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Have you ever Wondered how Artificial Intelligence is impacting the Investment Environment?
We take a little look into what AI is, who it might impact and the types of businesses we believe will be the biggest beneficiaries of this new industry.
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Stefan Angelini
G'day folks. My name is Stefan Angelini. I'm just going to talk to you a little bit about artificial intelligence and the effects it's having on the investment landscape. This should be a really good episode for those of you who just want to find out a little bit more on what artificial intelligence is, how new we are to the game, and where probably the best investment outcomes are at the moment. Now, keep in mind this is just general information. Please don't consider it as personal advice. If you want personal advice, please go and consult your licensed financial planner to determine if these different kinds of investments are right for you.
Now, first off, let me take you through artificial intelligence and what it is. Basically, after ChatGPT was released, it was one of the fastest adopted technologies ever, beating every other social media platform ever out there. And basically, let's look at how it works. Artificial intelligence, while it's been around for decades in various different kinds of forms, today we're going to focus on generative AI and large language models. Basically, these are forms of artificial intelligence that rely on training and learning from large data sets to interpret what you're inputting and to give you the best result possible based on what you want. And that's what you see with ChatGPT you ask a question, it gives you the best answer based on what it can get. Now it can generate photos based on what you want. It can generate stories based on the plot you give it.
Are there limitations on these large language models? Basically, there are. There's financial costs. So basically, if you want more embedded data, you need it comes at a higher cost because this you need increased computing power. And then as a user, we might have to face licensing deals as things become more complex and people build out the right models. But it's important that data quality is a huge priority. And it's going to be so easy for us to get lost in. So fake news kind of thing where you might not be getting the right information. So double checking of information is going to be huge. Let's look at who stands the benefit. If you want to find out more about artificial intelligence, there's plenty of articles on what it is.
But let's look at who stands the benefit. So what we think is given the pace of the technology improving, people normally have shine in a new object syndrome.
We can draw this back to the year 1999, 2000. We had the dot com bubble. Everyone was buying into tech companies, and these tech companies ended up getting a huge valuation because they were the new shiny thing and they ended up blowing up. So there was a lot of losers. Now, while there might be a few things that grab our attention at the start with these new technologies, not necessarily that the first out of the gate win in the long term. So what I would say is that what would you rather be invested in? If you think of mining, would you rather own the mining company who's more volatile or the company that produces the picks and shovels? So we prefer the picks and shovels approach, given it's such a new economy or industry. These companies will be able to provide the technology and benefit from the increased spending on all kinds of AI platforms. So some of the winners are supplier of these high end GPUs. So these are basically the chips that are used for the super computing. Cloud computing power and select software providers, basically because AI is going to need a huge amount of storage and a huge amount of computing power in order to get through what it needs to do, which is scale up its database for the best information based on what you put into what you want.
Now, hardware providers are going to be in a lot of demand, especially for high end computers. Cloud storing, infrastructure for power, calling and data storage is also going to be beneficiaries. So as people want to store more, produce more data, have better computing, it needs to go somewhere, and that's where those data storage centers might benefit. But who else might benefit? Businesses. Individual businesses can use artificial intelligence to better what they do for clients, so they can offer based on their data set, improve products and services by deploying AI, which would give them a wider moat and less competition because it's so much better than everyone else. So improved margin and improved revenues. Amazon, for example, will use their data, feed it back, run it through their model, and then be able to pinpoint exactly what's going on in their model to provide a better service.
Who gets disrupted? Well, who gets disrupted are anyone that has routine tasks, workflow reconciliation. This generative AI model will be able to do everything super fast. It can produce images, video, text. And basically, we think it's going to threaten the career of programmers, writers, graphic designers, and video editors, as well as a lot of low level tasks, which might be data analytics and gathering information, gathering data to then come in and provide you some feedback.
What are the societal impacts? Basically, a lot of people are going to be out of a job, yes, but we'll adapt, we always adapt. And that's going to probably be the biggest concern is people being out of a job. But also, what's the impact on the economy? If you're running super computers, you need more mining to manufacture semiconductor chips. You need more energy to feed these super computers, and therefore, mining efforts and chemical uses are going to increase. That's why with all those ESG providers, is this really an ESG model? Yes, it's going to be moved towards technology, but the power to get technology going when we don't have that energy source available to us right now is going to produce issues in the future.
So basically, what do we think? We think there's a lot of excitement and potential for AI, but given the speed evolving it's evolving at, don't necessarily just just jump onto the next best looking thing or don't have shiny objects in time. We prefer the opportunity to build around. So for instance, if you look at the Bitcoin scenario in cryptocurrency, cryptocurrency was the volatile, it's based on blockchain.
So that technology behind it is what you can really get into. And you can imagine that these industries are going to stay around for a long time because all these new companies will fit into it. So there's going to be a lot of different industries that will benefit. A lot of the big players are already using it really well and they'll probably be the biggest to benefit. So if you're out there looking for an AI opportunity, just make sure there's the ways to integrate it, who are the beneficiaries from supplying the industry, and who's going to win the long term. So that's a little bit of an update about AI. I hope you enjoyed it. Thanks for listening to me. Go off, happy investing. If you got any questions, reach out to [email protected] Thanks for your time. See you.