The rise of AI marks a tipping point in technological, economic and social transformation, with profound implications for the way we live and invest. So how can investors take advantage of this trend? Jordi Visser, CIO and Chairman of Weiss Multi-Strategy Advisers, speaks with Beth Kindig on the Real Vision podcast on March 20th and discusses the explosive We take a deep dive into AI's potential to drive economic growth, how to find winners on this topic, and the sectors that will benefit from AI. , the potential for cryptocurrencies to decentralize AI, and more.
I/O Fund published an early stock analysis that said AI was an explosive opportunity. Lead tech analyst Beth Kindig is on record as saying that Nvidia will surpass Apple's valuation in 2021, and her position has remained unchanged since November 2018. AI will bring a new set of FAANGs, one of which will be Nvidia.Since her call, NVIDIA stock has risen more than 1,600%, making her the de facto market leader in the emerging AI ecosystem..
Watch the full Real Vision interview here: Real Vision Video: AI Opportunities (youtube.com)
The impact of AI is much bigger than mobile
The multi-trillion dollar impact on global GDP is what makes AI such a transformative and explosive trend. It's the same smartphone that has revolutionized countless aspects of our lives, added trillions of dollars to the global economy, and generated trillions of dollars in profits. Companies and billion dollar industries.
AI is becoming several times bigger than mobile, and will be three to five times bigger over the next decade. Beth tells Jordi that AI's GDP impact is “so far estimated at $15 trillion, but McKinsey and others are now pushing the GDP impact to $25 trillion.” Mobile Prices I would guess it's $3 trillion to $4 trillion, maybe $4 to $5. [trillion], it depends on how you segment your smartphone, applications, app stores, etc. Let’s take a high estimate of $5 trillion – [for AI]we're currently looking at a minimum of 3x and currently 5x, and those estimates continue to increase. […]”
This huge economic growth opportunity from AI is “unprecedented”. It comes from the product-market fit of AI, which solves well-defined problems, reduces costs for companies, and improves employee productivity. , you get the explosive growth of a hockey stick.”
Integration warning
Despite predicted explosive growth in AI, it may still face the same hype cycle trajectory as many other aspects of technology.
Like any innovative technology, AI “will go through a lot of innovation that is absolutely necessary…but over time, the hype phase on the user side will end.” [fades] And those businesses don't last long. ” This is happening in every aspect of technology, from mobile to gaming to one of the most notable for tech investors: the dot-com bubble.
Bess warns that “we can expect to see something similar to what we've seen on mobile happen with AI.” [and] Maybe even at a higher rate. ” For context, “waves of innovation such as mobile often bring 2 million apps to market, but over the long term, if you fast forward 10 years, most people will only have about 10 apps.” Use the” [apps]”
According to data from Crunchbase, there are nearly 10,000 AI startups, but if you look more specifically at generative AI, there are nearly 800 startups. Of his 800 patients, 67% are still in the early stages and only 2% are in the late stages. This is despite a five-fold surge in investment in generative AI, reaching nearly $22 billion in 2023, with funding concentrated in OpenAI, Anthropic, and Inflection AI.
While this kind of proliferation of companies creating a variety of AI apps and use cases is undoubtedly a positive outcome, it is highly unlikely that all 10,000 companies participating in the AI economy will survive, and consolidation through acquisition will occur. , and even bankruptcy for small, homegrown startups.
While there will ultimately be winners in AI, there is one key factor that sets these companies apart. It's data.
Data creates winners
In the case of AI, data separates the winners from the rest of the population, as training an AI model is expensive and training that model requires high-quality datasets.
Google, Meta, Amazon, and Microsoft have all invested tens of billions of dollars in AI development over the years and can quickly and easily integrate AI into their established business models. For example, Bess announced in his June 2023 report that AI will drive Microsoft's revenue by 2027, from OpenAI's APIs running on Azure, to AI integrations and partnerships through Bing, to Copilot's deployment. We looked at ways to increase his $100 billion.
The difference between Big Tech and these four companies is that they have huge proprietary datasets that can be used to train AI models for various purposes. Beth points out: “For startups and small businesses, the question is do they even have the dataset to train these models? A lot of people have been following Tesla for a long time, How likely are they to publicly release the datasets created and generated by their vehicles? I’m going to protect it with everything I have.”
Small and medium-sized businesses not only struggle to build AI infrastructure due to the high costs of building physical data center infrastructure and acquiring GPUs, but also the challenges and costs associated with high-quality AI. You will also have a hard time developing and fine-tuning your model. Have your own dataset of sufficient size. In this sense, large proprietary datasets create a “winner-takes-all” or “winner-takes-all” market, currently led by the Magnificent 7. The open source movement could change this, but when and how is speculation at this point.
Show love for semiconductors
Jordi asked Beth what part of AI she liked, and her answer was “getting used to semiconductors.” She did just that. Of the I/O Fund's more than 45% allocation to AI stocks in 2023, 40% was in semiconductors, which helped the fund reach an annualized return of 57% last year.
Semiconductors are driving Big Tech's AI ambitions, with Beth explaining that these companies “make up 50% of the AI market.” This is up from 20% or 30% of the mobile market, and for us, this is the right way to participate in AI in the near future. He added that one of the main takeaways he wants investors to take away from this interview is that “these semiconductors are going to be players in AI software.”
This is evident with Nvidia. Not only is NVIDIA monetizing its hardware sales through an enterprise software suite that costs $4,500 per GPU per year, some of the biggest announcements at GTC are the Omniverse Cloud API and Omniverse integration with Apple's Vision Pro headset. It was software through integration. .
Prepare for the next stage of AI
Semiconductors have dominated the hardware (data centers) for the first burst of AI, but will expand beyond semiconductors to the edge. Edge AI will emerge as the second wave of AI in the upcoming upgrade cycles of smartphones and PCs. Beth explained: “AI can only do so much in the data center. Inference needs to be performed close to the user.”
We're already seeing signs of this development – Samsung has partnered with Baidu to use the Chinese tech giant's AI chatbot Ernie on its S24 smartphones, and Apple is also rolling out Ernie on Chinese devices as well. We are discussing its use. AMD, Apple, Qualcomm, and Intel are all releasing new PC chips that increase AI's computing power by 2-4 times that of the previous generation to facilitate AI inference on these local devices. Masu.
I/O Fund is now gearing up to capitalize on edge AI, as it is an important trend that has not yet emerged. We share in-depth research on the next stocks that are ready to take advantage of Edge AI with Premium His members, and discuss potential entries and exits each week in his 1-hour webinar on Thursdays. We are discussing. It also provides trading alerts and automatic hedging signals. The I/O Fund team is one of the only audited portfolios available to retail investors. Learn more about.
AI is not a trend you can ignore
While many are quick to say that AI is just a “buzzword,” those in the know could see some big moves in 2023 ahead of time. AI is not a trend that can be overlooked or ignored, and it offers investors a rare opportunity to get in on one of the biggest economic and transformative trends in technology at an early stage.
The $3 trillion to $5 trillion mobile economy sprouted today's FAANG. If I could have invested in FAANG 10-15 years ago, I would have done so given its multi-trillion dollar potential. Current estimates are that AI will be three to five times greater than mobile in terms of overall impact on GDP, and we are only at the first stage of multiple powerful AI waves. And as a leading AI portfolio, I/O Fund is poised to capitalize on this once-in-a-lifetime trend.
Watch the full 1-hour interview for an in-depth look at the potential of AI, which sectors will benefit, which sectors will be the 'hot potatoes' to avoid, cryptocurrencies and AI, and more.
If you own AI stock or are considering owning AI stock, we encourage you to attend our weekly premium webinar every Thursday at 4:30pm EST. Next week, we'll discuss some AI initiatives for 2024. So what is our target, where are we going to buy and how are we going to make a profit? Learn more about I/O Fund's premium services here.
Disclaimer: This is not financial advice. Please consult your financial advisor before purchasing stocks.
Recommended reading:
