A top 2% fund manager shares the 3 most AI-proof stocks he's betting on

• Tom Hancock of GMO shared three stocks he thinks are insulated from AI disruption.
• His picks include software makers SAP and Jack Henry.
• Hancock's GMO Quality Fund has beaten 98% of similar funds over the last 15 years.

The Iran war and the spike in oil prices can make it easy to forget that just weeks ago, markets were in a panic about AI disruption.

That threat is still in the background, and one fund manager has a trio of stock picks to consider whenever the market starts fretting over AI again.

"Two years ago, people would say software is the best business model in the world, and now all of a sudden, people start talking about terminal value," Tom Hancock, the head of the Focused Equity team at asset management firm GMO, told Business Insider.

His comments were a jab at what he thinks turned into a panic-selling episode at the beginning of this year, but there's some truth in the idea that business models and valuations are in flux.

Like many fund managers, Hancock says he's recently had to reevaluate the companies he invests in amid fears of AI disruption. Hancock runs a few funds — the GMO Quality Fund (GQETX), the US Quality ETF (QLTY), and the recently launched GMO Domestic Resilience ETF (DRES). He's overseen the GMO Quality Fund since 2004, and over the last 15 years, he's beaten 98% of similar funds by returning an average of over 14% a year, according to Morningstar data.

His quality-factor funds are overweight technology firms relative to the rest of the S&P 500. That means Hancock has significant exposure to firms vulnerable to the AI disruption theme, especially in the software industry.

He told Business Insider that he tries to avoid the threat by going through a checklist of characteristics.

"What we are looking for in software companies is ones where, if you spin up an AI substitute, people aren't going to be inclined to use it," he said. "Let's say a software company has some sort of regulatory lock-in or proprietary data built into it. Switching costs are very high, and there's sort of a network effect or an ecosystem around people using it. Various characteristics like that."

Hancock shared three examples of companies he invests in that he sees as particularly resilient to AI disruption.

3 AI-resilient stocks

The first is German enterprise software firm SAP (SAP), which trades in the US on the New York Stock Exchange. Hancock pointed to enterprise resource planning tools specifically, which coordinate key business functions from accounting to supply chains. Executives don't yet trust AI enough to outsource their logistics needs to it, Hancock said, and with changing tariff rates, logistics are too complex not to use an established, credible provider, he added.

"Getting your logistics wrong, the costs of that are so high. There's so much expertise," Hancock said. "You're not going to start using the ERP system that someone vibecoded for you."

Hancock described shares of SAP as the best individual-stock opportunity he sees right now, as fears of AI disruption in the software space are overdone.

Second, Hancock said Constellation Software (CNSWF) is fairly insulated from AI. While the products aren't extremely high-tech, he said, their customers value the simplicity. The firm has clients in local governments, education, healthcare, the restaurant industry, and more.

"If the customers want something, they come to the vendors," he said. "There's almost like a consultant-type relationship there that an AI solution couldn't provide."

Third, Hancock flagged Jack Henry (JKHY), a company that makes payments and processing software for banks.

"There is technical expertise that is hard to replicate, high costs to making mistakes, a hurdle in retraining users, and regulatory issues than make switching risky," Hancock said. "As a bonus, their pricing is more based on transactions than seats."