First Quarter | 2025

The future grows seemingly less predictable by the day, and AI is accelerating the trend. As fundamental investors, we usually derive most of a company's intrinsic value from cash flows generated beyond the first five years. The trouble is that those cash flows are getting harder to forecast, even as Gulf companies disclose more than ever. Banks are a useful illustration. Even banks that successfully deploy AI internally might face external pressure on funding costs, fee income and customer retention, and a shift down in their terminal multiples is not difficult to imagine using reasonable assumptions. We are not predicting that this will happen. But forecasting beyond five years genuinely feels harder than it used to be. The right response, we think, is to increasingly prioritise companies with durable competitive advantages, even if they do not appear obviously cheap relative to other, more AI-exposed companies.