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Beyond the Hype: Navigating the AI Technology Cycle for Smart Investments

AI Technological Advancements
Written by Andy

The tech industry is currently experiencing a surge in interest and investment in Artificial Intelligence (AI) technologies. However, some experienced investors are cautious about potential bubbles and hype surrounding certain AI-themed businesses. They are instead looking for undervalued opportunities in well-established technology companies that stand to benefit from the long-term trend of AI adoption.

Nvidia, a company that manufactures computer chips used to train AI systems, has seen a significant increase in its stock value since the release of ChatGPT. Other AI-focused companies like C3.AI and Palantir Technologies have also experienced substantial stock price growth this year.

Investing in AI: How to Avoid the Hype!

The term ‘artificial intelligence’ is most unfortunate. Computers do not have reasoning ability. They can merely sift through, and find things in, a bank of material with incredible speed. A computer may well become a world chess champion, but it will not invent a novel new game, though it may well devise a variant or a more complex form, of an existing game. It certainly won’t come up with a new, original philosophical insight

The term AI leads to a misunderstanding of both the benefits and the dangers inherent in their true functionality. Their programming, and the questions they are asked, determines the answers they will give, and those answers have a spurious authority. We see this already. Peeps Google questions, and assume that the answers provided are true and complex, without enquiring what material those answers were derived from, or even considering that the information bank from which they were derived might be in parts incorrect an /or incomplete.

People just need to temper their expectations in terms of what this generation of AI is capable of, and how quickly companies will be able to turn it into profitable products. The market right now though, is a race to high ground as the waters of another debt crunch (I’m sorry, “liquidity” crisis) rise once again. There is no time for patience, and so investors are throwing hail mary investments at whatever big name says they’ll plow some of their money into AI. It’s very much a 1999 situation.

AI means both nothing and everything nowadays. Careful about snake-oil vendors, that label any cloud solution “AI Powered”. It could have been a simple ML regression model in disguise, no more powerful than the toss of a coin.

GPS routing directions make fewer mistakes than all but the best human map readers. That has (reputedly) resulted in such fate in them that a motorist has driven to Gibraltar when he intended to go to Gibraltar Point. Even crossing the Channel apparently did not cause him to question either the map directions or to check the destination he had entered. That may well be apocryphal. There are however many recorded instances of vehicles taking to farm tracks and jamming themselves under low bridges and in narrow streets because ‘the GPS told me to’, so they accepted the directions as gospel, overriding the evidence of their ow eyes and without consideration of whether the rout might be fine for private car, but not programmed to provide for the dimensions of a double-decker bus or a 38 ton articulated truck. Similarly, at sea many vessels have run aground because the destination was set on a GPS and the (straight line)course was followed by mariners who failed to appreciate that the device was not programmed to steer around obstructions along that line. It is essential to understand the question the device is programmed to answer in order to avoid disaster, let alone make best use of the answers given.

Main Points:

  1. The term “artificial intelligence” can be misleading, as computers lack reasoning ability and primarily sift through data with speed.
  2. AI cannot invent new games or provide original philosophical insights; it can only devise variants or more complex forms of existing games.
  3. Misunderstanding of AI’s true functionality arises from its programming and the questions asked, leading to answers with spurious authority.
  4. Blindly accepting AI-generated answers without verifying sources or considering potential inaccuracies can lead to misinformation.
  5. Managing expectations is crucial regarding AI’s current capabilities and its potential for profitable products.
  6. The market’s rush to invest in AI is compared to the 1999 dot-com bubble situation.
  7. The term “AI” is often overused, and caution is advised against snake-oil vendors claiming any solution as “AI-powered.”
  8. GPS misinterpretations serve as an analogy to highlight the risks of blindly following AI recommendations without understanding the programming.
  9. Misunderstandings caused by the term “artificial intelligence” and blind faith in AI’s infallibility pose risks as we delegate more to computers and rely less on human expertise and critical thinking.

As much harm will come from the misunderstandings which will be caused by use of the inappropriate term ‘artificial intelligence’ as will come from even greater faith that answers given by ever more ubiquitous and effective computers must be infallible, correct and complete. That will be all the greater a risk as we delegate more to computers and lose practice in doing our own route planning etc, and grow less able to see when the answer provided must be wrong, let alone what the right, or a better answer would be.

The AI Investment Landscape: Seeking Undervalued Opportunities in an Over-Valued Space

Generative AI, the technology behind ChatGPT that learns from large datasets to create text, images, and code, is attracting investor interest. Businesses are exploring ways to use generative AI for various applications, such as video editing, recruitment, and legal work. Consultancy PwC predicts that AI-related productivity savings and investments could generate a massive $15.7 trillion worth of global economic output by 2030.

However, investors are also aware of the hype cycle that often accompanies emerging technologies. They are cautious about betting on highly valued AI-themed companies that may not live up to expectations. Instead, they are interested in backing proven technology companies that can benefit from the long-term growth of AI.

Some investors favor big tech companies like Microsoft and Alphabet, citing their strong balance sheets and ability to invest in various technology advancements, including AI. Other strategies involve investing in companies that provide infrastructure for AI technology, such as data storage products and necessary components.

While AI offers immense potential, experienced investors understand that the true benefits of AI adoption will materialize over the long term. They are focused on making smart investment choices and avoiding blind investments driven solely by the hype surrounding AI.

As with any emerging technology you need to carefully assess the risks and opportunities in the AI space. While some companies may thrive and become winners in the AI market, others may face challenges or fail along the way. Therefore, a cautious and informed approach is necessary when investing in the potential of AI.

About the author

Andy

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