Rajiv Jain: AI’s economic viability is questionable, the importance of business fundamentals in volatile markets, and why active management is essential for long-term success | Capital Allocators

AI's economic viability is under scrutiny despite leading firms generating substantial revenue amid high losses.

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Add us on Google by Editorial Team Jun. 8, 2026

Key takeaways

• AI technology holds significant potential, but its current economic viability is questionable.
• Leading AI companies like OpenAI and Anthropic generate substantial revenue despite high capital losses.
• Top-down models are valuable for risk management but should not drive investment decisions.
• The Asian financial crisis influenced a shift toward bottom-up investment strategies.
• Understanding business fundamentals is crucial, especially in volatile markets.
• Asian markets demonstrated resilience and recovery after the financial crisis.
• Active management and a proactive approach are vital in challenging market conditions.
• In bull markets, absolute returns are essential for long-term survival.
• Diverse thinking within a team prevents groupthink and encourages critical analysis.
• Hiring journalists in investment teams can challenge assumptions and promote critical thinking.
• A contrarian investment approach can be beneficial in navigating complex market environments.
• The energy and utilities sectors offer unique opportunities for contrarian investors.
• Emerging markets present both risks and opportunities for global investors.

Guest intro

Rajiv Jain is Chairman and Chief Investment Officer of GQG Partners, the global equity manager he founded in 2016. He previously served as Co-CEO and CIO of Vontobel Asset Management and has more than 25 years of investment experience.

The economics of AI technology

• AI technology is powerful but currently has poor economics. “Our view is that this is a powerful technology but the economics are really bad and time is not a friend” – Rajiv Jain
• OpenAI and Anthropic are major revenue generators in AI despite significant capital losses. “Half or more of revenue is coming from OpenAI slash Anthropic” – Rajiv Jain
• The disparity between investment and revenue in AI firms poses potential risks for investors.
• AI investments require careful consideration of financial viability and long-term potential.
• The hype around AI may not align with its current economic realities.
• Investors should be cautious of overvalued AI companies with unsustainable financial models.
• The rapid growth of AI technology necessitates a critical evaluation of its economic impact.
• Understanding the financial landscape of AI is crucial for making informed investment decisions.

Top-down vs. bottom-up investment strategies

• Top-down models are useful for risk management but should not dictate investment decisions. “Top down is a risk management tool and we’d use it heavily” – Rajiv Jain
• The Asian financial crisis led to a shift toward bottom-up investment strategies. “I became a 100% bottom up investor after that one crisis after the other” – Rajiv Jain
• Bottom-up approaches focus on individual company fundamentals rather than macroeconomic trends.
• Top-down strategies can help identify broader market risks and opportunities.
• Combining both approaches can provide a balanced investment strategy.
• Bottom-up investing requires a deep understanding of business fundamentals.
• Investors should evaluate the strengths and weaknesses of each approach in different market conditions.
• The choice between top-down and bottom-up strategies depends on individual investment goals and risk tolerance.

Importance of business fundamentals

• Understanding business fundamentals is crucial for investment strategy, especially in volatile markets. “Understanding of business does matter that becomes the core of it” – Rajiv Jain
• Business fundamentals provide a foundation for evaluating investment opportunities.
• In volatile markets, a focus on fundamentals can help identify resilient companies.
• Investors should prioritize companies with strong financial health and sustainable business models.
• Fundamental analysis involves assessing a company’s financial statements, management, and competitive position.
• A thorough understanding of business fundamentals can mitigate investment risks.
• Investors should be wary of companies with weak fundamentals, even in bullish markets.
• Fundamental analysis is a key component of long-term investment success.

Resilience of Asian markets

• The Asian financial crisis showed significant recovery and potential after the initial crisis period. “It took four or five years after the Asian crisis and the earnings had come through” – Rajiv Jain
• Asian markets demonstrated resilience and recovery post-crisis, offering opportunities for investors.
• The restructuring of businesses in Asia contributed to their recovery and growth.
• Investors should consider the long-term potential of emerging markets like Asia.
• The recovery of Asian markets highlights the importance of patience and long-term perspective in investing.
• Understanding regional economic dynamics is crucial for investing in emerging markets.
• The growth of Asian markets presents both risks and opportunities for global investors.
• Investors should evaluate the unique characteristics of each market when considering investments in Asia.

Active management in challenging markets

• Active management and a fighting spirit are essential in challenging market conditions. “If push in the corner of my view is let’s see if there’s something and roll up the sleeves” – Rajiv Jain
• Proactive strategies can help navigate difficult market environments.
• Active management involves making informed decisions based on market analysis and trends.
• In challenging markets, passive strategies may not be sufficient to achieve desired returns.
• Active managers can identify undervalued opportunities and manage risks effectively.
• A fighting spirit encourages resilience and adaptability in investment management.
• Active management requires continuous monitoring and adjustment of investment portfolios.
• Investors should assess the benefits of active management in different market conditions.

The necessity of absolute returns

• In a bull market, relative performance may seem sufficient, but long-term survival requires absolute returns. “If you don’t have absolute returns nobody needs you” – Rajiv Jain
• Absolute returns focus on generating positive returns regardless of market conditions.
• Relative performance compares an investment’s returns to a benchmark or index.
• Investors should prioritize absolute returns to ensure financial sustainability.
• Absolute returns provide a measure of an investment’s true performance.
• In volatile markets, absolute returns can help protect against downside risks.
• Investors should evaluate investment strategies based on their ability to deliver absolute returns.
• Focusing on absolute returns can enhance long-term investment success.

Value of diverse thinking in teams

• Diversity of thinking in a team is crucial to avoid groupthink and ensure critical analysis. “You never want a team that agrees with the 100% huge mistake” – Rajiv Jain
• Diverse perspectives encourage innovative solutions and prevent complacency.
• Groupthink can lead to poor decision-making and increased investment risks.
• Teams with diverse backgrounds and experiences can identify unique opportunities.
• Encouraging open dialogue and debate fosters a culture of critical thinking.
• Diverse teams are better equipped to navigate complex market environments.
• Investors should prioritize diversity of thought in their investment teams.
• Critical analysis and diverse viewpoints are essential for effective portfolio management.

Role of journalists in investment teams

• Hiring journalists to challenge assumptions helps prevent complacency and promotes critical analysis within the team. “Now we have equal amount of journalists and traditional analysts” – Rajiv Jain
• Journalists provide critical perspectives and challenge conventional thinking.
• Incorporating journalists into investment teams fosters rigorous analysis and risk mitigation.
• Journalists can identify potential blind spots and biases in investment strategies.
• The role of journalists is to take an opposite view by default, encouraging critical evaluation.
• Journalists bring investigative skills and a questioning mindset to investment teams.
• Their presence helps ensure that investment decisions are well-informed and thoroughly analyzed.
• Investors should consider the benefits of including journalists in their investment teams.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.