Investment manager Tom Slater discusses how Scottish Mortgage’s portfolio companies are driving global change across AI, digital platforms, and electrification.

As with any investment, your capital is at risk.

Performance

The six months to 30 September 2025 have been a period of meaningful progress, not only in markets, but more importantly, in the companies leading fundamental change. Scottish Mortgage’s Net Asset Value rose by 22 per cent, ahead of the FTSE All-World Index’s 12 per cent gain. The share price increased by 21 per cent.

These results reflect renewed investor interest in innovation and growth but also a recognition that many of the companies driving transformation have emerged from the recent dislocation stronger, more efficient, and more ambitious.

A Global Engine of Progress

This period’s strongest returns came from companies building real capabilities across a wide range of sectors and geographies. It has become increasingly clear that the forces reshaping the global economy, from artificial intelligence to digital commerce and electrification, are not confined to any one country or industry. Our top contributors reflected this global diversity.

The build-out of artificial intelligence infrastructure continues to accelerate, and the companies enabling this transformation are increasingly being recognised for their strategic value. Our holdings in ASML and TSMC, essential suppliers to the world’s most advanced chipmakers, delivered strong returns as investment in computing power remained a top priority for both enterprises and governments. The performance of NVIDIA reinforced the broader opportunity around AI hardware and software. Further up the stack, Cloudflare and Snowflake benefited as businesses continued upgrading their digital architecture to better handle distributed workloads, data integration, and AI-enhanced applications.

The expansion of digital platforms, both consumer- and enterprise-facing, also contributed significantly. Companies like Roblox, Meta, and Spotify appreciated as user engagement and monetisation improved. In each case, long-term product and network investments are bearing fruit. These platforms have shown that when usage and creator ecosystems deepen, business models become more resilient and scalable. Likewise, Netflix demonstrated that disciplined content investment and pricing power can still produce robust growth in a more mature market.

In commerce and logistics, our holdings in MercadoLibre and SEA performed well. These businesses, often underappreciated due to their regional focus in Latin America and Southeast Asia, are building scaled and profitable ecosystems not just in ecommerce, but also in digital payments and financial services. The story is similar at Shopify and Doordash, which capitalised on previous infrastructure investment to improve profitability and capital efficiency.

We also saw renewed investor attention in companies tied to electrification and clean energy. CATL, the dominant Chinese battery manufacturer, and Tesla, a long-standing holding, both contributed positively. Despite differing regulatory and competitive dynamics, each benefit from the global trend toward electrification, and from deep vertical integration in their respective segments. 

Underlying all these businesses is a shared set of characteristics: the ability to scale efficiently, to benefit from compounding network or data effects, and to operate with a long-term view in sectors undergoing structural change.

“Whether in Taiwan, Brazil, Sweden, Singapore or Silicon Valley, these companies are pushing the boundaries of what’s possible and the market has begun to take notice.”

Investing in the Next Generation

In recent months, we have introduced a number of new holdings that reflect how the global economy is changing. While the sectors vary, the companies share important traits: they are founder-led, ambitious, and well placed to benefit from long-term shifts in technology, consumer behaviour and energy.

A key area of interest for us is the way people work, create, and interact online. We invested in Figma, which is becoming the standard design tool for building websites, apps and digital services. It helps teams work together in real time and is already used by many of the world’s largest companies. We also bought shares in AppLovin, a company that helps mobile games and apps reach the right audiences through better advertising. As people spend more time on their phones, AppLovin is helping app developers grow their businesses more efficiently.

We continue to look for platforms that understand the next generation of internet users. Xiaohongshu, or “Little Red Book”, is one of the most popular lifestyle platforms in China. Its users are mostly young and urban and use it to discover products and share ideas about fashion, beauty, travel and more. The platform is growing quickly but still has lots of room to expand through advertising and ecommerce.

Electrification remains one of the most important global trends. We added CATL, the world’s largest battery maker, which supplies electric vehicle and energy storage companies across Asia, Europe and the US. We also added to our position in BYD, a Chinese company that makes electric cars and buses. Both companies are positioned to benefit as transport systems shift away from fossil fuels.

Finally, we invested in Anthropic, a company building the next generation of artificial intelligence. While still at an early stage, it is one of a small number of teams globally with the expertise to train powerful AI models. These technologies could reshape how people interact with software, and how information is processed and used. We believe the company has the right mix of technical depth, safety focus and commercial potential. Anthropic (like Xiaohongshu) is a private company. Access to private companies is a necessity for investors wanting exposure to the new generation of companies focused on training AI models.

Funding has come from reductions in holdings such as Amazon, Roblox, Spotify, Meta Platforms, Netflix, Tempus AI, MercadoLibre and Shopify. Each has delivered operational progress, often with improved financial performance or renewed investor recognition. These reductions were not driven by any loss of conviction. On the contrary, we remain supportive of their long-term potential and in all cases retain meaningful positions.

Beneath the Headlines

Global conditions remain uncertain, but they are less chaotic than they were a year or two ago. Inflation has eased meaningfully from its post-pandemic peaks, though it remains above historical norms in many parts of the world. Interest rates appear to have peaked for now, and while central banks are in no rush to ease, market expectations are more stable than they have been in some time. Geopolitical tensions from US-China rivalry to regional conflicts continue to shape supply chains and national policy. However, we believe the most important shifts are not occurring in policy corridors, but in labs, datacentres, and factories around the world.

This is a period of deep technological transformation. AI is reshaping how businesses operate and how decisions are made. The infrastructure powering that change is in high demand. But progress is not limited to computing. We’re seeing progress in areas as diverse as personalised healthcare, electrification, logistics, and digital content. The companies driving these shifts operate across continents, cultures, and sectors but they share the same ambition to reimagine what’s possible.

Patience, Rewarded

Periods of strong performance are welcome, but they do not change our approach. We are not chasing short-term trends or market approval. We are long-term owners, focused on identifying the exceptional few companies that can deliver transformational outcomes over decades.

Many of the companies that contributed most this period did so after long stretches of being out of favour. Their short-term returns were not linear nor were they predictable. But they reflect what we believe is the essence of successful investing: patience in the face of noise, and conviction in the face of doubt.

We thank shareholders who share that mindset. Our task is to seek out the rare businesses creating the future, and to support them with long-term and constructive ownership, wherever in the world they may be.

Annual Past Performance To 30 September each year (net %)

Source: Morningstar, total return, sterling. NAV stands for Net Asset Value. 

*FTSE All World Index(GBP) TR.

Past performance is not a guide to future returns.

Risk Factors

Unlisted investments such as private companies, in which the Trust has a significant investment, can increase risk. These assets may be more difficult to sell, so changes in their prices may be greater.

The trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

About the author – Tom Slater

Manager, Scottish Mortgage

Tom Slater is manager of Scottish Mortgage. He joined Baillie Gifford in 2000 and became a partner of the firm in 2012. Tom joined the Scottish Mortgage team as deputy manager in 2009, before assuming the role of Manager in 2015. Beyond that, he is the head of the US Equities team and a member of another long-term growth equity strategy. During his time at Baillie Gifford, Tom has also worked in the Developed Asia and UK Equity teams. Tom’s investment interest is focused on high-growth companies both in listed equity markets and as an investor in private companies. He graduated BSc in Computer Science with Mathematics from the University of Edinburgh in 2000.

Regulatory Information

This article was produced and approved in November 2025 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.

Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA).

Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA. A Key Information Document is available at scottishmortgage.com

Past performance is not a guide to future returns.