Baron Capital: AI Investing Requires Active, Layered Approach

Baron Capital's Head of Technology Research Michael Lippert argues AI should be viewed as a multi-layered onion rather than a single wave of change. He warns passive, market-cap-weighted ETFs expose investors only to past winners, missing the next decade's leaders due to AI's unprecedented adoption speed. Baron's actively managed BCTK ETF uses four pillars: durable competitive advantage, visionary management, compelling valuations, and long-term growth opportunity. Lippert sees robotics and physical AI as the next major frontier, with holdings like Spotify and Axon Enterprise exemplifying companies converting AI innovation into durable, profitable business models.