Money & Markets: Get into AI now because it’s about to be gigantic
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Artificial intelligence is going to power an enormous amount of new technology that until now was only dreamt of in science fiction. Investors need to get on board now.
When an engineer scientist coded up an embryonic world wide web, few people – apart from a few visionaries judged at the time by most as borderline loons – would have guessed it would throw a huge monkey wrench into humanity’s system.
All the madness that seems the hallmark of the age is basically normality plus the accelerant of new technology. That is, of course, nothing new. Before mechanisation, 90 per cent of the population were farming on the land; technology changed that to only 0.5 per cent today. In comparison, digital rage holds nothing to former disruptions.
The march of technological disruption is unstoppable, as one genii after another is released from the technological lamp, and markets love them.
Meanwhile, in the short-term, US politicians have been fighting over their debt ceiling. It was a phony fight, because all politicians are addicted to debt and all modern countries skate up to the limit of fiscal sustainability, as they centralise power through a never-ending cycle of taxation. As such, no party approximate to power wants their spending or potential spending limited. It did look like there was a minuscule chance a US debt-ceiling deal wouldn't be done, and even the slight chance of a technical US default was enough to suppress markets. That possibility was not going to come to pass, so there was short-term money to be made backing the obvious outcome.
This is the world of the acute, a reality most of us live in. Bills have to be paid, jobs have to be done, kids need feeding, washing needs doing. It is a world of short-termism, tactics and tricks. It sizzles but there is no stake. As the saying goes, traders wear orange jumpsuits, investors fly in jets because beyond the hype of the now, the real money is to be made in the world of the chronic, the world of long-termism, plans and strategies.
The long term is with AI and crypto. Perhaps forget crypto for now. Crypto woke the Kraken by saying it was going to upend government and fix money, so it’s going to be under a cloud for some time.
Instead, hello AI. I hope you took my previous AI ideas on board because Nvidia, the makers of the technology that drives the creation of AI, has gone into orbit. Nvidia is now (almost) a trillion-dollar company.
This is just the beginning because, sadly, AI is a weapon. If you have it and they don’t, you win. This makes it catnip for all the wrong sorts of folks and will lead to digital arms races. There will be no ‘second amendment’ for AI, so expect it to be incrementally limited to government and licensed parties in due course, yet that won’t stop the arms race, which will drive a vast industry that will appear from nowhere.
This is where investors will need to be positioned, because AI enables so many technologies that are on the brink of being enormous that, even with massive regulation, AI will enable a whole panoply of new technologies to jump out of science fiction into our real lives.
Recently I went to see a funky shoe maker called Arthur Sleep, who telescope an eight-month wait for handmade shoes to an eight-hour wait. You go to their store off Piccadilly, step into a couple of boxes of pink foam and eight hours later their ‘microfactory’ has turned out a made-to-measure pair of shoes. As a guy with hooves for feet, this instant production of made-to-measure footwear is wonderful but it is just a stop on a branch line where AI looks at photos of your feet, tells machines to get busy and the next day you have shoes, and the only finger raised was the one to press the smartphone’s camera icon.
...and then you wear digital versions in the metaverse where you sell them for crypto so you can buy some new digital plant NFTs for your oasis planet...
Hyperventilation aside, AI is the place to be for the investor in stocks and that encompasses the hardware, the software, the enabled products and services, and the companies that can use them.
It’s a skill game of course, but in new industries a rising tide lifts all ships. Now is the time to get in early and spread your bets. While the acute situations like the US debt ceiling will shake the markets up and down, and while dastardly geopolitics will inject volatility, all these acute things, however awful, wash out, leaving the technology to grind away pushing forwards – what they used to call ‘progress.’
There seems to be a new wave of it underway and the market will embrace it and reward those that back it.
Forget the noise and back the signal.
Meanwhile, for those still keen on crypto, they need to jump into Ordinals. Ordinals are the love child of NFT and bitcoin, a beautiful Midwich Cuckoo of a crypto gestating inside the bitcoin blockchain. As I write, it is exploding yet still under the radar for even most crypto lovers.
As the Covid era shrinks in the rear-view mirror, that bright beam coming at us head on is AI. Best make sure you are in the right lane.
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