You Can’t Invest in Artificial Intelligence Yet
If you aren’t up to speed on artificial intelligence (AI) yet, start here for a simple explanation of the technology. AI is immensely powerful and consequently it is a controversial topic. Steven Hawking has warned that AI “could spell the end of the human race”. Even iconic technology futurist Elon Musk warns against AI claiming that is represents the “biggest existential threat” to humanity that we know of. Predictions abound over how many jobs AI will inevitably steal, and perhaps the most ambitious estimate we’ve seen was in an article by the Guardian yesterday.
According to technology expert Mosh Varde, half the world’s population will be out of a job in the next 30 years with the middle class being completely wiped out. While once thought to be utopian scenario, the idea of a society where everyone just sits around enjoying “leisure time” is starting to sound scary. Just how many years will it be before Nanalyze is just an AI machine which cranks out interesting articles about investing in disruptive technology and OTC
One way to start hedging against the notion that our future progeny may not have access to gainful employment is to invest in the very same technology that will eventually render them jobless. We came across an article by TechCrunch yesterday titled “Investing In Artificial Intelligence” which is written by a VC investor who majored in Stem Cells and Regenerative Medicine during his undergraduate at Oxford and who recently completed his Doctor in Philosophy in Cambridge. As you would guess, this 2,366 word article contains some fascinating facts and quality guidance about investing in artificial intelligence. The problem is, nothing in that article tells me how I can invest in artificial intelligence as a retail investor. Take the first paragraph of the article:
Artificial intelligence is one of the most exciting and transformative opportunities of our time. From my vantage point as a venture investor at Playfair Capital, where I focus on investing and building community around AI, I see this as a great time for investors to help build companies in this space.
That’s great, but what about the 98% of people reading the article who aren’t partners in a VC firm? What about investing in AI for retail investors? The reason the article doesn’t mention opportunities to invest in AI for retail investors is that there aren’t any at the moment. Sure, every media outlet seems to have published an article about how retail investors can gain access to this space such as Business Insider citing IBM, Microsoft, Google, and SAP as possible plays on the AI theme. The fact is that right now AI has no meaningful effect on the bottom line for any of these 4 companies. Not even close. Maybe the most compelling argument you could make would be for IBM based on their strong patent position in AI. While IBM is the leading holder of artificial intelligence patents (+500), the portion of their $97 billion in 2014 revenues attributable to AI was next to nothing.
The same thing holds true for Amazon and Twitter, two companies that Goldman analysts think will benefit from AI. The massive size of all the companies mentioned so far prevents any of them from ever becoming a pure play for investing in AI. While you can make all kinds of arguments about companies or industries that will benefit from AI, these are speculative bets as opposed to pure plays on the AI theme. Every single hot AI technology seems to be in an early stage startup at the moment making this space pretty much off limits for the average retail investor who wants to make money off the theme before they potentially lose their job to a machine.
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