Investment Insights from Michel Bourgon
In a recent interview with Paperjam on August 12, 2025, Michel Bourgon, a distinguished senior equity portfolio manager at Indosuez Fund Solutions, highlighted a notable “high visibility” trajectory regarding capital expenditures (capex), typically strategized over a three to five-year horizon.
Among the enterprises poised to reap rewards from these investments are Broadcom, a prominent designer and supplier of semiconductor and infrastructure software products; Arista, a leading computer networking firm; Amphenol, recognized for manufacturing electronic and fiber optic connectors and interconnect systems; and Bird Construction, a reputable cable installer. Bourgon asserts that “These companies offer lower valuation.”
“Ten years ago, changing a feature on the Apple iPhone may have resulted in the bankruptcy of that supplier.”— Michel Bourgon, Senior Equity Portfolio Manager, Indosuez Fund Solutions
Bourgon commenced his career in Canadian equities in 2001, later expanding his focus to Switzerland, the UK, and Latin America. Since 2005, he has directed his expertise toward US equities.
This extensive background, combined with the US market’s overwhelming dominance—accounting for 80% of the MSCI World index—positions him advantageously to helm the Global Trend fund, which emphasizes artificial intelligence (AI).
Small and Mid-Cap Prospects
“Challenging the [Mag 7] leaders will be complicated, as they own data,” Bourgon remarked. Conversely, he maintains that AI suppliers are generally interchangeable.
While he expresses confidence in the aforementioned companies, they may face formidable obstacles amid a potential downturn in the capex cycle. Smaller firms are more likely to benefit indirectly by providing services or components to major AI players, including Celestica, Jabil, and Flex.
“Ten years ago, changing a feature on the Apple iPhone may have resulted in the bankruptcy of that supplier,” he reiterated.
Indeed, the financial resilience of these smaller firms depends heavily on the investment cycle; should contracts dwindle, they confront substantial risks due to their lack of autonomy. In essence, they are more readily replaceable than the predominant AI frontrunners.
Sectors Benefiting from AI Advancements
Bourgon posits that the most evident pathway to margin expansion via AI lies in cost reduction, particularly in sectors where human labor can be supplanted by automation. This is particularly pronounced in the service industry, where AI’s capabilities can significantly enhance efficiency.
Such advancements are especially impactful in banking, asset management, and various financial services, which are traditionally personnel-heavy. He noted that AI is already omnipresent within financial markets, with over 70% of trading volumes executed algorithmically.
Furthermore, AI may catalyze mergers and acquisitions by harnessing synergies through streamlined processes.
According to studies from McKinsey and Accenture, Bourgon observed that the financial sector stands to gain the most cost savings from AI’s automation of repetitive tasks. Intriguingly, he believes that the European financial landscape will experience significant benefits from AI integration across the continent.
Apart from cost efficiencies, AI plays a pivotal role in fostering innovation and research within the pharmaceutical and biotech realms. Bourgon views AI as a catalyst for expediting drug discovery and development, particularly in the preclinical stages.
He pointed out that the US Food and Drug Administration (FDA) now permits patents for molecules derived solely from algorithms, thus hastening initial drug development processes.
Within the medical field, he identifies AI innovations that assist physicians in analyzing larger patient populations and enhancing diagnostic accuracy through human-machine collaboration. He cites Intuitive Surgical, which specializes in robotic products aimed at improving clinical outcomes, as an example of how machines can augment human capabilities without assuming autonomy.
In the realm of discretionary consumption, Bourgon notes that companies such as L’Oréal leverage AI to better understand consumer preferences, swiftly adapt to changes, and deliver personalized products—thereby enriching the customer experience. “AI helps people to put on makeup,” he affirmed.
Conversely, the manufacturing sector, which has long emphasized process optimization, is likely to experience less dramatic improvements, albeit noteworthy advances will still be present.
Cybersecurity: A Challenge in Catch-Up Mode
Despite its consistent positioning as a top priority for CFOs, the cybersecurity sector encounters substantial challenges. It often finds itself in a reactive stance, perpetually striving to keep pace with emerging threats. Bourgon suggested that a prudent approach to investing in cybersecurity involves focusing on major cloud providers, as they deliver integrated security solutions tailored for most small and medium-sized enterprises (SMEs).
However, larger specialized companies may seek bespoke solutions from firms like Palo Alto and CrowdStrike. A significant looming risk for cybersecurity is the rise of quantum computing, regarded as the next frontier for AI computation, which could undermine current security paradigms.
Humanoids and Mobile Robots: Emerging Data Collectors
Bourgon posits that humanoids and mobile robots could function as data collectors, akin to platforms like Google Home and Amazon’s Alexa, which are often sold at a loss to gather information. However, he expresses skepticism about their immediate investment viability, suggesting that it is premature to evaluate their profitability.
Instead, he views them as likely complementary data sources rather than transformative entities when compared to existing alternatives, such as smartphones and home personal assistants.
“It’s probably an interesting growth environment, but, for us, it’s still too early in the cycle,” he concluded, emphasizing Indosuez’s preference for companies with demonstrated profitability.
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