Maria’s Note: Maria Bonaventura here, Rogue Economics’ senior managing editor. Today, we hand the reins over to contributing editor Laurynas Vegys.
Lau has an extensive track record of investing in stocks, cryptocurrencies, and financial derivatives. He specializes in spotting megatrends in sectors like precious metals, mining, and tech. Below, he gives us a one-click way to profit from one of the five key trends on Nomi’s radar…
In 1997, a computer by the name of Deep Blue changed the course of history.
After a six-game chess match, Deep Blue defeated world champion Garry Kasparov.
It was the first time a computer ever beat a human in a traditional chess tournament.
Since then, supercomputers have gotten even better at solving complex tasks. And at the core of it is artificial intelligence (AI).
AI is one of the hottest technology trends right now. It’s right up there with virtual reality (VR), blockchain, nanotech, robotics, and 3D printing.
But AI is even more important than all the above combined.
That’s because most of these technologies run on it… or, at least, AI underpins their development.
But the AI trend is just getting started. And it goes far beyond building smart computers that can beat chess grandmasters.
AI will reshape how we live and do business. And it will happen a lot sooner than you might think.
I’ll show you why in today’s essay… and how, as an investor, you can position yourself to profit.
AI Is Unlocking Explosive Value
As regular readers know, AI is one of the five key investing themes on our radar for 2022. Here’s Nomi with more:
AI is hot. It’s already being used in multiple industries, from finance and media to healthcare, agriculture, legal, retail, oil and 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, Meta (formerly Facebook), Google (Alphabet), IBM, Intel, Microsoft, and Nvidia.
And it’s all thanks to the exponential advances in computing power happening today.
Computer power is doubling roughly every 18 to 24 months, in line with Moore’s Law. Meanwhile, the cost of computers is being cut in half.
This is why we can have real-time navigation in our cars through GPS, or stream videos on our smartphones. And it means that computing innovation will not slow down but instead continue to speed up.
That’s excellent news for AI.
AI relies on computing power to analyze infinite amounts of data. It needs to turn data into actionable information fast.
Studies show that the computing power needed for key AI landmarks over the past few years has doubled roughly every 3.4 months. That’s an increase of 300,000 times between 2012 and 2018.
And as with all technological developments, there’s a profit angle.
Investment Is Flooding Into AI
Using artificial intelligence to win your favorite board game – as Deep Blue did back in 1997 – is just one possible application of this groundbreaking technology.
The number of commercial AI applications grows every day, as does investment in it.
Why? It’s simple. Humans have created more data in the past several years than in all of recorded history.
There are 79 trillion gigabytes of data in the world today. In fact, the amount of data doubled from 2019 to 2021.
Due to the pandemic, a huge portion of the global population was working and learning from home… and consuming more online entertainment than ever before.
And this trend is far from over. The amount of data in the world is set to more than double by 2025. But it’s simply impossible for humans to process all this data.
Enter AI. It helps companies process large amounts of data, recognize patterns, and solve specific problems.
Businesses already use AI in multiple industries, as Nomi pointed out at the start of this essay. And marketing is one of the industries benefitting from AI the most.
Just think how much data global marketing leaders Google and Meta glean from our search and browsing activities… and how much they stand to make by being able to better target advertising.
But they can only do this with better and faster data analysis.
It’s no surprise, then, to see so much investment flowing into AI. You can see this in the chart below…
The U.S. is the global leader in private AI investment. In 2020, American investors poured about $23.6 billion into AI.
Investors in China put about $10 billion into AI. That made China the second-largest destination for AI research in the world, after the U.S.
Consulting firm McKinsey projects that AI will add up to $5.8 trillion in value globally by 2022. This includes things like customer service management, pricing, and other business needs. The firm’s analysts estimate that AI will add at least $13 trillion to the global economy by 2030.
Meanwhile, PricewaterhouseCoopers – a global professional services network – estimates that AI will add about $15.7 trillion to the global economy by 2030. (For perspective, China’s economy was worth about $14.7 trillion in 2020).
A Simple Way to Profit
Here’s the bottom line. The AI megatrend will revolutionize multiple industries. And it will create economic value worth trillions of dollars in the process.
So how do you position yourself to profit?
Many AI opportunities are available only to insiders and venture capitalists. They’re off-limits to the average investor.
But the Global X Robotics & Artificial Intelligence ETF (BOTZ) is a straightforward AI investment you can access with a brokerage account.
BOTZ has about $2.6 billion of assets under management. And it has 37 stock holdings, including leading chipmaker Nvidia.
It gives you exposure to companies involved in developing AI and robotics.
All the best,
Contributing Editor, Inside Wall Street with Nomi Prins
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