Will stocks grow or die?

The rapid evolution of AI captures the imagination of investors and benefits many companies, but others die in the barrage.

The government says any debate over AI regulation needs “the broadest possible” participation from the widest possible segment of the community, from technologists to the general public. “Technology has to be good for us,” said Jenny McAllister, Assistant Secretary for Climate Change and Energy. “How we use technology is always a social choice. We welcome the interest of the tech community in how these issues are regulated and organized. increase.”

While the future looks bright for many sectors of the stock market, unless AI evolves into a terminator-like machine intent on destroying humanity, others will face new pressures.

A trend is underway where companies that mention AI will be rewarded with stock market gains. In mid-May, online retailer Temple & Webster announced it was boosting its AI, sending its stock up 27% in two days.

Shares of Telix Pharmaceuticals have risen more than 50% since April, when it boosted its AI capabilities through an acquisition in Austria.

NVIDIA, an American technology giant that makes specialized AI chips, has more than doubled its share price this year, up 30% last month alone, amid the AI craze.

Grady Wolfe, market analyst at Bell Direct, said sectors that would benefit greatly from AI include healthcare, materials, and commerce, “especially in the aftermath of the supply chain and logistics crisis that erupted after COVID-19.”・It was stated that mining, logistics, etc. were included.

Wolf said big companies like Google, Microsoft and Nvidia “are pouring billions into advancing AI,” while small-cap companies that can’t keep up with their competitors’ spending on AI could struggle. warned.

“Brick-and-mortar retailers like City Chic and Best & Less can also face some challenges,” she said.

Bell Direct’s Grady Wolfe said small-caps could struggle against big-spending giants.

Jun Bei Liu, lead portfolio manager at Tribeca Investment Partners, said local tech stocks such as NEXTDC, Appen and Megaport have risen in recent weeks.

“AI is evolving rapidly, so we don’t know what AI can replace at the moment. AI is a great tool for all fields,” said Liu.

He said NEXTDC was “the purest strategy” exposed to rising data center demand, while machine learning company Appen has been working hard but had deals with global tech giants. .

Tim Wallace, country manager at investment platform Syfe, said ASX firms “are rushing to enter the AI news cycle,” while Appen shares remain more than 90% below their coronavirus highs. said Temple & Webster was down more than 60%. Get out of the coronavirus high.

All businesses are likely to be affected by AI at some level, “just as the advent of the internet rewrote the laws of corporate growth potential,” Wallace said.

He said there are also questions about how much media and asset management will be outsourced to AI, and the scale of AI disruption.

This was the explanation for the large NVIDIA rally, which Wallace described as “a game of picks and shovels.”

“NVIDIA sells chips that power the much-talked-about AI revolution,” Wallace said.

“So how much is the shovel really worth? 208x profit? 38x return? Nvidia is one of the more expensive shovels.”

“With the global phenomenon of ChatGPT, there is a shortage of corporate executives who have blended buzzwords such as artificial intelligence and machine learning into everyday language in the past few months,” said Dominic Murczek, portfolio manager at Infinity Asset Management. I never did,” he said.

An army of AI-powered Terminators could ruin your day.

He said at least 50 of his companies have mentioned AI in earnings calls, deal updates, investor days, and annual meetings.

“We believe it is important for investors to be disciplined and not get too ahead of themselves.”

Infiniti said companies that would benefit include the likes of NextDC and Goodman Group, adding, “Despite being an industrial property business, there are a small number of data centers slated for development in Japan.” .

Cameron Gleeson, senior investment strategist at BetaShares, said innovations such as AI tend to create a “winner takes all” environment, where a few winners highlight the high failure rates of other winners.

“The few local IT companies that have been leaders in this field are actually in danger of being disrupted by innovative technology,” he said.

Gleason said there are inherent risks to equities as outsourcing business models appear vulnerable to AI and current AI leaders may not be able to maintain their position.

“Ultimately, while artificial intelligence continues to take hold as a long-term megatrend, investors should not put all their eggs in one basket.”

Stockspot CEO Chris Bryukke said investors could look at ETFs that spread their money across different companies.

“Buying individual stocks might get you lucky, but history shows that stock market gains over the last 100 years have actually come from just 7% of stocks,” he said. .

“Investing has a history of looking to the next big thing. In the early 2000s it was a bunch of tech companies.

“Our advice is to keep it to a small part of your overall portfolio if you really want to leverage AI.”

Analysts say most companies will benefit from AI, but there will also be victims. Photo: iStock