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Investing in Artificial Intelligence

The Stocks You Should REALLY Be Looking For

Written by Jason Stutman
Posted October 15, 2016

Something quite concerning is happening right now that threatens to cause a monumental rift in the American public... and ultimately the world at large.

Contrary to what you might be thinking, I'm not referring to our current election cycle, or anything else having to do with the common, petty politics of today. What I'm talking about is something far more consequential than any modern political squabble. It's something that promises to shake the foundations of society in a way we have never seen before.

This isn't hyperbole, some wildly misconstrued idea, or conspiracy theory. It is an event that virtually everyone in my field of study agrees is coming. The only argument to be had at this point is not if, but when.

This major and pending event is the reason Amazon, Google, IBM, and Microsoft put aside their differences last month to strike a groundbreaking partnership. It's why these companies, and others like them, are collectively spending billions to be at the head of the pack.

It's why Elon Musk is partnering with some of Silicon Valley’s most powerful companies to get an ambitious new startup off the ground... and why Chinese technology giant Huawei just handed a couple of lab rats at Berkeley $1 million.

It's why President Obama is now speaking out, warning that what's coming could put millions of Americans out of work. It's even why the POTUS and a number of little-known economists are now tossing around the strange concept of “unconditional free money.”

Know where I'm going with this yet? I'll cut to the chase...

I'm talking about the emergence of true AI — artificially intelligent machines that will eventually render humans virtually obsolete.

Just two decades ago, the words above would have read like the ramblings of a crazy person, or perhaps the beginnings of a science fiction film. Today, though, the conclusion that computers will soon overshadow human intellect is abundantly clear.

Already, computers use AI to beat the world's greatest chess masters, recognize faces, and understand and translate language. AI can drive vehicles with no human interference, compose music, and even diagnose disease better than today's doctors.

In a word, the difference between man and machine is becoming increasingly blurred. The gap between what we humans can do and what AI can't is undeniably shrinking, which ultimately raises the question of where we'll all fit in once it's closed for good.

If You Can't Beat 'Em...

According to a recent paper by Carl Benedikt Frey and Michael A. Osborne of Oxford, nearly half (47%) of American jobs today could be automated within the next 10 to 20 years. According to Bank of England chief economist Andy Haldane, 80 million (again, roughly half) of U.S. jobs are in danger of being taken over by robots and AI.

Of course, 10 or 20 years might seem like a long ways from today, but it's never too early to begin considering the investment implications of such disruptive innovation. While you certainly won't be waking up tomorrow to a world run almost entirely by machines, the very groundwork for that day is being laid here and now.

As I mentioned above, virtually every recognizable name in mainstream tech is taking action today to be a part of this trend. The most striking recent development has come in an agreement between Amazon, Google, IBM, and Microsoft known as the Partnership on Artificial Intelligence to Benefit People and Society. Never before have we seen these companies come together in a joint effort like this.

Digital and artificially intelligent assistants are already here today, and they're getting smarter every year. During its recent device reveal, Google spent most of its time not talking about hardware but instead explaining how its latest virtual assistant, Google Assistant, is being integrated into its smartphones, messaging app, and connected home devices.

Jointly, Amazon continues heavily marketing Alexa, Microsoft is integrating Cortana, and Apple is improving on Siri. Even Facebook is rolling out its own messaging AI.

There is literally no other field of research being promulgated this way by each and every major tech firm. The only other industry that comes close is virtual and augmented reality, but even that pales in comparison. Artificial intelligence — true artificial intelligence — is the holy grail of today's tech companies. The people leading these firms today will either obtain it, or they will die trying.

But for any of this to happen — for any of these tech companies to succeed in AI — the right infrastructure is required first. The same way search needed keyboards and monitors, advanced digital assistants will rely on technologies that enable things like speech and object recognition. Specifically, AI programs will rely on the right sensation hardware.

Imagine for a moment that you had an incredibly smart friend, someone who knew anything and everything there is to know. Imagine all the wonderful conversations you would have... all the things you would learn. Now imagine trying to communicate with them if they were both deaf and blind.

The reality is that no form of intelligence, neither natural nor artificial, can truly thrive without effective sensation. If a digital assistant doesn't understand what you're saying half the time or how you're saying it, it's effectively crippled.

So while you can surely invest in AI on the software front with companies like Google, IBM, Microsoft, Apple, Amazon, and so forth, there's an alternative case for hardware firms that promises to be far more lucrative. That's because the hardware companies that will be crucial for building the physical nuts and bolts of AI are tiny by comparison.

From a growth standpoint, these firms are far more compelling AI investments than any of the tech blue chips of today.

Until next time,

  JS Sig

Jason Stutman

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