Sight. Sound. Smell. Elicit the right sense and it can evoke memories or trigger powerful emotions.
It’s also a multibillion-dollar business. According to Euromonitor, the worldwide fragrance market alone is around $50 billion.
German fragrance company Symrise knows this. Its specialty is in creating scents that go into products we use every day.
As the top fragrance company in the world, Symrise has to stay ahead of the competition.
Which is why its 25 dedicated fine fragrance perfumers – or “noses” – are a key part to nearly $5 billion in annual sales.
But those 25 “noses” only have so much time to go through the 1.7 million formulas in the company’s database.
Speeding up the process can be a huge advantage in keeping its edge.
And that’s why in late 2018, Symrise partnered with tech giant IBM on a new artificial intelligence (AI) fragrance application, Philyra.
The program sifts through the company’s data to create new fragrance combinations. And it can do this far faster than humans can alone.
From there, the company’s “noses” take those combinations and tweak them to get the perfect scent.
In fact, it didn’t take long for Philyra to come up with two new scents for O Boticário, the second-largest beauty chain in Brazil.
That means a centuries-old fragrance company was one of the first to successfully use AI to become more efficient.
It put Symrise years ahead of its competitors – and many other industries – in embracing AI. But of course, other companies are now catching on.
And that’s why I’m telling you this story today. Because there’s a new AI opportunity opening up – and the potential upside is massive for those who get in early.
The AI Surge
Many of you know about OpenAI and its popular AI chatbot, ChatGPT.
On November 30, 2022, OpenAI released ChatGPT to the world. Within a week, it had 1 million users. Within two months, it had 100 million users.
It’s the fastest uptake of any tech service in history. For comparison, it took TikTok nine months to reach 100 million users and Instagram more than two years.
That helped it secure a $10 billion investment from tech giant Microsoft. It vaulted AI into the mainstream. And it showed the time for AI is now.
But more importantly, many more companies are starting to adopt AI into their business.
According to a poll by Accenture, 98% of global executives believe that AI will play an important part of their business in the next three to five years.
International Data Corporation (IDC) estimates that the market for AI applications – apps that won’t function without AI – will reach $192.6 billion by 2025. That’s compound growth of 31.2% from today.
It’s a huge opportunity for investors that jump on the trend early enough.
However, it’s not as simple as throwing darts at the board and investing in any company linked to AI. You have to pick your spots to make smarter bets.
That means we have to look at companies using AI to solve real, massive problems.
The AI Gravy Train
One of the best ways to look for opportunities in new, emerging technology is to find out what the government is focusing on. Then, latch onto that trend.
Especially when it converges with problems many of us face every day. That’s why Inside Wall Street editor Nomi Prins has been pounding the table on the new AI Executive Order (EO).
President Biden signed that order in October. And the name alone says a lot about Washington’s priorities: “Safe, Secure and Trustworthy Artificial Intelligence.”
As Nomi pointed out last week, the goal is to push the U.S. on a path to be the leader in AI technology while managing its risks at the same time.
But what was striking about that EO is what it mentioned dozens of times: healthcare. In fact, the EO mentioned advancing the use of AI in healthcare as a priority.
It’s a multitrillion-dollar industry ripe for disruption.
Consider that in the U.S. alone, we spend about $4 trillion on healthcare. That’s 16% of GDP. And it’s up from $1.3 trillion, or 13% of GDP, in 2000.
And in 2022, Americans spent more than $600 billion on medications alone. A number that’s tripled since the early 2000s.
In other words, medical care isn’t getting any cheaper.
But if hospitals and physicians can find a better way to help aid them in treating patients – one that ultimately lowers costs while providing better care… They’ll invest billions to make that happen.
That’s the case today. In 2022, private investment in AI-related medical and health care totaled over $6 billion. That’s according to Stanford’s Artificial Intelligence Index Report.
That topped the list of AI-related investments. And it’s easy to see why.
Developing a new drug or life-saving device isn’t easy. Nearly 90% of new drug candidates fail. That’s after drug companies spend around a decade and billions of dollars developing these drugs.
That’s why we’re starting to see big pharma make major moves into AI. Like Johnson & Johnson, which is investing millions into AI research and hiring thousands of data scientists.
It’s not unlike how Symrise is using AI to blend new fragrances. Except in this case, it’s not about smell. It’s about finding the next life-saving medical formula.
We’re also seeing hundreds of millions of dollars of government funding going towards AI-powered medical devices.
Things that can help detect diseases – like cancer – earlier. Or devices that can aid physicians in coming up with the best course of treatment.
In fact, that’s exactly the kind of opportunity we showed viewers at an urgent market briefing Nomi hosted on Tuesday. If you missed it, catch the replay here.
Our AI Roadmap
When you take it all together with the recent executive order… Plus, the recently proposed “Artificial Intelligence Research, Innovation, and Accountability Act of 2023” is making the rounds in Congress…
We have a roadmap of where to focus.
The bigger point is that AI is here to stay. We can either embrace it and find ways to invest in its growth, or let the opportunity pass us by.
Symrise was ahead of the curve in adopting AI for its business.
If you’d bought shares of Symrise in late 2018, when it started adopting AI, you’d be up about 65% today.
Now, other industries – like healthcare – are catching up.
At the end of the day, AI is unleashing one of the greatest transformations of our lifetime.
It’s going to change the way we work. It’s going to change the way we live. And it’s going to mint fortunes for those who figure out how best to play it.
The good news is, there’s no one better at navigating what’s happening in Washington than Nomi.
And on Tuesday, I joined Nomi at an urgent event she hosted, called Wall Street and Washington’s Unfair AI Investment Advantage Exposed.
At that event, we showed you how to navigate the AI trend. And the perfect way to play it that can give you the best bang for your AI buck.
It involves using a strategy that can make you as much as 11X more money on your stocks. And yet, all you need is a regular brokerage account.
We’ve used this strategy to deliver big gains for our readers every year for the past four years – including 4,942% in 2020… 338% in 2021… 532% in 2022… and 2,174% this year.
If you missed the briefing, you can still catch the replay right here.
Regards,
John Pangere
Analyst, Inside Wall Street with Nomi Prins