Jeremy Grantham, cofounder of GMO or Grantham Mayo Van Otterloo & Co LLC Investments, has spent decades calling out market excess and steering capital toward what he believes endures: quality cash flows, sensible prices, and real assets. He is famous for warning about bubbles before they burst and for backing long-horizon themes like climate solutions and resource efficiency. Grantham’s stance for 2025 is consistent with that legacy. He sees U.S. equities as richly valued on long-term measures, which is why GMO continues to emphasize quality, valuation, and diversification outside the hottest corners of the market.
That does not mean avoiding innovation. GMO holds dominant platforms where pricing power, wide moats, and recurring revenues that can compound through cycles. The firm trims when momentum outruns fundamentals and adds when risk-reward resets, using internal vehicles to fine-tune factor, sector, and regional exposure. You will see both of those levers at work in the latest filing: selective adds to quality tech, a small reduction in an implementation sleeve, and position right-sizing where multiples ran ahead of earnings.
Taken together, Grantham’s 2025 positioning signals a pragmatic blend. Own profitable, cash-rich franchises that benefit from AI and digitization, pair them with broad implementation tools for liquidity and balance, and keep dry powder for the fat pitches that corrections usually deliver. Below are five of GMO’s largest disclosed holdings and what they say about the firm’s outlook.
1. Microsoft (MSFT) 5.34% of portfolio
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GMO holds $2.42B of Microsoft across 4,859,939 shares, adding 76,854 (+1.61%) in the quarter. The incremental increase underscores Microsoft’s role as a structural anchor in the portfolio: a cash-rich, wide-moat business that compounds steadily through cloud, productivity software, and AI leadership.
The measured build signals GMO’s preference for calibrating exposure rather than making aggressive bets. For Grantham, Microsoft is less about chasing near-term AI hype and more about owning one of the few mega-caps capable of delivering durable returns regardless of macro conditions. In GMO’s framework, it functions as a “core compounder” that balances the more tactical sleeves of the portfolio, providing both resilience and upside optionality as markets transition through valuation cycles.
2. Meta Platforms (META) 3.63% of portfolio
Meta ranks among GMO’s top positions at $1.64B and 2,226,027 shares, with an increase of 160,575 shares (+7.77%). The investment case mixes quality and operating leverage: ad pricing power, a rapidly scaling Reels format, and rising efficiency in AI-driven ad targeting. Meanwhile, Reality Labs’ spending is increasingly framed against healthy cash generation.
A measured add says GMO wants participation in Meta’s earnings and margin expansion but remains valuation aware. Meta’s cash-rich, high-return profile plus optionality in AI infrastructure and edge compute fits Grantham’s preference for strong balance sheets and defendable moats rather than story stocks.
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3. Alphabet (GOOGL) 3.06% of portfolio
Alphabet sits at $1.38B with 7,853,396 shares, a small addition of 19,435 new shares (+0.25%) recently taking place. Search, YouTube, and Cloud create a three-engine model that throws off cash and funds for heavy AI investment. Google Cloud’s path to sustained profitability and Gemini-driven product improvements offer long-term monetization avenues beyond ad cycles.
The tiny increase is telling. GMO keeps the exposure, acknowledging Alphabet’s scale and AI depth, but adds incrementally rather than chasing performance. That is consistent with Grantham’s method: hold dominant franchises, let compounding work, and size based on valuation and risk rather than headlines.
4. Oracle (ORCL) 2.76% of portfolio
Oracle remains a top holding at $1.25B and 5,708,423 shares, though GMO trimmed 356,434 shares (–5.88%) this quarter. The thesis centers on mission-critical databases, sticky enterprise relationships, and accelerating cloud bookings tied to AI-related workloads and partnerships.
The reduction likely reflects risk control after a strong run, not a broken story. Oracle still offers durable, high-margin software plus a growing cloud business, but GMO’s cut fits a discipline of harvesting gains when multiples stretch, redeploying to areas with better forward returns. Trimming without exiting is classic Grantham: respect the moat, mind the price.
5. Abbot Laboratories (ABT) 2.35% of portfolio
GMO holds $1.06B of Abbott Laboratories across 7,814,538 shares, trimming 293,045 (–3.61%) in the quarter. Abbott is a steady compounder in diagnostics, nutrition, and medical devices, giving GMO defensive ballast against volatility in tech and cyclical names.
The modest reduction looks like portfolio calibration rather than a shift in conviction. Abbott’s diversified revenue streams and strong balance sheet make it a long-term stabilizer in Grantham’s mix, offering reliable earnings power while GMO leans harder into growth elsewhere.
Priced for Patience: How GMO Is Setting Up the Next Decade
Grantham’s 2025 blueprint is not a call to hide from innovation, it is a call to own it on sensible terms. GMO continues to favor wide-moat platforms where AI and digitization lift earnings power, while using its implementation fund to fine-tune market exposure and keep flexibility for better entry points.
If mean reversion bites lofty indices, that mix should protect capital and create opportunities. If fundamentals do the heavy lifting, the quality bias keeps compounding intact. Either way, the message is consistent with decades of Grantham’s writing: valuation matters, quality endures, patience wins.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
