Key Takeaways
- Thematic investing based on digitalisation, affordability, and AI requires scrutiny beyond the surface narrative; each stock’s idiosyncratic risks often outweigh the broad tailwind.
- DLocal’s success is less about digital payment adoption and more about its complex management of emerging market FX and regulatory risks, where its take rate is the critical metric to monitor.
- The ‘affordability’ thesis for Oscar Health and Hims & Hers is misleading. Oscar is a leveraged play on US healthcare policy and its Medical Loss Ratio, while Hims is a direct-to-consumer brand play where customer acquisition cost versus lifetime value is the central dynamic.
- Nubank represents a more sophisticated application of AI, using it as a core operational tool for credit underwriting rather than a superficial feature. Its performance is inextricably linked to Brazilian monetary policy and the Selic interest rate.
- A forward-looking hypothesis suggests that as the market’s understanding of AI matures, capital may favour firms where AI is integral to the business model (like Nubank) over those where it is merely an enabling technology (like Hims).
A recent observation from the analyst known as ‘thexcapitalist’ suggested that the market landscape of the next decade will be carved out by three powerful forces: digitalisation, affordability, and artificial intelligence. This framework identified a handful of equities—DLocal, Oscar Health, Hims & Hers, and Nubank—as primary beneficiaries. While the allure of investing in such secular megatrends is undeniable, a closer inspection reveals a far more complex reality, where the specific operational risks and business model nuances of each company are more instructive than the overarching theme itself.
Digitalisation’s Treacherous Frontier: The Case of DLocal
DLocal ($DLO) is often presented as a straightforward play on the proliferation of digital payments across emerging markets. Its value proposition is facilitating cross-border transactions for global merchants in regions where traditional payment rails are fragmented. However, framing this simply as a growth story of digital penetration is a significant oversimplification. The company’s true operational theatre is the complex management of dozens of local currencies, regulatory regimes, and payment methods.
Its success, and indeed its primary risk, lies in navigating foreign exchange volatility. This is not just a financial risk to be hedged but a core operational component. Furthermore, its competitive moat—deep integration into local systems—is also a source of persistent regulatory risk. Investors should focus less on total payment volume (TPV) growth in isolation and more on the company’s take rate. Any meaningful compression in this metric would signal intensifying competition from larger players like Adyen or Stripe, or pressure from merchants as they scale. DLocal is less a tech company and more a highly specialised financial plumbing operator for difficult markets.
The Affordability Paradox in Healthcare
The narrative of affordability links Oscar Health ($OSCR) and Hims & Hers Health ($HIMS), yet they represent fundamentally different propositions with distinct risks. Oscar Health operates within the heavily regulated US health insurance market, primarily through the Affordable Care Act (ACA) exchanges. Its path to profitability is not a simple function of tech-driven efficiency but a tightrope walk governed by its Medical Loss Ratio (MLR)—the percentage of premium revenue spent on clinical services. A successful quarter for Oscar is one where its members stay unexpectedly healthy. Its fortunes are therefore inextricably tied to US healthcare policy and the continuation of ACA subsidies, making it as much a political instrument as a disruptive enterprise.
Hims & Hers, by contrast, is more accurately described as a direct-to-consumer wellness brand that uses a telehealth platform for distribution. It targets areas like hair loss and sexual health, where consumers are willing to pay out-of-pocket for discretion and convenience. The core dynamic here is not healthcare disruption but classic e-commerce unit economics: the ratio of customer lifetime value (LTV) to customer acquisition cost (CAC). While revenue growth has been impressive, the long-term risk is brand commoditisation in an increasingly crowded market for telehealth services.
AI as Operational Engine, Not a Marketing Slogan
Nubank (Nu Holdings, $NU) is perhaps the most interesting, and misunderstood, name in the cohort. The suggestion that it benefits from “AI demand” is imprecise. Unlike a semiconductor firm, Nubank does not sell AI; it wields it as its primary weapon for operational leverage. The company has built one of the largest digital banking platforms by serving underbanked populations in Latin America, particularly Brazil. Its crucial advantage lies in its AI-driven data analysis for credit underwriting.
By leveraging a vast proprietary dataset, Nubank can extend credit to individuals that traditional banks, with their archaic scoring models, would overlook. This is a far more profound application of AI than the chatbots or personalisation algorithms common elsewhere. However, its performance is dominated by the macroeconomic climate in Brazil. The company’s Net Interest Margin (NIM) is acutely sensitive to the direction of the Selic rate, the benchmark interest rate set by Brazil’s central bank. To analyse Nubank without a firm view on Brazilian monetary policy is to miss the most significant variable in its financial model.
A Comparative View on Valuation and Operations
Grounding these narratives in financial data reveals the distinct risk and reward profiles. The metrics below highlight that these companies, despite being grouped thematically, operate on entirely different financial planets.
| Company (Ticker) | Core Thesis | Price/Sales (TTM) | Gross Margin (%) | Key Operational Metric | Primary Headwind |
|---|---|---|---|---|---|
| DLocal ($DLO) | Emerging Market Payments | 5.8 | 46.1% | Take Rate | FX Volatility & Regulation |
| Oscar Health ($OSCR) | ACA Insurance Tech | 0.8 | 24.5% | Medical Loss Ratio (MLR) | US Healthcare Policy Shifts |
| Hims & Hers ($HIMS) | DTC Wellness | 7.5 | 82.4% | LTV/CAC Ratio | Brand Commoditisation |
| Nu Holdings ($NU) | AI-Powered Banking | 7.9 | 44.2% | Net Interest Margin (NIM) | Brazilian Macro Environment |
Note: Financial data is subject to market changes and is based on trailing twelve-month figures as of mid-2024.
The high gross margin of Hims reflects its brand-led, product-centric model, while its Price/Sales ratio signals the market’s growth expectations. Oscar’s low P/S ratio reflects the inherent risks and lower margins of the insurance industry. Nubank and DLocal trade at comparable P/S multiples, but their underlying drivers—interest rates versus transaction fees—are wholly uncorrelated.
Conclusion: Beyond the Megatrend
The temptation to invest along clean thematic lines is strong, yet rarely does it lead to alpha without a deeper, company-specific analysis. The firms identified are not pure plays on broad concepts but are instead intricate machines with unique sensitivities to policy, competition, and macroeconomic variables. For an investor, the megatrend should be the starting point for due diligence, not the conclusion.
A speculative hypothesis for the coming years: as the market’s fascination with AI evolves from the infrastructure layer (semiconductors) to the application layer, a significant re-rating will occur. Capital may begin to differentiate between firms that use AI as a feature (e.g., for marketing optimisation) and those, like Nubank, where AI is the fundamental engine of the core business model. In this environment, the market may discover that the most durable AI investments were not in the obvious tech sector but were hiding in plain sight within a Brazilian neobank all along.
References
Grand View Research. (2024). Artificial Intelligence Market Size, Share & Trends Analysis Report. Retrieved from https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market
Morgan Stanley. (2024). AI’s Next Frontier: The Rise of Reasoning Models. Retrieved from https://www.morganstanley.com/insights/articles/ai-trends-reasoning-frontier-models-2025-tmt
PwC. (2023). AI predictions 2024. Retrieved from https://www.pwc.com/us/en/tech-effect/ai-analytics/ai-predictions.html
thexcapitalist. (2024, August 23). [AI, affordability and digitalization are the mega-trends that’ll define the next 10 years]. Retrieved from https://x.com/thexcapitalist/status/1936780081713578099
