Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — H1 2025 Earnings Presentation
35 slides from Polar Capital Technology Trust's earnings presentation, Dec 10, 2024
Slide 1: Polar Capital Technology Trust Half Year Results To 31 October 2024
Polar Capital Technology Trust Half Year Results To 31 October 2024 polarcapitaltechnologytrust.co.uk This is a marketing communication This presentation is for use with non-US investors only. 1
Slide 2: Results As At 31 October 2024
Results As At 31 October 2024 Year ended As at Change 30/04/2024 31/10/2024 Net Assets £3,804,533,000 £4,179,544,000 +9.9% NAV per ordinary share 315.41p 352.15p +11.6% Price per ordinary share 292.00p 310.50p +6.3% Benchmark Change - - +14.1% Ordinary shares in issue* 1,206,215,690 1,186,874,680 -1
Slide 3: PCT As At 29 November 2024
PCT As At 29 November 2024 Year ended As at As at Change 30/04/2024 31/10/2024 29/11/24 Net Assets £3,804,533,000 £4,179,544,000 +9.9% £4,437,614,406 NAV per ordinary share 315.41p 352.15p +11.6% 374.06p Price per ordinary share 292.00p 310.50p +6.3% 336.00p Benchmark Change - - +14.1% Ordinary shar
Slide 4: Long-Term Performance
Long-Term Performance Discrete Annual Performance (%) Financial 31.10.23 31.10.22 29.10.21 30.10.20 31.10.19 YTD 31.10.24 31.10.23 31.10.22 29.10.21 30.10.20 Ordinary Share Price (TR) 6.34 44.76 13.25 -24.66 20.00 47.95 NAV per share 11.66 40.37 19.75 -24.73 26.65 49.01 Benchmark1 14.10 40.55 27.28
Slide 5: Half Year Review
Half Year Review DJ World Technology vs FTSE World TR since April 2024 • Global equities (FTSE World +8.1% in Sterling terms) DJ World Technology vs FTSE World TR since April 2024 continued to rebound as economic growth remained firm 20% despite significant geopolitical volatility and somewhat softe
Slide 6: Half Year Review
Half Year Review • US technology outperformance vs RoW technology: W1TECN +13.9% vs W2TEC +4.7%. US large-caps +16.2% vs small-caps +3.3% • Significant sub-sectors variance: Internet +11%, Software +8.2% while Semis +3.4%, Hardware -4.1% • Relative technology valuations expanded from 1.28x 1.37x d
Slide 7: Artificial Intelligence: The Age of AI has Begun
Artificial Intelligence The Age of AI has Begun “ AIprofound is one of the most things we are working on as a humanity. It “ is more profound than fire or electricity. - Sundar Pichai, Alphabet CEO This presentation is for use with non-US professional investors only. Please refer to the Important In
Slide 8: PCT: AI Portfolio Exposure
PCT: AI Portfolio Exposure Indicative percentage of portfolio exposed to Artificial Intelligence (100% stock weights) 4.2% With AI poised to become 7.1% the next general purpose AI Enabler – Cloud Computing technology (GPT), we 23.9% have added an ‘AI lens’ to our investment AI Enabler – Semiconduct
Slide 9: IT Spending Outlook And Priorities: AI-Driven
IT Spending Outlook And Priorities: AI-Driven • Worldwide IT spending is expected to total $5.74 trillion in 2025, Worldwide IT spending forecast ($m)1 an increase of 9.3% from 2024, according to the latest forecast by Gartner, Inc1 2024 2025 2024 Growth 2025 Growth • Digital groundwork for AI being
Slide 10: Discontinuous Technology Progress: Skyscrapers
Discontinuous Technology Progress: Skyscrapers Building height 400m 25x taller buildings Otis Safety Elevator in 46 years 300m Bessemer Steel 200m 100m ALL OF HUMAN HISTORY 16th Century 1885 1894 1908 1913 1931 Mud houses Home Manhattan Singer Woolworth Empire Yemen Insurance Life Building Building
Slide 11: Discontinuous Technology Progress: Artificial Intelligence
Discontinuous Technology Progress: Artificial Intelligence GPT-4? Parameter count of Significant Machine Learning Systems 1.0e +12 Transformer Model Language Vision Games 1.0e +10 1.0e +8 1.0e +6 1.0e +4 1.0e +2 1956 1990 1994 1998 2002 2011 2016 2022 Dartmouth IBM AlphaGo AlphaFold conference Watso
Slide 12: Technology Inflection – Transformer Models (2017)
Technology Inflection – Transformer Models (2017) Change in computational requirements for training AI models1 10,000,000,000 Megatron-Turing Scalability Self-Attention NLG 530B 1,000,000,000 • Model performance • Can weight GPT-3 Training Compute (petaFLOPS) scales with increased importance of diff
Slide 13: Massive Market Opportunity
Massive Market Opportunity • GenAI could add $2.6-4.4trn annually; half of today’s activities could be automated by AI between 2030-2060 • Today, 60% of work is in occupations that did not exist in 1940; we cannot know what new opportunities will be AI enabled • We think AI will transform the speed
Slide 14: Accelerating Technology Diffusion
Accelerating Technology Diffusion Technology diffusion accelerating1 Months to 100m MAU2 140 Spindles 70 120 55 Steam and Motorships Technology Adoption Lag 100 54 80 Railway Passengers 41 Steel Tractor Railway Freight Electricity Aviation Freight 30 60 Telephone Electric Furnace Telegraph Fertilize
Slide 15: Early AI Applications: Software Copilots
Early AI Applications: Software Copilots • Large visible market opportunity – 1bn knowledge workers globally – 2 copilots @ $30/mo = $720bn TAM • Rapid payback on time saved – Companion software/existing workflows – Breakeven = 1 hr per month time-saved • Early use cases – Coding, content creation,
Slide 16: Early AI Applications: Pre-Automation Tools
Early AI Applications: Pre-Automation Tools • Draft One is a multimodal AI tool that automatically constructs police reports • “…we have seen an 82% decrease in time spent writing reports”1 – Police officers can spend up to 40% of their time writing reports • “In the three months since launch, Draft
Slide 17: Early (AI) Tools Can Be Very Impactful
Early (AI) Tools Can Be Very Impactful Horsepower Increase in farming 50x productivity over manual labour between 1600 and late 1800s Tractor 4x Increase in output per agricultural worker during the early 20th century Sewing Increase in stitches Machine 22x per minute over trained seamstress using S
Slide 18: Rapid Model Improvement: Scaling Laws
Rapid Model Improvement: Scaling Laws “ We study empirical scaling laws for language model performance on the cross-entropy loss. The loss scales as a power-law with model size, dataset size, and the amount of compute “ used for training… Source: OpenAI, 2020. All opinions and estimates constitute t
Slide 19: Rapid Model Improvement: Inference-Time Compute
Rapid Model Improvement: Inference-Time Compute OpenAI’s ‘o1’: the first AI model with true general reasoning capabilities by introducing “inference-time compute”1 01 AIME accuracy during training2 • Higher-order deliberate reasoning from OpenAI’s o1 model demands greater computing power – The abili
Slide 20: Rapid Model Improvement: 2025 Drivers
Rapid Model Improvement: 2025 Drivers • Next Generation Infrastructure Anthropic model2 – NVIDIA Blackwell GPUs - ramp late ‘24 Claude 3.5 – 4x performance increase on training, 30x increase Sonnet inference performance1 Claude 3 Opus – 59% improvement in power efficiency1 (Benchmark scores) • AI Mo
Slide 21: Rapid Model Improvement: Timeline To AGI
Rapid Model Improvement: Timeline To AGI “systems Probability of Transformative AI being developed by year I think the idea that as AI become more productive, first they speed up the productivity 6% of humans, then they equal the 50% chance of productivity of humans, and then transformative AI being
Slide 22: Rapid Model Improvement: Timeline To AGI
Rapid Model Improvement: Timeline To AGI Source: Polar Capital. All opinions and estimates constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Polar Capital. Some information contained herein has
Slide 23: 'Invisible' Market Opportunities
‘Invisible’ Market Opportunities +10 Years 5 Years Visible Tech Visible market New markets Technology UI breakthrough market transition growth created US$150bn Windows 3 GUI 100m users 500m users Packaged PC1 (1990) (1990) Home PC (2000) software market (2005) US$570bn ecom, Web Browser 16m users Co
Slide 24: From Complement To Substitute?
From Complement To Substitute? Klarna AI assistant2 • $2-3m replaces 700 agents $5.3Trn1 $44Trn • 2/3 of chats after 1 month • Better customer experience: IT Spending Global 2024 wage bill – 2 mins vs 11 mins previously – 25% drop in repeat inquiries • Estimated $40m savings in 2024 Source: 1. Gar
Slide 25: AI Capex Bubble? Unlikely
AI Capex Bubble? Unlikely Cloud capex as a % of US GDP1 US railroad capex as % of GDP2 0.80% 3.5 0.70% 3.0 Gross Railroad Capital Formation (% of GDP) 0.60% Net Railroad Capital Formation (% of GDP) 2.5 Percent of GDP 0.50% 2.0 0.40% 0.30% 1.5 0.20% 1.0 0.10% 0.5 0.00% 0.0 Cloud capex as % of US GDP
Slide 26: AI: Accelerated Computing
AI: Accelerated Computing US$ content per server The CPU is the building block of the traditional $1,740 PCB server, the workhorse for $360 $680 general purpose workloads CCL $160 and serial computing ABF Substrate $850 $35 $800 NAND $800 $19,000 25 x DRAM $1,000 $600 Power Semi $60 BoM $200,000 UPL
Slide 27: A New AI Compute Stack: More Than Just GPUs
A New AI Compute Stack: More Than Just GPUs Foundries 3nm/2nm, new transistor architectures Semiconductor Capital Equipment Advanced tools and packaging Networking – Ethernet/Infiniband 400G/800G/1.6T, co-packaged optics Substrates Larger finer substrates with move to chiplet Printed Circuit Boards
Slide 28: PCT: AI Portfolio Exposure
PCT: AI Portfolio Exposure Indicative percentage of portfolio exposed to Artificial Intelligence (100% stock weights) 4.2% With AI poised to become 7.1% the next general purpose AI Enabler – Cloud Computing technology (GPT), we 23.9% have added an ‘AI lens’ to our investment AI Enabler – Semiconduct
Slide 29: Applying An 'AI lens' To PCT
Applying An ‘AI lens’ To PCT AI Enablers (Semiconductors + Cloud) AI Beneficiaries AI Adopters 57% 31% 7% Source: Polar Capital, 29 November 2024. It should not be assumed that recommendations made in future will be profitable or will equal performance of the securities in this document. A list of a
Slide 30: PCT Positioning
PCT Positioning Geographic exposure (%) Top 15 positions Sector exposure 80 NVIDIA 11.4% Semiconductors & Semiconductor Equipment 30.2% 76.1% 70 Microsoft 7.8% Software 18.0% 60 Meta Platforms 6.4% Interactive Media & Services 11.8% 50 Apple 5.7% Technology Hardware, Storage & Peripherals 6.3% 40 30
Slide 31: PCT Positioning
PCT Positioning Largest overweights Largest underweights PCT relative market cap exposure vs benchmark1 Amazon Adobe Systems 20% Amphenol Corp Alphabet Arista Networks Analog Devices 15% Axon Enterprise Apple Ciena Corp Applied Materials 10% Cloudflare ASML Holding 5% Corning Cadence Design Systems
Slide 32: Portfolio Structure: Active Positions And Valuation
Portfolio Structure: Active Positions And Valuation A diversified portfolio, capturing secular growth potential of key themes Valuation Snapshot Technology Index Fund Index Active Fund Index Active Difference (29 November 2024)1 Trust1 Top 1001 Meta Platforms 6.36% 5.31% 1.05% Apple 4.67% 15.07% -10
Slide 33: Important Information
Important Information Polar Capital, 16 Palace Street, London SW1E 5JD Polar Capital, 16 Palace Street, London SW1E 5JD Important Information This is a marketing communication. Please refer to the Polar Capital Technology Trust plc offer document and to the KID before making any final investment dec
Slide 34: Important Information
Important Information Polar Capital, 16 Palace Street, London SW1E 5JD Polar Capital, 16 Palace Street, London SW1E 5JD Holdings: Portfolio data is “as at” the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the Company. The holdings
Slide 35: Important Information
Important Information Polar Capital, 16 Palace Street, London SW1E 5JD Polar Capital, 16 Palace Street, London SW1E 5JD Performance/Investment Process/Risk: Performance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Factors affecting the
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