The debate around technology valuations is intensifying as investors question whether AI companies are being valued on current business economics or future potential. According to The Economic Times, Mehul Vora, Chief Technology Officer at Mirae Asset Sharekhan, emphasizes that investors should separate technology potential from economic potential when evaluating AI investments. Vora's framework focuses on five critical questions: sustainable technology moat, customer relationship ownership, cost of inference/compute, margin improvement with scale, and replication difficulty for competitors. As reported by The Economic Times, the CTO draws a clear distinction between AI branding and AI moat, noting that "AI branding is not an AI moat" and that investors should look for the combination of technology moat, distribution moat, and economic moat to identify genuine long-term AI winners.
Despite remaining positive about AI's long-term economic impact, leading investors are recommending portfolio adjustments after recent sharp rallies in AI-linked stocks. Mihir Vora of Trust Mutual Fund said the fund continues to have significant exposure to companies benefiting from the AI-led capital expenditure cycle, including power transmission companies, but plans to reduce some of its holdings. As reported by CNBC TV18, Vora noted that "We still have a lot of it, but we'll reduce a bit." Prashant Khemka of WhiteOak Capital Group explained how a sharp rally can cause an AI-linked stock to become a much larger part of a portfolio even without fresh investment, with an allocation that was initially 5% potentially rising to 8-10% after strong performance. Khemka recommended investors can then trim positions back to around 5-6%, allowing them to reduce concentration while still holding more shares than before the rally.
Both investors emphasized the importance of diversification to manage regulatory risks and market volatility. Vora stressed that "As long as you diversify the portfolio, not over-concentrated, it's fine. You can bear these kinds of shocks." On regulatory changes, Vora noted that the direction of insurance sector reforms appears aimed at making the industry more efficient and passing benefits to customers, comparing it to mutual fund industry changes that could expand the market by making investment products more affordable. Khemka said regulatory action can hurt stocks sharply in the short term but could eventually support growth, explaining that "The regulator here, I believe, has taken these actions to promote growth in the industry. Time will tell."
Both investors continue to see significant opportunities in capital-market businesses as household savings grow increasingly financialized. Vora's exposure includes exchanges, brokerages and wealth managers, with commodity exchanges being his biggest bet due to multiple growth opportunities and relatively low penetration. Khemka said exchanges can be attractive because they generally operate as monopolies or duopolies and benefit from capital formation and rising trading activity, evaluating them against the broader market using cash-flow multiples rather than price-to-earnings ratios. Khemka identified capital-market intermediaries, healthcare, and selected industrial businesses as areas with investment opportunities, noting that "Healthcare is a segment where we always find a great number, a large number, of investable opportunities."
