Last year, the markets were glued to companies that had anything to do with artificial intelligence (AI).
There was the launch of the ChatGPT chatbot, which became the fastest-growing consumer application in history.
But ChatGPT wasn’t alone. It had competition from tech titans – like Microsoft’s Azure platform, Amazon’s SageMaker, and Google’s TensorFlow.
Following ChatGPT’s success, AI stocks exploded.
Stocks like Upstart Holdings, Super Micro Computer, and Nvidia ended the year up 117%, 294%, and 155%, respectively.
And this year, we’ll see explosive new AI – and new profit opportunities – as the tech is implemented across industries. Let me explain…
Ahead of the Headlines
If you’re a longtime reader, you were ahead of the AI boom before it made headlines last year.
I first put it on your radar in the December 30, 2021 Inside Wall Street. In that dispatch, I wrote:
AI is hot. It is already being used in multiple industries, from finance and media to healthcare, agriculture, legal, retail, oil & gas, and manufacturing.
And the number of companies – from startups to industry titans – developing AI is staggering. Some of the most prominent players are Amazon, Apple, Facebook, Google (Alphabet), IBM, Intel, Microsoft, and Nvidia.
All this investment will unlock explosive economic value. Consulting firm McKinsey estimates that AI will add at least $13 trillion to the global economy by 2030.
We had just launched Inside Wall Street. But I’d been following the rise of AI long before then.
Many of you know this, but my first job was as a programmer at IBM.
My dad worked there, too, for close to three decades. In 1981, the company even featured him in its flagship magazine, THINK.
Home computers were just starting to take off. They were still limited in their capabilities. And most people saw them as machines that needed to be told what to do.
But Dad saw greater possibilities. He envisioned a future where computers could think for themselves.
In that THINK story, he said: “The future in the computer field is in software.” And he explained that the true power of computers was in helping businesses and governments save manpower.
Jack Prins, Nomi’s dad, lays out his vision for the future in IBM’s flagship magazine
So, at IBM, he pioneered a field of forecasting called multivariate analysis. It was so important that the government contracted IBM and Dad’s team to use it on their data.
In short, this forecasting helps computers analyze large, complex data sets.
It lies at the heart of every AI today. It’s what enables AI to expand and “learn” on the back of various algorithms.
And AI is a huge – and growing – market.
A $192 Billion Market by 2025
The market for AI applications – apps that can’t function without AI – is on track to reach $192.6 billion by 2025. That’s according to figures from the International Data Corporation (IDC).
That’s compound annual growth of 31.2%.
And global executives see the writing on the wall, judging by a recent poll by management consultant firm Accenture.
It asked execs whether they believe AI will play an important role in their business in the next three to five years. Nearly all – 98% – said yes.
It’s easy to see why.
AI accelerates enterprise productivity. Businesses want to be more efficient. It means more profits at the end of the day.
Which is why more organizations are set to rely on AI for digital-first operations. The IDC says that, by 2026, 75% of large organizations will rely on AI for this.
Today, 45% of organizations haven’t expanded into AI beyond a few isolated projects.
So, there’s a huge opportunity for the companies at the forefront of this digital transformation.
What This Means for Your Money Today
At our Distortion Report advisory, I’ve recommended six companies involved in AI – with more picks to come. As the AI boom continues this year, I expect those model portfolio companies to rally with it.
Out of respect for our paid-up readers, I can’t reveal the names of those companies here. But if you’re not a Distortion Report subscriber, you can still take advantage of this trend.
The best way to do that is with the Global X Artificial Intelligence & Technology ETF (AIQ). It holds 86 stocks involved in AI – including Intel (INTC), Nvidia (NVDA), and Meta Platforms (META).
The returns are unlikely to be as big as returns in individual companies, like the ones I recommend at Distortion Report.
But AIQ is a simple way you can position yourself to ride the AI trend higher.
Regards,
Nomi Prins
Editor, Inside Wall Street with Nomi Prins