Portfolio managers Ifkovics Ábrahám and Hadnagy Milán of Hold Alapkezelő told our paper that strong demand for memory chips and massive investments into artificial intelligence (AI) are beginning to divert capital away from the US government bond market. That shift of funds is one factor contributing to rising global yields.
They noted that large listed companies in both the United States and Europe reported strong results in the Q2 earnings season: S&P 500 firms showed unusually high profit growth not seen in about five years, while Euro Stoxx 600 companies increased earnings by roughly 25 percent. The managers stressed that equity price moves depend less on absolute profit levels and more on how results compare with market expectations.
Where investor attention is concentrated
Ifkovics pointed out that the US market is dominated by AI‑driven sectors and by the so‑called megatech firms (members of the Magnificent Seven, including Microsoft, Google and Meta, and also Oracle), which are making aggressive AI investments. These expenditures often appear as capital expenditures (CAPEX) and do not immediately depress reported profits.
At the same time, suppliers in the AI value chain — such as neocloud providers, new data‑centre operators and semiconductor makers — are generating very high profits. The managers singled out Micron, Samsung and SK Hynix as beneficiaries of rising memory prices.
Hadnagy warned that large CAPEX programmes can later reduce profit margins through depreciation, and companies often have to take on debt to finance such investments. Ifkovics described the scale of some US megatech investments as a form of excess: they are investing more than the liquid capital generated by their operations.
Why finding single‑name opportunities in the US is harder
Because the US attracts so much investor focus, Ifkovics and Hadnagy said it is harder to uncover mispriced, high‑potential individual stocks there. Consequently, Hold Alapkezelő tends to look for sectors and companies that have recently underperformed, where declines may reflect panic or short‑term factors rather than lasting fundamental problems.
Examples mentioned include the luxury consumer sector, which after a strong 2022–2023 run has softened as Chinese and Western demand faded, and parts of the biotech and European industrial sectors that have experienced large rallies and subsequent corrections.
Regional emphasis: Europe and Central‑Eastern Europe
The firm places particular emphasis on Central‑Eastern Europe (CEE), where they say they have better informational advantages. They noted that the region has performed strongly over the past three years, highlighting Poland and Greece and, to some degree, Hungary.
A concrete success cited this year was investments in German steel companies Thyssenkrupp and Salzgitter: share prices plunged late February amid tensions tied to the Iran war, providing a buying opportunity. Ifkovics added that a recent EU regulation tightening import quotas and increasing tariffs helped improve profit prospects for European steelmakers.
Passive investing and market concentration
The managers discussed the rise of passive investing (ETFs). In the US, more than 50 percent of assets under management are handled passively, which amplifies flows into the largest market‑cap names and increases index concentration. Ifkovics noted that the seven largest companies in the S&P 500 account for roughly 30 percent of the index — a historically high share.
Hold Alapkezelő view: passive tools are useful and low‑cost, but blind, index‑only buying can become risky if investors do not consider company fundamentals. If more market participants recognize the concentration risk and the deployment of capital into long‑term CAPEX, active management could regain appeal.
Investment horizons and recommendations
Regarding time horizons, the managers stressed that the appropriate holding period depends on the type of fund. Short‑dated bond or money‑market funds can be exited within months if needed, but absolute‑return, equity or mixed funds typically warrant a minimum three‑ to five‑year horizon. They also noted that individual funds have different benchmarks and objectives: for example, the HOLD Részvényalap focuses on Central and increasingly Western Europe, while the HOLD 2029 Deep Value Alap is a global equity fund measured against the MSCI World index as a relevant benchmark.
Cultural factors and investor base
Ifkovics highlighted cultural differences: in Europe (including Hungary) fewer people actively manage investments compared with the US, where over half of the population has some equity exposure. That greater household participation helped US markets outperform over the past decade and a half. The relatively small size of local markets and the limited number of publicly listed domestic firms also constrain equity investing in some countries.
Conclusion
Ifkovics Ábrahám and Hadnagy Milán conclude that the memory‑chip boom and large AI investments are significant structural forces: they can redirect capital flows, contribute to higher global yields, and increase concentration in equity markets. Hold Alapkezelő’s response is to search for underappreciated opportunities in Europe and the CEE region, favouring areas where they can obtain an informational edge rather than competing in the most crowded segments of the US market.
