Scottish Mortgage Investment Trust enjoys 22% YTD gain, boosted by Nvidia earnings and SpaceX premium. Supply chain risks and China exposure remain concerns.
Scottish Mortgage Investment Trust is entering a pivotal fortnight, with twin catalysts — Nvidia’s earnings on 21 May and the widening valuation gap at SpaceX — shaping the trajectory of a portfolio that has already delivered a 22% year-to-date gain. The trust, which trades at a premium to net asset value (NAV) in both London and Frankfurt, faces a delicate balancing act between euphoric demand for AI-related stocks and geopolitical risks embedded in its holdings.
Nvidia’s Numbers and the Supply-Chain Wildcard
All eyes are on Nvidia’s quarterly release, a direct lever for Scottish Mortgage given its large stakes in Nvidia, Taiwan Semiconductor and ASML. Co-manager Lawrence Burns describes demand as “unbroken,” with cloud providers expected to spend roughly $650 billion on AI infrastructure by 2026. The concern, he says, lies on the supply side. A potential strike at Samsung by 50,000 workers in mid-May threatens to disrupt deliveries of AI memory chips, adding fresh strain to a sector already sensitive to any production hiccup.
The trust’s exposure to China — about 14% of assets, including ByteDance, TikTok’s parent — is another risk vector. A recent meeting between Donald Trump and Xi Jinping failed to ease trade tensions, and new US restrictions could hammer those positions. Even so, investors have piled in. In Frankfurt, the stock closed at €16.98 on Friday, up 2.3% on the day, and sits just shy of its 52-week high.
Should investors sell immediately? Or is it worth buying Scottish Mortgage Investment?
SpaceX: The Premium Engine
The most powerful driver of Scottish Mortgage’s premium — currently estimated at 3.2% to 3.5% — is SpaceX. The holding represented 17.9% of the portfolio at end of April and is the trust’s single biggest contributor to returns over multiple periods. Yet a half-trillion-dollar disagreement hangs over the name. Scottish Mortgage internally values SpaceX at $1.25 trillion, while reports around a potential IPO suggest a $1.75 trillion figure. Management defends its lower mark as rooted in verifiable transactions, not market speculation, but for retail investors the trust remains one of the few indirect routes into SpaceX before a public listing.
This premium has allowed Scottish Mortgage to do what few global investment trusts can: issue shares from its own inventory at a markup to NAV. On Friday, 500,000 shares were placed at 1,438p, following a 1-million-share placement at 1,429p on Wednesday. The London close on Friday was 1,439p. The return to net share issuance — after years of buybacks that ended in April — signals strong market confidence, and management is capitalising on the demand without diluting existing shareholders.
Private Holdings and the Coming Results
Private companies make up roughly a quarter to a third of the portfolio, and that slice holds both the biggest upside and the biggest vulnerability. While SpaceX dominates, other unlisted bets such as ByteDance and Joby Aviation add to the mix. The trust’s annual results for the year to March are expected in the second half of May, and commentary on its private-equity strategy will be closely watched.
Over one year, Scottish Mortgage delivered a total return of 44.8%, far outpacing the AIC Global sector’s 29.8%. Total assets stood at around £13.74 billion in mid-May. The next milestone on the calendar is the annual general meeting in Edinburgh on 2 July, where a board reshuffle — Professor Maxwell will step down — is set for approval. Until then, the share price will dance to the rhythm of AI supply chains and the elusive SpaceX IPO valuation.
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