Is the excitement surrounding AI overblown?
Are investors putting the cart before the horse?
Should we interpret Nvidia‘s (NVDA) AI-fueled rise (shares are up 170% year to date) as the clarion call that things cannot possibly be as rosy as they seem?
Nah.
We’ve seen this movie before.
I remember when my school district started plugging all its computers into this newfangled thing called “the internet.”
Up to that point, I visited the computer lab only to type up articles for the school newspaper or play a long-haul trucking simulator that was – for some unknown reason – installed on every machine.
That was in 1998.
This morning I asked a smart speaker in my kitchen to order more applesauce for my teething son. (It’s the only thing he’ll eat without a fight.) The package will be delivered before these words are published.
In fact… hang on a sec.
I just added a bag of birdseed to my order.
Ch-Ch-Ch-Ch-Changes
In his bestselling book, The Energy Disruption Triangle, my friend David Fessler says that when it comes to technology, changes happen much faster than anyone expects.
He’s right.
Only a few folks – including another famous David – were able to predict the sweeping effect the internet would have on… well, pretty much everything.
Many saw the crashing and burning of companies like Pets.com and wrote the internet off as a mere flash in the pan…
A fad for nerds who wear black vinyl coats and sunglasses indoors.
Boy, were they wrong.
A recent study found some 60% of today’s jobs didn’t exist in 1940. They couldn’t have. Not without the internet.
These days, the “digital economy” contributes more than $2.4 trillion to U.S. GDP. It employed 8 million people worldwide in 2021.
Amazon (AMZN) alone employs 1.6 million people globally.
In fact… it’s rare to meet a young adult who isn’t planning to pursue a web-based career.
We often joke – yes, even in these hallowed pages – that today’s college-goers are seeking degrees in “underwater basket weaving” and other silliness. But data from the National Center for Education Statistics tells a different story…
It tells us that a growing number of students are opting for engineering and other technical degrees. Meanwhile, interest in social sciences and history is on the decline.
This decadelong trend is hardly surprising when you consider many of today’s graduates spent their formative years thumbing through apps on an iPad.
The Digital Economy Goes Boom
The internet disrupted everything. From our economy to our very way of life.
It’s changed us in good ways… and bad.
And for folks who invested in the right tech companies – and even some of the wrong ones – the effects have been life-changing.
In my own base portfolio, I’ve seen my shares in Apple (AAPL) more than quadruple. And in spite of last year’s tech reckoning, I’m up 32% on Digital Realty Trust (DLR), 62% on Cisco Systems (CSCO) and 262% on Netflix (NFLX).
It’s why I’m able to freely splurge on the finer things in life (like birdseed and applesauce).
Now a new wave of innovation is coming. And with it will come a new wave of profits.
Anyone who missed out on investing in the beginning phases of the internet… or the early days of crypto… should pay close attention.
There’s no need to squint, either.
AI is already shaking up industries in fundamental ways. Companies are betting big, restructuring and rethinking their hiring plans based on technology that is still in its nascent stage.
At the same time, investors are scrambling to determine where they should lay their chips. For many of them, Nvidia is now a proxy for AI as a whole.
The company’s hardware will be essential to the technology’s future… a simple fact that just pushed Nvidia shares to unprecedented heights.
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Nvidia
Manward’s own Alpesh Patel has been singing the company’s praises since January. And in a recent Stock of the Week, he profiled another blue chip AI play that’s grabbed its share of headlines lately.
But as Alpesh told me on a call last week, he isn’t just interested in investing in AI…
He’s working to invest with it.
As Important as the Internet Itself
Alpesh has made a huge splash as one of the first hedge fund managers to openly use AI as an investing tool. (He even beat JPMorgan Chase to the punch.)
Business Insider recently did a profile of his work so far. The results have been encouraging to say the least.
It’s all proof of Alpesh’s belief that AI is “as important as the internet itself.”
That’s a declaration that shouldn’t be taken lightly.
Just as the web did before it, AI is about to change the world in myriad ways… whether you’re ready for it or not.
AI has a powerful and profitable future.
Fortunes are already being made.
Our humble advice for investors?
Be ready this time.
Alex Moschina
AlexMoschinais the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.
