Artificial Intelligence
Artificial Intelligence (AI) is no longer a futuristic concept. It has already transformed the way we live, work and communicate. AI automates many tasks, ranging from simple repetitive tasks to complex decision-making processes. It is also becoming more accessible to businesses and individuals, thanks to cloud computing and the availability of open-source software.
There is of course CHAT-GPT. GPT stands for generative pre-trained transformer which is a type of large language model (LLM) neural network that can perform various natural language processing tasks such as answering questions, summarising text and even generating lines of code. Our education systems have been trying to figure out how to avoid receiving essays from students, generated by computers.
Apps like starryai enables users to generate art with AI by simply using words to describe what they want to see, and the app’s easy interface and functionality makes AI generation approachable for everyone. You can also alter existing images. By granting users full ownership of their creations, they can be used for NFT projects, printed out, and shared throughout social media. Pictory is an app that can be used to create videos.
AI is being used in a wide range of applications, from personal assistants like Siri and Alexa to self-driving cars, fraud detection and predictive maintenance. In healthcare, AI is being used to develop more accurate diagnoses and treatments as well as to improve patient outcomes. In finance, AI is being used to detect fraud and in manufacturing to optimize production processes and reduce costs.
One of the most significant impacts of the rise of AI is the potential to create new jobs and transform existing ones. AI is expected to create jobs in areas such as data analysis, programming and machine learning. However, the impact of job losses, caused by the automation of many routine tasks, could be much larger. This has led to calls for governments to invest in retraining and upskilling programs to ensure that workers are equipped with the skills needed to succeed in the new economy.
Another important consideration is the ethical and societal implications of AI. As AI becomes more powerful and more integrated into our daily lives, it raises questions around privacy, security, and the potential for AI to be used for more questionable, even criminal purposes. There is a need for careful regulation and oversight to ensure that AI is used responsibly and in the public interest.
Looking to the future, the rise of AI is set to continue, with the development of new applications and advances in machine learning technology. AI is expected to revolutionize many industries and to create new opportunities for businesses and individuals. However, it is important that we approach this technology with caution and consideration, ensuring that it is used ethically and responsibly and that it benefits society as a whole. It is important that we embrace this technology while being mindful of its potential implications.
From an investors point of view, investing in AI stocks can be a promising long-term investment opportunity due to the potential for growth and innovation in various industries. However, it is important to note that investing in these stocks may come with short-term volatility and risk, especially as companies prioritize reinvesting their revenue into growth, rather than reporting high earnings. The current interest rate cycle has certainly impacted the performance of AI stocks. I have started to implement funds that include companies focused on AI last year, and while they certainly underperformed more than other approaches in this interest rate hike environment, the outlook for these companies beyond this cycle is very positive and promising.
Companies like C3.ai, Palantir, IBM, Microsoft, Meta, Tesla, Google, Baidu, Nvidia, Snowflake, Zoom and Amazon are part of the AI race. These are not buying recommendations, just an overview of AI companies that could be in line for benefitting greatly from the expected annual 37% growth rate through 2030. AI is all about data. Tesla is collecting an immense amount of data through their cars, which includes information about the vehicle's performance, driver behavior and environmental conditions. This data is then analyzed by Tesla's AI systems to improve their autonomous driving technology and other features.
Investors should always exercise caution when investing in any stock or fund, including those focused on AI companies. It is also important to diversify investments and consider the overall portfolio strategy, rather than relying solely on a single sector or industry.
Cathy Wood has created a great lineup of ‘innovation only’ ETF’s which can provide access to an actively managed pool of these stocks. But as always, due diligence and caution is recommended, many of these stock prices were cut in half last year, including Cathy Wood’s funds. While these stocks and funds had a great start this year, it may take until the last quarter of 2023 or even 2024 to see a real rebound.
