Prominent value investor and PPFAS Mutual Fund CIO Rajeev Thakkar defended the valuations of America’s “Magnificent Seven” stocks, drawing a sharp line between their cash-spinning business models and the cash-burn dynamics of newer AI firms — and said the US remains a far safer investment destination than cheaper Chinese equities.
Speaking at PPFAS’ annual shareholder meeting in Mumbai on Nov. 22, Thakkar said the big US platforms such as Alphabet, Meta, Amazon and Microsoft “generate a huge amount of cash flow” and shouldn’t be compared with high-burn AI ventures or cyclical chipmakers. “These are businesses which earn a huge amount of cash flow,” he said, contrasting them with companies like OpenAI, which he described as “burning cash because their revenue is far short of the expenditure.”
He added that even semiconductor leaders face more volatility. “NVIDIA is dependent on the chip cycle… margins can break,” he said, noting that hyperscalers are already developing their own AI chips, which could dent NVIDIA’s demand over time.
Buffett wouldn’t buy into a bubble
Thakkar also pushed back on comparisons between today’s US tech valuations and the Nifty Fifty bubble of the 1970s. “Multiples are 20, 25, 30 times earnings — not bubble territory — and there’s a lot of cash on the balance sheet,” he said, pointing out that Berkshire Hathaway recently disclosed a $5 billion stake in Alphabet. “If it was Nifty Fifty kind of valuation, one wouldn’t expect Berkshire to create a fresh investment there.”
PPFAS’s US tech exposure
PPFAS’s flagship and only equity fund ( apart from ELSS fund) thus far (it is planning to launched a large-cap fund in 2026) has maintained significant exposure to the US tech stocks. As of October 2025, the fund held 11 percent exposure of total aum to overseas stocks - Alphabet Inc. Class A shares represent the largest allocation at 3.75%, followed by Meta Platforms Class A at 2.70% and Microsoft Corp. at 2.68%. Additionally, Amazon.com Inc., classified under catalog and specialty distribution, accounts for 2.37%.
PPFAS Flexi-cap has been among the top performers delivering Year-to-date returns of 7.69%, 1-year return of 10.81%. Over longer horizons, the fund has registered 19.54% (2-year), 21.98% (3-year), 22.05% (5-year), and 18.47% (10-year) annualised returns. The fund has an AUM of Rs 1,25 lakh crore.
Recently, the fund also announced that it has received approval for two dedicated passive overseas funds out of the Gift City. The Parag Parikh IFSC S&P 500 FoF and Parag Parikh IFSC Nasdaq 100 FoF, offering Indian investors direct exposure to US equities. Both funds will follow a passive investment strategy, investing in UCITS-compliant S&P 500 and Nasdaq index funds.
Chinese cheapness challenge!
On China, Thakkar said the risks far outweigh the low valuations. “You would rather be safe than sorry,” he remarked, arguing that US- or Europe-domiciled multinationals offer global exposure without the structural uncertainty and governance risks embedded in China. He highlighted restrictions on foreign ownership in key Chinese sectors and warned that ADR structures leave investors exposed. “The owners of these ADRs have no voting rights or business interest in the actual operating company,” he said.
Citing the Ant Financial spin-off — executed without the consent of major Alibaba shareholders — Thakkar said such governance overhangs make China difficult to own. “PPFAS prefers developed markets where investor rights and regulatory frameworks are clearer,” he said.
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