined by Michael Hickey to discuss the enduring principles that have guided portfolio performance across changing markets.
Transcript
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<b>Subtitles are AI Generated</b>
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We greatly appreciate it. On behalf of the team in Boston I want to thank
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everybody here for their support.
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We have a big team back in Boston and we always welcome people to come see
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the team. As I think everybody knows, after essentially a
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40-year career of being a PM and an analyst Will is stepping back at
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the end of the year. This is his swan song as far as the
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Canadian market goes. We launched Insights 10 years ago
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this coming January.
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I know Will wants to maybe share some thoughts around knowledge
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and experience he's gained and also, incredibly, a shareholder letter
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you got decades ago.
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I did bring the original letter from 1993,
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Mike. I do want to thank Shannon and Kelly and Heather, the
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Canadian team has just been unbelievable and all of you folks for
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entrusting us with your hard-earned money and your client's money.
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This was a letter I received in 1993.
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This is before the internet and before email and everything but I like it.
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"My wife and I are now participating in your Fidelity Contrafund.
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We thus far have been very pleased with its performance and trust that in the
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future it will only grow and grow.
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If you are like us you stay very busy and at times get bogged down in your
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paperwork and day-to-day routine." They haven't seen my office
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yet but, you know, I mean, Nidhi, Matt and I are working hard.
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We are very busy.
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"We've invested in your Contrafund to help us pay for a college education for
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our son. We've enclosed his picture so that you can
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get a sense that there are real people out here trusting you with their
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hard-earned money." So that's little Alexander.
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"Alexander's only one but in 17 years he'll be looking to me for help for
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college. The Edge family wishes you only the best for the future and thanks for
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your hard work.".
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Luckily, I read the letter and it really touched me.
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We read it every year when we do our kickoff breakfast
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or lunch. I read it to all the new hires.
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That's what it's all about in Boston.
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We've got to execute for the clients.
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It's competitive but being mission driven has
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really helped us, I'd say.
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The joke was that Jason Weiner found the Edge family
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when I celebrated 20 years on Contrafund.
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The kid had done so well in high school he got a scholarship to college.
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They shared that he wanted to go to law school.
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We've we've kept in touch.
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During Covid, which was a difficult time, we were all remote and
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not together, I Zoomed with the Edge family, with the whole team
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for a kickoff. It was really great to bring people back to
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the mission and what we were all about. For the 35th they
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Zoomed in as well. It's just a remarkable family.
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Little Alexander now has a kid so we've got three generations of Edges, Mike.
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Incredible.
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Been working with Nidhi and Matt for many years.
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They've covered the most important companies in the technology
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space, the big Mag-7.
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They're really exceptional talents, know their names and
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are working hard.
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That's what it's all about so really optimistic.
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Talk about the team because it's not just you and
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Nidhi and Matt. Rio's in the audience here, one of our great
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analysts. This is a demonstration of all the support that they have.
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The access that we have is leveraged by the
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team and all the insights that we have.
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That was one of the things when I first took over Contrafund, why
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wouldn't you speak with the analysts and associates who are
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out there visiting customers, visiting companies, going to trade shows,
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going to conferences. They have real insight.
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We were all analysts, that's the thing. I was
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the retail analyst way back when, that's why I know Dollar General so well.
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Rio and Nidhi and I were out in some suburb
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visiting with Dollar General, which I've known literally for 40 years
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almost. Because we're all analysts we know the
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mistakes people make. I remember there were certain fund managers, I would
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come in and say, you know, The Limited is doing really well.
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I don't care about consumer, inflation is going
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up, I'm worried about oil, forget ...
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then there were other fund managers say that's an interesting story, let's call
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them together or tell me more about it.
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I think those fund managers who work closely with the analysts
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actually can perform better.
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This is just a picture of the team at different meetings that we've
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had.
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Will, let me pass it to Nidhi.
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Will was the standard-bearer working with Peter Lynch
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in the '80s. Peter, of course, has been with Fidelity since the late
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'60s. You two are carrying on that legacy.
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Talk about the lessons learned and the culture and the experiences
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you've had with Will and the broader PM and research team.
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I think for Matt and I, you know, working with Will for
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almost 20 years now I think his philosophy
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and process is just so internalized for us.
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I joke that there's all these Will-isms that always stand out in my
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mind every time I'm doing research on a company or talking to an
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analyst. Stocks follow earnings.
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If the stock has doubled you haven't missed it.
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Rio knows all of these, the whole department knows all these.
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When in doubt call the company.
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Keep turning over rocks.
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These are quotes that stand out in our mind because it's how we do our job
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every day and it's because of the mentorship that Will has
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given to us and everyone in the department, and the culture
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and philosophy that he's sort of
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spread throughout the research department.
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Our job is to carry that forward. It's not even
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a change in how we do anything. It's just how we have grown up at Fidelity
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covering stocks, managing sector funds,
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managing diversified funds with Will, with each other.
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It's really a continuation of what we've been doing for 20 years.
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Because we've been working together for so long, almost 20 years
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as Nidhi said, we've invested in a lot of different market environments.
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We lived through the great financial crisis together.
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We invested through the internet, going mobile
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and then, of course, COVID, and now the emergence of
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digital intelligence. It's always been staying close to the technology and
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being flexible to the opportunities. I think what's really helped
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cut out all of the noise is having that consistent framework,
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stocks follow earnings.
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That's the language we speak together, what really matters,
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where are the durable growth themes.
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The great thing about Fidelity is that we can meet
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with a lot of companies. Every day there's
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PMs and analysts meeting with private and public companies throughout
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the world.
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Will says in order to find very good stocks you have to look at a
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lot of stocks. We have that chance at Fidelity.
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I think this boundless curiosity that's
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really inside the organization to discover that next idea
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is really what we're doing every day.
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We're all analysts. We all like going to meetings.
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I would say my performance per ...
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what does Jensen say, watt per dollar
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or whatever. My performance for...
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Performance per watt.
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Yeah, performance for watt. My performance per the amount of
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energy I've expended is probably not that good.
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My mental model is if some company is coming to Boston and
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wants to see Fidelity that we should show up and hear the
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story, even if it's just for a half hour.
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Why have you come all the way to Boston to tell your story?
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Ideally, we're prepared. You can learn something from
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every executive.
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I think a key lesson that we have learned from
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Will just growing up having worked with him is he always
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makes the effort to take one more meeting, talk to one more analyst.
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If you just keep doing that every day over the course of a 30, 40-year
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career it adds up to a lot of insights
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and information that you can ultimately learn from.
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This job is about pattern recognition.
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If you just keep pushing it forward with one more
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data point, one more meeting, one more insight, you
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can make a lot of difference in the portfolio over many years.
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The other point is you show up at a meeting, you've got to ask
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the right question. Daniel Dupont and I were talking backstage earlier.
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I think we've all learned at Fidelity, because we know the
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executives in some cases, but what's the most important question to
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ask? What's on the CEO's mind?
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If you go to a lot of meetings you can sometimes ask P&G, what do you
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think of what Colgate's doing or whatever?
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There's a lot of information in our mosaic by talking
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to a lot of companies.
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I think connecting all the meetings we do together, talking to the suppliers,
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talking to the customers, talking to the competitors, really
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helps us surround investment theme from all the angles
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so we can hear the full story.
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Nidhi, you touched earlier on Will's philosophy and,
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really, the North Star, stock prices follow earnings.
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This is a chart that Will has shown for decades.
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Make this observation of what's
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the yellow line and what are the blue lines doing?
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There's a high correlation between those two.
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This goes back to 1988 and it's
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highly correlated.
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This at a macro level but at a micro level we're doing the same
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thing. We're looking at every company and trying to understand
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what is the growth profile going forward?
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What is the duration of that growth profile?
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What are we willing to pay for that based on sort of the quality of the
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business and the execution of the management team?
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Ultimately, that's how we construct the portfolio, bottoms-up,
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is finding those stocks that have durable growth whether
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it's a technology moat or their industry position, and
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then staying close to the company, understanding what is
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management's North Star, where do they want to take the company
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and ultimately figuring out what we want to pay for it and what the market
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might be willing to pay it.
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You can see here, I mean, 2026
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S&P earnings growth is expected to be 30%, over
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30%, which is just astounding.
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I don't remember the last time we saw that kind of number.
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A lot of it is coming from tech and comm
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services.
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We'll talk about the AI buildout and such but that is driving a lot of
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the earnings growth this year.
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In 2027 EPS is expected to grow 15%.
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That's pretty broad based but I think if you sort of peel the
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onion and look underneath that it's still in large part being driven
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by AI, whether that's the AI supply chain,
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power. Healthcare earnings are expected to grow
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quite nicely in 2027.
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Some of that I think is the diffusion of AI into
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healthcare, as well as consumer.
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There's a lot underneath this but when you roll it all up
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stocks follow earnings and that's what we're doing every day.
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And God bless the capitalist system that public companies
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tend to gain market share, they tend to be well managed and
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by embracing technology they can grow their business.
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It's a massive global market.
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Let's stay on this.
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I'm going to jump a couple of questions up.
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This is just a remarkable slide.
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This shows the earnings of US tech versus the rest of the world in this
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inflection sort of, I don't know if it's the iPhone or after
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the financial crisis in 2010, it's really
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the only trade that you've had to have correct.
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Will, obviously, has done an incredible job of that with a lot of names we'll
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look at in a moment.
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I actually think what's really interesting on this chart is if you look back to
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the 2000 bubble it barely registers.
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It's a blip. I think we all remember that in our investing
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careers and histories as a really big moment but in terms
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of earnings it was kind of a blip relative to everything
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that came after.
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I first started sharing this chart with our board
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and with clients in 2016 or
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'17 when I was covering large-cap internet
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and our tech sector leader.
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The lines looked like they had separated quite significantly then.
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With AI it's just been turbocharged.
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You're right, Mike, I think a lot of that started with the iPhone.
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I think the seeds were planted just before
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the dot-com bubble with the rise of the internet and then
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the launch of the iPhone is what allowed the internet to
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actually diffuse throughout the consumer economy.
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I think we're starting to see something similar today
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where there's this huge AI buildout and
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over the next few years if it finds its way into
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different sectors of the economy, whether that's healthcare,
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manufacturing, consumer, that's when we'll start to
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see this earnings separate
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even further from the rest of the world.
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The yellow line is earnings for every other sector in the world
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that's not US tech. I think we
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could just be at the beginning of this because right now we're just building
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AI, we're not really using it that much.
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Matt, the next chart is also
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remarkable in the
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sense of the CapEx that is being spent.
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We've gone from some capital-light businesses that you see on the left-hand
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side in the box to capital-heavy but the
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CapEx spend is also a remarkable, sort of a triple off
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of 2005 into a projection of 1.4 trillion
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out into 2028.
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When you have some of the most forward looking tech companies in the world
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all spending hundreds of billions of dollars to chase the
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same thing, which is AI compute, it has a big
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impact on the economy. You can see here from maybe
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2025 through 2027 you're
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spending the equivalent of 2 1/2 points of GDP.
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Some of that is being targeted at a set supply
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chain which is much smaller than the scale of that so we've seen a tremendous
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ramp in the technology supply
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chain.
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If you play this out to the end of the chart the
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investment levels versus GDP are reaching maybe
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5 or 6% which is comparable to where we were during the railroad buildout.
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It's really the biggest capital buildout of all time.
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The way we think about it is that you have the
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companies that are the AI beneficiaries of the initial
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construction phase, it's the labour around power and
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construction. Then you have compute providers which is
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the semiconductors, the network and the memory.
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Then you have the companies that are developing the intelligence and selling
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the intelligence. Those are the frontier model companies and the
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hyperscalers.
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I think with our approach we think about it in terms of durability.
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One of the areas where we feel most comfortable about is
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at the hyperscaler level because the capital they're putting in the
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ground is in response to real backlog growth from a very
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diversified customer set.
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Computers can now generate intelligence and there's demand for intelligence
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to come into work floors throughout the economy.
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What we like about AWS and Google and
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their spend, they're getting good returns.
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Revenues are accelerating at very attractive margins.
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That's because both companies for years in the making, have
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developed their own AI infrastructure designs.
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That means the dollars they spend on compute
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they can get more compute per dollar spent or they can get better economics
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for AI workloads.
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That's a durable advantage.
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That's a good point, Matt. What we're hearing, nine months ago
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people weren't talking about Codex and Claude.
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The AI writing code, editing code,
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updating code has become a massive market extremely
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quickly. People were worried is there going to be an
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overbuild but as Matt said, AI is now generating
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revenue. The companies that we talk to every day
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are embracing AI and saying it's generating either
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cost savings or enabling them to move faster.
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Then you look at the other end of the spectrum.
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Because there's been so much demand in such a short
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period of time supply chains have really gotten constrained.
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The memory companies, you've seen prices go up 5 to 7X.
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Micron grew revenues over 300% last
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quarter and it's basically all price.
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I think the memory companies are still going to do well but
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when prices go up that much t stimulates the growth of supply.
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You have to be careful what's durable, where are the unit economics really
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driving a competitive advantage and where
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is it just a supply demand mismatch where that
19:57.262 --> 20:00.732
could be rectified as more supply comes on.
20:00.732 --> 20:04.903
Now the agents are emerging. Muse has come out, Grok
20:04.903 --> 20:09.308
Bot and Instinct. How many people out there have tried a personal
20:09.308 --> 20:11.710
AI agent?
20:11.710 --> 20:16.715
Oh, great. Are you happy with it so far?
20:16.715 --> 20:18.617
Okay, some people are happy.
20:18.617 --> 20:22.654
Good. Well, you now, because I'm thinking back to that long
20:22.654 --> 20:25.691
term US tech earnings chart. Bill Gates saying there's going to be a computer
20:25.691 --> 20:31.730
on every desktop. Usually those sorts of projections
20:31.730 --> 20:35.734
are optimistic or the timing is a little off but we
20:35.734 --> 20:39.805
can imagine a time where everyone's gonna have an AI agent, everyone possibly
20:39.805 --> 20:43.642
could have a personal robot.
20:43.642 --> 20:47.613
Our job is to pick the winners but not lose sight of
20:47.613 --> 20:51.750
the long term and then, as Matt said, be careful about when
20:51.750 --> 20:54.019
expectations get too frothy.
20:54.019 --> 20:57.723
The long term trend, I think, is that tech is gonna continue to become more
20:57.723 --> 21:00.492
important in the market and in our lives.
21:00.492 --> 21:05.063
The last thing I'll point out on this is the 1.2,
21:05.063 --> 21:09.101
1.4 trillion of CapEx is over 50% of
21:09.101 --> 21:11.303
S&P 500 CapEx.
21:11.303 --> 21:15.307
When we think about what are the fundamentals driving
21:15.307 --> 21:19.544
S&Ps earnings this is a big part of it.
21:19.544 --> 21:23.548
To build this out you need power, you need land,
21:23.548 --> 21:27.386
you needed labour, equipment.
21:27.386 --> 21:31.390
This theme is finding its way into every sector of the economy.
21:31.390 --> 21:35.427
We're seeing industrials companies grow earnings high double-digits that
21:35.427 --> 21:40.065
have never grown before, utilities, power
21:40.065 --> 21:44.903
is growing for the first time in 20 years.
21:44.903 --> 21:47.906
We're seeing it across the board.
21:47.906 --> 21:51.877
It's actually creating sort of breadth
21:51.877 --> 21:56.181
of opportunity for us as we look outside of tech and comm services
21:56.181 --> 21:59.785
which is something new that we haven't necessarily seen before because
21:59.785 --> 22:04.122
historically tech has not been that capital intensive.
22:04.122 --> 22:08.360
When visiting with companies every CEO,
22:08.360 --> 22:12.297
every CFO has to have an AI strategy now.
22:12.297 --> 22:15.534
It's not easy for these older companies to keep up.
22:15.534 --> 22:19.638
They've got to retool and hire younger executives who
22:19.638 --> 22:24.376
can help them because AI is changing the economy.
22:24.376 --> 22:27.646
Just while we're on this, we didn't talk about this question but we've talked
22:27.646 --> 22:31.616
with US clients often about the private equity effort here,
22:31.616 --> 22:35.921
not only to get shots on goal, to take positions, but the learnings
22:35.921 --> 22:40.092
we get from those companies that could be a competitive threat to these
22:40.092 --> 22:42.260
companies or others.
22:42.260 --> 22:46.298
What are your thoughts on that? Maybe, Matt, you could take that.
22:46.298 --> 22:50.502
There is a lot of money now chasing
22:50.502 --> 22:55.407
compute infrastructure so we're seeing a lot of technology startups.
22:55.407 --> 22:59.277
In general, I think the value of meeting with private companies is that you're
22:59.277 --> 23:03.515
going to find exciting investments in their own right but you're
23:03.515 --> 23:08.920
also going to get a look at, hey, how might an industry get disrupted, what
23:08.920 --> 23:12.891
assumptions might be challenged for the public companies
23:12.891 --> 23:15.160
we're invested in?
23:15.160 --> 23:19.097
Just in the past two weeks there's a private company that's doing drone
23:19.097 --> 23:20.832
deliveries.
23:20.832 --> 23:24.936
They're doing a funding round. Their aspirations
23:24.936 --> 23:28.974
are to do millions of deliveries a day and they're signing
23:28.974 --> 23:33.178
up some pretty big clients like Walmart and
23:33.178 --> 23:36.014
Amazon. The technology is working.
23:36.014 --> 23:40.118
What is that going to do to supercharge e-commerce and change the
23:40.118 --> 23:43.021
economics of last mile delivery?
23:43.021 --> 23:47.392
We had a call with a battery recycling
23:47.392 --> 23:51.463
company that is now moving into taking the materials
23:51.463 --> 23:56.067
from automobiles, phones, putting it into
23:56.067 --> 24:02.541
battery energy storage systems.
24:02.541 --> 24:07.012
Power demand is growing for the first time in a while and
24:07.012 --> 24:11.049
the US has enough power, it just can't get to the right place at the right
24:11.049 --> 24:13.151
time.
24:13.151 --> 24:17.322
There is a potential solution to that which is to be able to
24:17.322 --> 24:21.159
store the power on site near the data centres.
24:21.159 --> 24:25.330
As we think about our power supply chain stocks, meeting with a private company
24:25.330 --> 24:29.067
that maybe has an innovative solution is really helpful.
24:29.067 --> 24:33.705
I think the good news is is that SpaceX
24:33.705 --> 24:38.343
and Cerebras, which were private holdings of ours, have come public
24:38.343 --> 24:43.248
so that frees up liquidity constraints
24:43.248 --> 24:46.718
in the portfolio to look at some of these new ideas.
24:46.718 --> 24:51.156
We are very active on the private front.
24:51.156 --> 24:55.160
Just in terms of Insights, the two leading frontier
24:55.160 --> 24:59.130
models that are driving a lot of the CapEx are private
24:59.130 --> 25:02.033
companies, OpenAI and Anthropic.
25:02.033 --> 25:05.971
Without our privates efforts those would just be black boxes to
25:05.971 --> 25:09.975
us. They are one of
25:09.975 --> 25:14.145
the huge demand drivers of AI today, of the AI
25:14.145 --> 25:18.283
infrastructure build, so having insight into these companies
25:18.283 --> 25:22.320
that when they list they'll probably be in the trillions of dollars
25:22.320 --> 25:23.021
of market cap.
25:23.021 --> 25:24.823
And I'll just reinforce that point.
25:24.823 --> 25:29.461
I mean, we had the call with one of the leading private model companies and
25:29.461 --> 25:33.431
they were sharing actual data from what they're seeing on usage.
25:33.431 --> 25:38.236
Will asked the room, how many people are using Muse or using agents?
25:38.236 --> 25:42.374
We know from the private model companies that agentic is less
25:42.374 --> 25:47.145
than 10% adopted but it's driving close to 65%
25:47.145 --> 25:48.947
of the token consumption.
25:48.947 --> 25:54.653
It's just that little data point that we can go back and look at, okay,
25:54.653 --> 25:58.690
because of all this investment there's a lot of token capacity supply
25:58.690 --> 26:02.694
coming online. It's costs $50 billion to build
26:02.694 --> 26:06.765
a gigawatt of compute but that compute, the token per
26:06.765 --> 26:11.069
watt is increasing much faster than the lines on this graph.
26:11.069 --> 26:15.140
You almost have an exponential increase in the capacity of compute.
26:15.140 --> 26:19.744
Then we can go back and we can look at, well,
26:19.744 --> 26:21.980
are we going to be an oversupply on compute?
26:21.980 --> 26:25.383
We can say, okay, well what is the penetration of agentic going to be and what
26:25.383 --> 26:29.421
might the usage look like just from little data
26:29.421 --> 26:33.558
points that are real data points in companies that are driving
26:33.558 --> 26:35.627
the whole story.
26:35.627 --> 26:38.496
It comes back to Fidelity scale.
26:38.496 --> 26:41.967
We've invested in many of these leading tech companies so the private
26:41.967 --> 26:45.937
executives know us and we can say we can help them when
26:45.937 --> 26:49.908
they go public, which is an important event eventually for them.
26:49.908 --> 26:54.012
We're not afraid to invest relatively early with
26:54.012 --> 26:57.115
a private company if we like the management team.
26:57.115 --> 27:01.186
It's been extremely helpful for our mosaic of
27:01.186 --> 27:02.120
information.
27:02.120 --> 27:05.857
Those are just the companies that we were able to make it to.
27:05.857 --> 27:08.226
There are many others happening in the department.
27:08.226 --> 27:12.597
That's just a normal week
27:12.597 --> 27:16.668
where we're just getting out there and getting data points
27:16.668 --> 27:20.772
and then sharing them across analysts and PMs and just trying to
27:20.772 --> 27:23.008
level up and all get smarter together.
27:23.008 --> 27:25.243
There's a lot of collaboration.
27:25.243 --> 27:29.347
We'll attend some of the key meetings together but we'll also divide and
27:29.347 --> 27:32.584
conquer and be in multiple places at once.
27:32.584 --> 27:36.721
What I found really valuable about being a co-PM with Nidhi is that we're
27:36.721 --> 27:40.892
thinking independently. We're asking our own questions and maybe coming at
27:40.892 --> 27:43.561
the problem from a different angle.
27:43.561 --> 27:47.532
If we don't reach agreement we can always
27:47.532 --> 27:51.603
extend the debate to bring in the Fidelity analyst and really just
27:51.603 --> 27:55.607
focus on the facts, what are the assumptions in the model and why are
27:55.607 --> 27:59.110
we coming out differently on a potential investment?
27:59.110 --> 28:03.081
It's doing a lot of meetings but then it's also learning from the meetings
28:03.081 --> 28:05.750
and really diligencing the ideas.
28:05.750 --> 28:09.788
It helps to have a team to do all of that.
28:09.788 --> 28:13.792
Yeah, I'd argue if both of you like the name that's more
28:13.792 --> 28:17.095
than twice as good because you come from different experiences.
28:17.095 --> 28:21.332
Exactly, you can build consensus. To Matt's point,
28:21.332 --> 28:25.103
the divide and conquer can be really powerful.
28:25.103 --> 28:29.274
Just a couple weeks ago I went down to
28:29.274 --> 28:29.874
Louisiana
28:29.874 --> 28:34.345
It was a seven hour journey to get there for a
28:34.345 --> 28:38.316
two hour tour, something I probably wouldn't have done if
28:38.316 --> 28:42.420
I was going to miss all these in-house meetings, all these CEOs and
28:42.420 --> 28:46.324
CFOs that were coming to see us but with a co-manager we can sort of divide and
28:46.324 --> 28:50.528
conquer. I went down to Louisiana with our Amazon analyst, Matt went
28:50.528 --> 28:54.866
to our in-house meetings, and then we were able to sync up when
28:54.866 --> 28:58.903
I got back. I gained some really helpful insights from
28:58.903 --> 29:02.907
that visit, not just for Amazon but for robotics and
29:02.907 --> 29:04.676
automation in general.
29:04.676 --> 29:08.947
It's sort of a unique opportunity that we get once in a while
29:08.947 --> 29:11.516
so it's important to be able to take advantage of those.
29:11.516 --> 29:15.487
I think having a co-manager allows us to just take advantage of
29:15.487 --> 29:17.288
more access points to companies.
29:17.288 --> 29:18.790
There is so
29:18.790 --> 29:22.827
much attention on the Mag-7 and
29:22.827 --> 29:27.265
AI. As Nidhi said, it's like there's a
29:27.265 --> 29:31.136
massive number of names that have just been like we don't have time for this,
29:31.136 --> 29:35.240
we don't care, your growth has slowed to 10%, we want the shiny new
29:35.240 --> 29:37.075
object.
29:37.075 --> 29:40.512
I think this next question about outside of tech where are we finding
29:40.512 --> 29:43.281
opportunities is very appropriate.
29:43.281 --> 29:51.089
I don't know if you guys want to share a name or two or just sector.
29:51.089 --> 29:55.026
One of the things, I think
29:55.026 --> 29:59.097
Nidhi had mentioned this, the opportunity in AI is not
29:59.097 --> 30:03.168
just the companies that are selling it but what companies that are outside
30:03.168 --> 30:06.070
of AI can adopt AI to improve their business and.
30:06.070 --> 30:10.241
I think of Chubb which has been a bigger position
30:10.241 --> 30:14.245
in the portfolio, when you think of growth investing
30:14.245 --> 30:17.415
you don't necessarily think of insurance underwriters.
30:17.415 --> 30:21.085
Chubb has this great disciplined underwriting
30:21.085 --> 30:25.290
business, they have high returns on equity
30:25.290 --> 30:28.993
but their business is really like a big data processing business.
30:28.993 --> 30:32.997
Their CFO said we receive 300 million emails a
30:32.997 --> 30:38.937
year. Many of them have very rich data attachments.
30:38.937 --> 30:42.974
Historically, it's been people that would have to process this information
30:42.974 --> 30:47.145
but now with AI you can ingest unstructured
30:47.145 --> 30:51.516
data, you can give the underwriters more capacity, you can reply
30:51.516 --> 30:55.553
to quotes faster, you can have better customer service.
30:55.553 --> 30:59.023
They have all these initiatives across the company.
30:59.023 --> 31:03.194
The big dream would be can you improve decision-making over
31:03.194 --> 31:07.232
time? It seems like Chubb has sort of extended their runway,
31:07.232 --> 31:11.336
given that they're global, they have all of this internal data
31:11.336 --> 31:13.271
that can now be made more valuable.
31:13.271 --> 31:15.907
They can make their customer value proposition more valuable.
31:15.907 --> 31:20.111
It's uncorrelated to AI.
31:20.111 --> 31:24.315
I would say the other sector that we've spent
31:24.315 --> 31:29.554
a lot of time on and have quite a bit of exposure to is healthcare.
31:29.554 --> 31:33.925
That is also, I think, a sector where we're going to see a lot
31:33.925 --> 31:39.130
of AI diffusion, whether
31:39.130 --> 31:43.301
it's making drug development more efficient because you're
31:43.301 --> 31:47.438
putting compounds into trials that
31:47.438 --> 31:51.709
have more likelihood of success, or developing
31:51.709 --> 31:55.246
highly personalized novel therapies.
31:55.246 --> 31:59.517
and as we get more and more data we'll be able to unlock
31:59.517 --> 32:03.554
that even further. It doesn't happen as quickly as Claude code takes
32:03.554 --> 32:07.759
off but there are parts of
32:07.759 --> 32:11.796
healthcare that will really be able to
32:11.796 --> 32:16.134
benefit from AI. Managed care is another one where similar to insurance
32:16.134 --> 32:20.305
it's just a lot of data and processing that should all be made
32:20.305 --> 32:23.074
more efficient with AI.
32:23.074 --> 32:28.146
I think this is just the new world we're going to be living in and we're
32:28.146 --> 32:32.417
just going to be really methodical about continuing to talk to companies
32:32.417 --> 32:36.688
and understanding what their opportunity is in
32:36.688 --> 32:40.591
this new sort of technology platform that we're gonna be living in.
32:40.591 --> 32:43.428
What's amazing about it is when you think about
32:43.428 --> 32:46.764
these therapeutic companies it's all about patent expiries.
32:46.764 --> 32:51.235
You file a patent on that particular therapy and then it expires.
32:51.235 --> 32:55.840
But when you have personalized medicine that's been designed by AI
32:55.840 --> 32:59.410
it's not patented. It's really the whole process.
32:59.410 --> 33:04.515
Each therapy is its own treatment.
33:04.515 --> 33:06.284
There is no patent expiry.
33:06.284 --> 33:07.885
It's pretty exciting.
33:07.885 --> 33:11.856
Will, I think we're at time but I want to give you the last
33:11.856 --> 33:15.827
word and thank you for your dedication to the
33:15.827 --> 33:16.728
clients.
33:16.728 --> 33:21.065
I'm grateful to our Canadian clients and partners.
33:21.065 --> 33:25.203
I am super excited about what Matt and Nidhi are going to be doing.
33:25.203 --> 33:27.238
I'm going to take a little time off.
33:27.238 --> 33:30.908
Maybe I'll go to Lake Louise in the spring but I'll be back in the summer,
33:30.908 --> 33:31.542
hopefully.
33:31.542 --> 33:35.213
It's Will's version of time off.
33:35.213 --> 33:39.317
I'm a little nervous, honestly. I want to be back.
33:39.317 --> 33:43.521
I have a lot of fun in the halls at Fidelity and attending meetings
33:43.521 --> 33:46.190
so hopefully I'll be back sooner than later.
33:46.190 --> 33:48.960
Abby Johnson seems to think I'm gonna be back sooner than later.
33:48.960 --> 33:53.331
We'll see. It's important to
33:53.331 --> 33:57.568
pass the baton and I'm super excited and super confident in what
33:57.568 --> 34:00.038
Matt and Nidhi can do. It's a great team.
34:00.038 --> 34:03.041
Rio can attest to that.
34:03.041 --> 34:07.178
The three of us sit next to each other so we're constantly in
34:07.178 --> 34:10.848
communication which has been a lot of fun in our new office.
34:10.848 --> 34:14.819
If you're ever in Boston come down to the new office and we'll show
34:14.819 --> 34:16.988
you where all the magic happens.
34:16.988 --> 34:18.990
We're going to take a 10-minute break, thank you very much.
