AI

However, the text tool ChatGPT has received the most attention. It is also the app that now holds the record for the fastest to reach 100 million users from the time it was released in November 2022. ChatGPT took 2 months to achieve this, while by comparison TikTok supposedly used 9 months and Instagram 2 years.

Why have these tools been so quickly adopted by so many? I'd say it's a combination of two things. Firstly, the quality of the output from the tools has now reached a level that is very usable. In many cases, better than what the person can create himself using a lot of effort and time. The second is that they are available to the general public so that anyone who tries them can see their benefit. Suddenly, everyone who wants has access to tools that can very quickly create fully usable versions of what you want, and at a relatively low price.

It is easy to understand that many people want to make use of this. For example, there are lots of stories about school kids and students who use ChatGPT to write essays and other tasks. The debate rages on as to whether this should be allowed or banned. At the same time, we see that advanced computer tools (call it AI) are appearing in more and more areas in people's everyday lives. Chatbots abound in first-line customer service both online and on the phone. Automatic translation of text and speech has become relatively good. Advanced cruise control for cars are approaching full self-driving. And if you trade in the markets, you can be reasonably sure that partially autonomous computer programs are on the other side of many of your trades. The machines are coming, and they are coming fast. What is new now is the speed ChatGPT and tools based on it have had in being adopted by so many different people in a number of arenas at the same time.

The AI hype has created waves in the stock market in recent weeks, and many are interested in knowing how best to position themselves for increased use of AI. Well, as usual, finding the best exposure isn't necessarily easy or obvious. But there are a number of companies that are worth mentioning. A natural place to start is OpenAI, which is behind ChatGPT. However, this is not a listed company. It was started in 2015 and was originally an initiative to promote "general artificial intelligence", which can be said to be software that is as smart as a human. The company wanted to protect us from a future where AI was monopolized by big-tech companies like Google. It should be open, transparent, and accessible to everyone. USD 1 billion was raised from donors in Silicon Valley. One of them was Elon Musk, who also sat on OpenAI's board until 2018.

But it is difficult to be idealistic when what you are doing costs billions in investments. In 2019, OpenAI shifted its focus to become a for-profit company and received USD 1 billion in funding from Microsoft. In January this year, Microsoft announced additional "multiyear, multibillion-dollar investments" in OpenAI without providing details. Following this, it has been announced that Microsoft will offer OpenAI services as part of its Azure cloud computing platform and make ChatGPT models available to users of this. They also want to renew the company's search engine Bing with the use of AI tools. Right now, Microsoft is undoubtedly in the lead in this race. However, it is a huge company, so by taking the $MSFT share you get exposure to a lot of other things as well.

Then of course you have Alphabet $GOOGL, the parent company of Google. They have long worked with AI tools, but to a lesser extent made these available to the public yet. In the summer of 2022, there was an uproar when an engineer who worked with Google's chatbot LaMDA (Language Model for Dialogue Applications) claimed that the chatbot had become self-aware, i.e. aware of its own existence on the same level as a human. At the start of February this year, Google was to present its AI-powered chatbot now called Bard. However, it managed to give the wrong answer to a question, and Google stock fell close to 10% over the next two days. Though probably mostly because of talk that AI-driven services are a major threat to Google's search-dominated revenue model.

How about good old $IBM? Well, they've been early on. Their AI is called Watson and won the well-known American TV competition "Jeopoardy" as early as 2011. Watson is now available for a number of applications via IBM's services. IBM has several times been ranked as number 1 in industry assessments regarding AI, so they are undoubtedly one of the leaders in this field.

Far ahead is also Tesla $TSLA, about which I wrote two articles a little while ago here and here. They develop and use AI through autonomous software in both vehicles and robots. They have developed their own microchips and supercomputers for this. They recently showed off a prototype of a humanoid robot, and if it is launched it could be very interesting to see how it is received. We cannot ignore Tesla as an important player in the practical use of AI.

Furthermore, there are many who highlight the leader in graphics memory chips Nvidia $NVDA as an important player for the realization of AI. It is their most advanced chips that are used to a large extent in the computers where the AI systems are run. For more about microchips and NVDA see my article about this from earlier.

A natural objection to taking positions in the above-mentioned companies if you are looking for AI exposure is that all of these are large companies best known for things other than AI. That's right, and I could easily draw out several of the same type. At the same time, it is a fact that there are companies of this type that are among the absolute leaders in this field now. AI requires enormous computing power and access to a lot of data. This costs money. At the same time, a continuous flow of information about user interaction is an important factor in constantly improving AI systems. Tesla's access to driving data and Google's access to search data are obvious examples that are difficult to copy for others without this access.

There are some smaller companies listed, particularly in the US, which can provide "cleaner" exposure to certain types of AI. Several of these have AI in their name and have moved up and down by tens and even hundreds of percent so far this year. For many, however, this has only brought back a small bit of what has fallen since the IT peak in 2021. This is not all that reminiscent of the dot-com IT boom at the turn of the millennium, where companies changed their names to something with .com and experienced strong price rise. You have to be careful with these, and as always familiarize yourself with what you are taking positions in. Examples of such stocks that I myself have on my watchlists are SoundHound AI, BigBear.ai and C3.ai, but this is not a recommendation to buy.

The term artificial intelligence invites a number of interesting discussions in many areas. Some fear that they will take over the world, and there have been many movie plots throughout the years that have played on this. Others see AI as a threat to a number of professional groups, taking their jobs. Some claim that what AIs produce is cheating, or not "real" either art or text. Still others see AI as a wonderful tool that, if used correctly, can quickly bring new opportunities to humanity. The interesting thing is that there is some truth in all these claims. Based on how quickly ChatGPT and other tools have been adopted in recent weeks and months, I think we can conclude that we have only seen the beginning, and that this will be a big topic for many years to come. Not least in the financial markets.

Disclaimer: After many years in the brokerage industry I started my own business in 2021. I published the book "Paleo Trading: How to trade like a Hunter-Gatherer” and launched Paleo Capital that manages a hedge fund according to the principles described in the book. I emphasize that nothing written on this blog is to be regarded as personal advice or a concrete call to take positions. Everyone must be responsible for their own decisions and familiarize themselves with the products they use.