Brendan McDermid/Reuters; Dimitrios Kambouris /Getty
- D1’s Dan Sundheim and SurgoCap’s Mala Gaonkar spoke about investing in AI a Chicago conference.
- Sundheim said it won’t be private companies leading this tech change for once.
- Gaonkar said the most promising industry for short-term AI advances is the medical technology field.
The best way to invest in the world’s hottest trend is not through seed rounds or even fully-fledged private companies, said D1 Capital Partners founder Dan Sundheim, despite billions flooding into artificial intelligence start-ups last quarter alone.
Sundheim, whose portfolio has billions invested in both public and private companies, believes the best way to tap into the AI frenzy is through public companies. Speaking at Tuesday’s Invest for Kids conference in Chicago, he said that AI, unlike other big technological advances, will be felt across sectors so all companies have an interest in putting money toward it.
Large public corporations have the most resources to implement AI across their businesses, according to a recap of his comments viewed by Business Insider. In other words, scale is more of an advantage in the AI field than nimbleness.
He said companies putting capital and talent behind AI projects are doing so without expecting a short-term return on their investment. The infrastructure required by these projects, he said, means companies are looking at the ROI a decade from now, not a quarter.
Sundheim was speaking on a panel with Mala Gaonkar, the former Lone Pine executive who launched SurgoCap Partners at the start of 2023. From her vantage point, AI will impact industries on different timelines, so over the next three to five years, it’s crucial to know which areas will feel immediate benefits and which sectors will take time.
Gaonkar said medtech— such as diagnostic imaging — should benefit from AI advances earlier than other sectors.
Sundheim also said that because of AI infrastructure needs, there will be investment opportunities in companies that supply the equipment to upgrade the electrical grid.
Both firms have had strong years investing in public markets.
Gaonkar’s fund is up more than 25% this year, BI previously reported, as assets have swelled to more than $3 billion. Sundheim’s D1, which according to regulatory filings manages roughly $26 billion, is up more than 34% in its public book though its venture investments have been marked down 2.6% so far in 2024, according to a recent report from Institutional Investor.
The two funds are a part of Julian Roberston’s Tiger Management’s broader Tiger Cub network, which is known for its focus on growth stocks, particularly in the tech sector. Sundheim, who was the CIO at Viking Global before launching D1 in 2018, joined funds like Tiger Global and Coatue in 2020 and 2021 in their aggressive funding of private companies. PitchBook notes that the firm has made 228 investments in private companies since six years ago.
While the private portfolio has been a drag on Sundheim’s overall returns the last three years — and he’s now looking to public giants for AI exposure — he still said Tuesday that the most exciting company in the world is a private one: Elon Musk’s SpaceX.
D1 has a stake worth roughly $2.5 billion in the company, according to the II report.
The two firms declined to comment.