(Bloomberg) -- Baillie Gifford & Co., known for investing in hyper-growth tech stocks, now likes “boring” US infrastructure companies as it sees a building boom after many years of under-investment.

“We think there’s going to be a massive building boom certainly in the US, the UK and in some other places,” Stuart Dunbar, a partner at the Edinburgh-based firm, told Bloomberg in Tokyo. Baillie Gifford still likes some US big tech stocks but is underweight on many of them now because of high valuations, he said.

“In parts of Europe and in the US, the infrastructure is just falling apart. It’s been under-invested for 50 years and it’s getting to the point where it can’t be ignored any longer, with bridges falling down literally,” Dunbar said. “It’s quite an unexpected source of growth, like building aggregates suppliers, drainage systems providers,” he said, mentioning companies such as Advanced Drainage Systems Inc. and Stella-Jones Inc. as among its favorites.

Baillie Gifford has been known for its big bets in large tech firms such as Tesla Inc., Meta Platforms Inc. and Amazon.com Inc. But it’s now underweight most such US stocks — an unusual stance for the firm — despite its positive long-term view on them, Dunbar said.

Investment in suppliers of water pipes and utility poles is by no means a departure from its growth stock strategy, though. “We will look wherever we need to look to try to find the companies that we think have got the ability not only to grow quickly, but to do so profitably,” Dunbar said.

For tech stocks, Nvidia Corp.’s high valuation depends on continued growth, according to the investment manager. Nvidia, which makes chips used for AI data centers, trades at 34 times expected earnings, well above 23 times for the S&P 500 index. 

“That growth isn’t likely sustainable in the long term unless we start to see meaningful value coming through from applications of AI, so we’ve been top-slicing it,” Dunbar said, adding that Baillie Gifford still holds Nvidia and doesn’t have a negative view.

Baillie Gifford is more cautious on Google parent Alphabet Inc., fretting that “AI could be a Google killer,” Dunbar said. On the other hand, it’s still a fan of Amazon because strong research and development spending allows it keep a solid competitive position.

Meta also has a strong data set on which the firm can build AI capabilities, while Tesla has “incredible robotics and energy businesses” even though its rival BYD Co. “makes better cars at half the price,” he added.

BYD is among China tech shares that Baillie Gifford sees coming back, despite headwinds from threats of tariffs from the US, and Europe in the case of EV makers. Elsewhere, the investment manager thinks digital banking is an important trend, betting on fintech firms such as Nu Holdings Ltd. in Brazil and Adyen NV in the Netherlands.

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