How To Capture The AI Boom



Day by day, AI slowly moves from being a thing from science fiction to every-day life. Asking Siri, or Google’s assistant a question may seem common place, however this is Ai slowly creeping into our lives…

When Citigroup analysts said that AI “could be as disruptive as the smartphone”, it reminds me of now famous Thomas Watson quote in 1943:

“I think there is a world market for maybe five computers”

I think AI has the potential to do much, much more in the future.

Research from Merryl Lynch suggests that AI could double the rate of growth in stock markets before 2030 and propel a new digital industrial revolution…

The so-called industrial revolution 4.0!!

To quote investors from the Bank of America-Merrill Lynch:

“We believe the big data and AI revolution is underway and will propel a fifth wave of IT-driven productivity growth”

One of the main advantage of AI is its use of efficiency. For example, Google installed Ai sensors into its data centres to reduce the power needed and the system managed to reduce the electricity bill by 40%!

The data revolution has only just begun. 90% of the world’s data has been created in the past two years alone. Once that figure increases, ai and ml will eventually be able to make better decisions on certain things than humans!

The Hype factor Is Priced In
Investors today are not oblivious to the hype of artificial intelligence though. Stock enthusiasts are keeping a close eye on FAANG stocks to pick the AI winner…

In my own opinion, consumers will have to come at things from a different angle if they want to make the most of the AI boom. The hype is probably priced in to stocks already!

Also, I would avoid big tech completely because I think mr regulator is going to come along think and fast!

One of my own ideas is to take fairly standard companies which can’t replaced easily and hold onto them. One such example would be Coca Cola

I know its not a revolutionary choice, but Buffett has proved that Coke has the ROIC and brand-power to stick around.

Now, if Google can cut their costs by 40%, can you imagine what would happen to Coke the dividend machine?

Another idea was something like Nike or Burberry. Both have very strong consumer brands, are targeting consumers in the far east now (esp chinese middle class). Both are almost certainly going to benefit from this increase in productivity.

There is absolutely enormous opportunity out there for investors, you just have have to come at AI form a different angle…

The sort of investments I’m interested in these days are classic Buffett stocks which are guaranteed to benefit from surges in productivity.

Anyway, there are my thoughts!

I think investors should wake up to the potential!