ROBT - AI At A Crucial Inflection Point
2023-07-26 03:40:00 ET
Summary
- ChatGPT was just the start. As tech companies pour billions into AI development, achievements that seemed unimaginable not long ago may be much closer at hand.
- Now “generative AI” - made suddenly famous by OpenAI’s captivating ChatGPT tool - is poised to unlock productivity by taking on repetitive tasks and freeing humans to focus on decision-making.
- Given its vast potential, we believe AI presents a tremendous long-term opportunity for global equity investors, starting with the technology’s building blocks.
By Michael DiTillio, CFA
ChatGPT was just the start. As tech companies pour billions into AI development, achievements that seemed unimaginable not long ago may be much closer at hand.
The term artificial intelligence ((AI)) has been around since the 1950s. Once limited to simple tasks like categorizing images and pattern recognition, AI models eventually learned how to finish sentences and answer questions.
Now “generative AI” - made suddenly famous by OpenAI’s captivating ChatGPT tool - is poised to unlock productivity by taking on repetitive tasks and freeing humans to focus on decision-making. Tech touts have even labelled it the “leader of the Fourth Industrial Revolution.”
Generative AI systems run on data - tons and tons of it - but traditional computing hardware can’t handle large AI workloads. To accelerate AI’s development, tech companies are investing billions in AI infrastructure and data center architecture.
We expect that managing terabytes of information in real-time will demand lots of specialized graphics processors (called GPUs); gobs of memory and storage capacity; and, not least, plenty of high-bandwidth and low-latency connectivity.
This buildout, we believe, has brought AI to a crucial inflection point where the technology’s sci-fi promises now seem surprisingly near at hand.
Take the mobility sector, where AI is poised to drive the future of autonomous vehicles. We believe AI algorithms have the potential to process data collected from cameras and sensors to connect and mediate a wider network of autonomous vehicles, smart traffic lights and emergency services.
In addition to passenger cars, we also think AI could be especially useful in high-risk industries, such as mining and construction, by sparing more workers from performing dangerous tasks.
Given its vast potential, we believe AI presents a tremendous long-term opportunity for global equity investors, starting with the technology’s building blocks: semiconductors.
Apart from well-known giants such as Nvidia ( NVDA ), TSMC ( TSM ) and AMD ( AMD ), we think the AI supply chain is chocked with highly innovative companies, including smaller-yet-integral Asian suppliers of components and computing platforms.
In our view, rising geopolitical tensions have also boosted Southeast Asia’s role along the AI value chain; examples include Thailand (for networking equipment), Malaysia (semiconductor assembly), Singapore (semiconductor testing), and Vietnam and India (IT services).
All in all, we think AI’s 70-year-old story may just be getting started.
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AI At A Crucial Inflection Point