They Beat All US Stock Funds Since 2003 | Michael Baron on the AI Winners Investors Miss

Michael Baron of Baron Capital explains his case for AI beneficiaries beyond the biggest tech stocks, including software companies the market fears will be disrupted. He joins Matt Zeigler and Justin Carbonneau to discuss how competitive advantages, management quality, and a long investment horizon shape the firm's growth portfolios.
Baron Capital's co-president and portfolio manager walks through the firm's investments in Tesla and SpaceX, from vertical integration and autonomous driving to reusable rockets, Starlink, and the potential for AI infrastructure in space. He also explains why proprietary data may strengthen some software businesses, how the firm manages positions as winners grow, and what would make him sell. The conversation closes with lessons from Ron Baron on curiosity, primary research, and building conviction.
Topics covered:
• Finding growth opportunities across technology, financial services, real estate, and consumer businesses
• Why Michael Baron believes some apparent AI losers could become beneficiaries
• Proprietary data and the investment cases for Shopify, Guidewire, FactSet, MSCI, and Gartner
• Tesla's evolution, energy business, and the potential economics of autonomy and software
• SpaceX's reusable rockets, Starlink, and Michael Baron's vision for AI infrastructure in space
• Valuing businesses over a long horizon and assessing reliance on key leaders
• Lessons from Ron Baron and the importance of management relationships during market stress
• Letting winners run while managing concentration, leverage, and portfolio correlations
• Distinguishing portfolio trims from selling when a competitive advantage deteriorates
• Why Michael Baron believes AI will increase the importance of investment judgment
Learn more about Baron Capital:
baroncapitalgroup.com
Chapters:
00:00 Michael Baron on finding growth beyond technology
04:16 AI disruption and the opportunity in software
10:54 Tesla, Elon Musk, and vertical integration
18:33 Long-term valuation and key-person risk
23:28 SpaceX, Starlink, and AI infrastructure in space
34:11 Lessons from Ron Baron and the firm's future
40:08 Evaluating management and competitive advantages
47:11 Time as an edge and managing growing positions
54:11 When to trim a position and when to sell
58:11 Curiosity, primary research, and conviction
Learn more about the Excess Returns podcast network:
excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.