History says productivity lifts growth. Is AI’s impact being underpriced?

When technology improves productivity, growth usually follows. Nicky Sun of Munro Partners believes AI’s more constructive path deserves greater weight.

At Munro, Sun is immersed in research and modelling that feeds directly into portfolio decisions. She began her career in equity research at AFIC and later earned her CFA, a notoriously demanding qualification that reflects her analytical mindset.

Recent research has outlined outcomes from extreme downside to meaningful production acceleration. Markets have reacted to both. But history suggests productivity waves tend to lift growth over time.

Sun isn’t anchored to the most dramatic forecasts. Instead, she is focused on what volatility may be revealing beneath the surface and acting accordingly. 

Beyond the day-to-day market swings, she is asking a different set of questions.

• Where are barriers to entry highest?
• Where are bottlenecks forming?
• And where does risk management matter most after sharp moves?

In this conversation, Sun outlines how she is weighing growth and risk and shares what she’s buying, trimming and adding to her watchlist.

What’s your most recent investment and why?

We have recently increased our position in Howmet Aerospace (NYSE: HWM), which fits into our Travel Area of Interest.

Howmet is a manufacturer of highly engineered components for commercial aerospace, defence and industrial gas turbines markets. It holds leading positions in technically complex engine components, where barriers to entry are exceptionally high due to its proprietary processes, stringent certification requirements, and long qualification cycles.

We see a multi-year growth runway driven by rising commercial aircraft production and structural demand growth in industrial gas turbines. 

Which investment did you add to your watchlist this week?

As global growth investors, we have an investment universe of many fascinating companies. However, I have recently added Anritsu (TYO: 6754) and Keysight (NYSE: KEYS) to my watchlist.

As AI infrastructure scales, bottlenecks are increasingly shifting towards network and connectivity. 

Whilst we already have exposure in some of our funds to optical component suppliers such as Coherent and Lumentum, Anritsu and Keysight appear to be leveraged to adjacent areas of the networking supply chain that may be underappreciated, which was underscored by a record result from Keysight this week. 

What is the most recent investment you have trimmed or sold and what drove this decision?

It’s been an interesting time in markets lately! With that in mind, we have recently trimmed GE Vernova (NYSE: GEV).

At Munro, we run a disciplined risk management processes as part of our investment process, where we discuss all our stock holdings as a team on a weekly basis. 

GE Vernova was screening as a stock that had done really well, but has limited upside in our model based on our assumptions. 

We still like the company overall, but the team thought it would be prudent to trim our exposure, considering the stock had performed well.

What’s your favourite chart or data point from this week?

The recent Citrini research outlined a highly disruptive scenario rather than a forecast, but it has sparked widespread debate around AI-driven outcomes.

The Financial Times chart below illustrates potential GDP trajectories, from extreme downside to meaningful production acceleration.

History suggests that productivity enhancing technologies tend to lift long-term growth, and I think the more constructive scenario deserves greater weight. 

Ultimately, these sell-offs create opportunity for active investors who can look in the right places.

What was your weekly high – a standout market moment or highlight?

A highlight was hosting ASML's investor relations team in our Melbourne office.

ASML's monopoly position in extreme ultraviolet lithography makes it a critical enabler of advanced semiconductor manufacturing. It is a company that the team has been following for decades, and direct engagement with management helped validate our long-term thesis. 

What was your weekly low – a market disappointment or challenge?

Travel stock, Airbus (EPA: AIR), reported results recently, and the share price reacted negatively.

We know how complex aircraft manufacturing can be, and the production of aircraft continues to face various bottlenecks. This time, the constraint was a shortage of engines from a key supplier, Pratt & Whitney, which limited Airbus’s ability to accelerate deliveries.

Over the longer term, we remain confident that Airbus can progressively increase production to meet structurally growing demand for new aircraft.

In the meantime, slower delivery rates can create opportunities elsewhere in the portfolio, particularly for companies with exposure to the aftermarket, which benefit from extended aircraft service lives and lower retirement rates of older fleets.

What first drew you to markets and what continues to keep you inspired today?

My interest in markets began at university, when peers began discussing investments in various Australian listed stocks. 

I was struck by the idea that public markets allow everyday investors to own parts of large global businesses!

Today, what continues to inspire me is the privilege to learn about new companies every day. As part of a research trip, we will be meeting a range of businesses in the US next week, and identifying companies with the potential to be structural winners over the next decade remains extremely rewarding. 

What’s one piece of advice you’d give to new investors?

Something I have been focusing on is learning how to use AI tools effectively.

I'm personally amazed by how much more productive I have become with the support of AI tools, relative to when I first started in the industry.

Internally at Munro Partners, we adopt and explore all the new tools available. The most recent tool released yesterday called Perplexity Computer seems like it can enhance the research process for all investors. I think it’s a really exciting time ahead!

How do you unwind when you’re not thinking about the market?

I love Reformer Pilates and running. In my opinion, there's nothing that beats the post-run endorphins! I also enjoy cooking and baking new recipes – I’ve been enjoying baking cinnamon scrolls.

Rapid fire! 🔥

Favourite investing book?

One Up on Wall Street

Favourite investing or finance/markets-related podcast?

Business Breakdowns

The first thing you read each morning?

Bloomberg

Favourite restaurant?

Tip00

Something people are surprised to learn about you?

I will always order hot chips if it's on the menu

Think there’s a better pick? Prove it. Share your rapid-fire book, podcast, and daily read in the comments.