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 Vardehalf 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 scams stocks?

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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9 thoughts on “You Can’t Invest in Artificial Intelligence Yet
  1. That is very interesting, I am looking to invest in AI soon using family wealth to diversify out of oil and hotels business, and would be interested to know when/if I can have meaningful investment in AI.

    Thank you Nanalyze!

  2. You can invest in AI as a retailer at the ground floor level. Look up BrainChip Holdings on the Australian Stock Exchange. Code is BRN.
    Look up their website to learn more about the company.
    Disclaimer, I own shares in the company. I don’t work for them.
    This isn’t advice. Do your own research.

    1. Hi Michael,

      Thank you for the heads up!

      BRN is a reverse merger in which the holding company acquired “BrainChip” by issuing 353,605,500 shares for a company with total net assets of -206,000 AUD. Does that make any sense whatsoever? See the second to the last page of the below document:

      The resulting entity has no revenues and a market cap of $27 million USD. One of their most recent filings is an inquiry by the ASX on their ability to stay afloat to which they reply that they are seeking financing. They burnt 2.5 million AUD in 2015 and have less than 2 million AUD on hand.

      It looks and acts just like the typical OTC company that tries to attach itself to the latest technology with a few patents and then issue shares to “bring their tech to market” until they dilute themselves out of existence. We’ll take a closer look, but initially this has too many red flags to even consider.

  3. Have you heard of Adgorithms (ticker: ADGO)?

    They are quickly transitioning into an AI Marketing company with their Albert platform. Check out some of their case studies, they’re very impressive. It was trading at under the cash value on its balance sheet for a long period because they’re burning tons of cash trying to onboard clients onto the platform, but it’s gone up recently after their latest client onboard and looks like it’s trading right around its Cash on the balance sheet now..

    I heard about them on TechEmergence’s podcast and started doing some digging after that.

    1. Nice find Arj. Judging by the chart it looks like maybe a pump? Low float and low volume? A 130% share price increase in one month is a bit strange. Nonetheless, it merits some more digging! Not sure we’ll be able to fit that in our queue THAT soon but it’s on our radar now. Thanks again!

      1. No, not a pump, just an incredibly low float combined with a share price at 1/10 of where it was a year and a half ago. Any news will cause a 100% increase yet still be 1/5 of where it was not long ago.

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