ChatGPT [Investment opportunities in the Artificial Intelligence field]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
Bbddl
Posts: 114
Joined: Sat Jun 17, 2017 1:28 pm

ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Bbddl »

I was talking to somebody yesterday about the future of ChatGPT, and artificial intelligence. Anyone know of any investment opportunities in this field? Seems to have a very promising future…
User avatar
rationalist_ps
Posts: 124
Joined: Wed May 20, 2020 3:28 pm
Location: New York

Re: ChatGPT

Post by rationalist_ps »

Since this is a relatively new area, the chance of success with one's investments is less than 5% I would say. But, if one is lucky, the returns will be abnormally high.
I prefer probabilistic thinking over stories. The former emphasizes uncertainty around future outcomes (as well as in judging past outcomes), while stories tend to anchor on one view. - Antti Ilmanen
Outer Marker
Posts: 4362
Joined: Sun Mar 08, 2009 8:01 am

Re: ChatGPT

Post by Outer Marker »

Open AI is not publically traded, but you can invest in Google and Microsoft.
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: ChatGPT

Post by jebmke »

AI boom could expose investors’ natural stupidity
https://www.reuters.com/breakingviews/a ... 023-05-19/
Stay hydrated; don't sweat the small stuff
User avatar
burritoLover
Posts: 4097
Joined: Sun Jul 05, 2020 12:13 pm

Re: ChatGPT

Post by burritoLover »

No, what happens is everyone else already knows that AI will likely be big - so they bid up all companies in the space. All companies are not going to be dominant in the industry in the future so if you invest in an AI-focused fund, you are probably going to underperform the market unless the market is just completely underestimating AI's potential. The only way to make money is predict which specific companies will be dominant in the future AND are underpriced (the last part is key - they could be dominant in the future but you still underperform the market because they are overpriced now). Either that or ride the coat-tails of this bubble and get out before the bubble pops. Both options are excessively difficult even for big-brained professional traders who make you or I look like financial toddlers in comparison.
runner3081
Posts: 5978
Joined: Mon Aug 22, 2016 3:22 pm

Re: ChatGPT

Post by runner3081 »

Once everyone starts talking about it, it is way too late.
dissentmemo
Posts: 25
Joined: Sun May 14, 2023 9:01 am

Re: ChatGPT

Post by dissentmemo »

Bbddl wrote: Sun May 21, 2023 9:27 am I was talking to somebody yesterday about the future of ChatGPT, and artificial intelligence. Anyone know of any investment opportunities in this field? Seems to have a very promising future…
VTSAX
User avatar
LadyGeek
Site Admin
Posts: 95466
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general discussion). I also retitled the thread for clarity.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Opinika
Posts: 98
Joined: Fri Apr 23, 2021 4:40 pm

Re: ChatGPT

Post by Opinika »

A general comment about ChatGPT.

I gave it an assignment to answer some questions about meteorology, aerodynamics and physics. The same questions I would assign for sophomore college level final exams.

ChatGPT consistently aces my classes. Scary really. And so fast too.
Doctor Rhythm
Posts: 3035
Joined: Mon Jan 22, 2018 2:55 am

Re: ChatGPT

Post by Doctor Rhythm »

Not really a good forum for this kind of thing. Actually no forum is, but others will give more encouraging replies.

Personally if I knew something truly valuable, I wouldn’t tell you until after I’ve acquired it. I might even publicly disparage its potential. After acquisition, I’d hype it up if I planned to sell.

But I know nothing valuable and don’t really care about ChatGPT. No, really.
User avatar
LadyGeek
Site Admin
Posts: 95466
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by LadyGeek »

Those wishing to discuss ChatGPT should instead post in this thread: Bogleheads and ChatGPT

Posts with ChatGPT queries and responses in the forum should read: ChatGPT in the Bogleheads forum and Posting AI Generated Materials (e.g. ChatGPT) - allowed, but must be sourced.

Let's use this thread for investment opportunities.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: ChatGPT

Post by nisiprius »

burritoLover wrote: Sun May 21, 2023 9:42 am No, what happens is everyone else already knows that AI will likely be big - so they bid up all companies in the space. All companies are not going to be dominant in the industry in the future so if you invest in an AI-focused fund, you are probably going to underperform the market unless the market is just completely underestimating AI's potential. The only way to make money is predict which specific companies will be dominant in the future AND are underpriced (the last part is key - they could be dominant in the future but you still underperform the market because they are overpriced now). Either that or ride the coat-tails of this bubble and get out before the bubble pops. Both options are excessively difficult even for big-brained professional traders who make you or I look like financial toddlers in comparison.
Indeed.

But there's another factor, too. I'm cribbing and paraphrasing from what I learned in a Rational Reminder podcast, Lighting your Money on Fire with Thematic ETFs and elsewhere. It's not merely that all companies already in the space will be bid up. It's that the obvious opportunity will attract a flood of new businesses into the space. The shares you own in AI companies will represent a smaller and smaller percentage of all of the shares of stock in the AI space. You will own a narrower and narrower slice of the growing pie.

There's absolutely no reason to think your share of the pie will automatically get bigger. Companies do not automatically do well just because of being in "a good business."

What often happens, of course, is a boom and a shakeout. There's a certain amount of winner-take-all. The fact that the industry is growing exponentially does not increase your chances of making money, but it probably does mean that the spread of outcomes will be wide and lottery-like. Pick Commodore Business Machines and lose everything, pick Apple and hit the jackpot. The pie grows. Most of the slices shrink to zero. A few of them represent wide slices of the growing pie.

Consider what has happened with cannabis stocks. A few years ago "everyone" was buying them because the legalization of marijuana in many cases created an obvious growth opportunity. And what happened? You hardly hear about it any more, because the industry has grown, yet stock investments in the industry have tanked.

Sure, in novels people are always saying "I am greatly taken with the impressive demonstrations of those bright young brothers and their flying machine, and I shall invest in airline companies." And in novels, it works. In real life, Warren Buffett has commented
if a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down,
meaning that aviation has changed the world, yet airline stocks have performed miserably.

Don't get caught up in these fads. Can you pick the next Microsoft? You are more likely to pick the next Digital Research.

Even if you diversify with an ETF, that does not solve the problem that your holdings represent a constantly shrinking percentage of the category, and the category won't necessarily grow as fast as your percentage share of it shrinks.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by nisiprius »

Bbddl wrote: Sun May 21, 2023 9:27 am I was talking to somebody yesterday about the future of ChatGPT, and artificial intelligence. Anyone know of any investment opportunities in this field? Seems to have a very promising future…
P.S. It seems like only yesterday (2011) that IBM's Watson beat Ken Jennings in Jeopardy! and everybody was saying all the same things about Watson.

So, how has IBM stock done since then?

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by jebmke »

nisiprius wrote: Sun May 21, 2023 12:16 pm
Bbddl wrote: Sun May 21, 2023 9:27 am I was talking to somebody yesterday about the future of ChatGPT, and artificial intelligence. Anyone know of any investment opportunities in this field? Seems to have a very promising future…
P.S. It seems like only yesterday (2011) that IBM's Watson beat Ken Jennings in Jeopardy! and everybody was saying all the same things about Watson.

So, how has IBM stock done since then?

Image
Wasn't that long ago that the metaverse was the best thing since sliced bread. How much capital was destroyed in that quest?

AI may well be a winner long term; but it could also be like the internet in the 1990s, destroying huge amounts of capital on early implementations that have no value
Stay hydrated; don't sweat the small stuff
carne_asada
Posts: 212
Joined: Sat Aug 03, 2019 7:38 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by carne_asada »

nisiprius wrote: Sun May 21, 2023 12:16 pm
Bbddl wrote: Sun May 21, 2023 9:27 am I was talking to somebody yesterday about the future of ChatGPT, and artificial intelligence. Anyone know of any investment opportunities in this field? Seems to have a very promising future…
P.S. It seems like only yesterday (2011) that IBM's Watson beat Ken Jennings in Jeopardy! and everybody was saying all the same things about Watson.

So, how has IBM stock done since then?

Image
IBM picked the wrong horse in the AI race and they quickly hit the limits of the the approach used for Jeopardy!
adave
Posts: 549
Joined: Thu Sep 13, 2007 7:17 pm
Location: Houston

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by adave »

It's too early to pick winners in AI.

I have no idea who will come out on top, but I do have some thoughts.

My general view point is the models themselves will become commoditized and extremely common. So who will win? The companies that control the most valuable and UNIQUE data sets.

For example, nobody has the kind of data Tesla has, which its millions of cars being driven around the world. There is nobody who can compete with this currently.

Others also have unique data, companies like Quora and Reddit for example. Amazon obviously but perhaps retail data is more easily available.

More than who is providing the models, I would invest with companies that control valuable and unique data at scale.

Just my 2 cents however, I could be totally wrong.
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by ThankYouJack »

I've thought about this myself. I don't own any individual stocks but if I could invest $10k (or more if I did some research) directly in Open AI, I would.

Why? Because it's already been a huge game changer for me and it seems most people are yet to see the utility of it.

I believe Open AI is currently at ~$29B valuation. Will be interesting to look back a year or two from now and see where things stand. I realize it would be a bit of a gamble, competition is starting to pick up, and I would just put in money that I could afford to lose.
investorpeter
Posts: 607
Joined: Sun Jul 31, 2016 5:46 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by investorpeter »

Nvidia has already benefited greatly from the ChatGPT / Generative AI frenzy. Up 118.4% YTD.
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by jebmke »

investorpeter wrote: Sun May 21, 2023 1:31 pm Nvidia has already benefited greatly from the ChatGPT / Generative AI frenzy. Up 118.4% YTD.
almost recovered from their crypto-crash
Stay hydrated; don't sweat the small stuff
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by nisiprius »

carne_asada wrote: Sun May 21, 2023 12:33 pm
nisiprius wrote: Sun May 21, 2023 12:16 pm It seems like only yesterday (2011) that IBM's Watson beat Ken Jennings in Jeopardy! and everybody was saying all the same things about Watson.

So, how has IBM stock done since then?
IBM picked the wrong horse in the AI race and they quickly hit the limits of the the approach used for Jeopardy!
That's kind of the point. It's easy to say "AI" (or cannabis or aviation or personal computers or the Internet) has a bright future, but picking a broad category that everybody can see the potential of doesn't mean you don't have to pick the right horse. Picking the right horse is the hard part.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Capster1
Posts: 252
Joined: Thu Jun 24, 2021 11:34 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Capster1 »

I don’t know about investment, but I’ve been using it to do quick research. It’s also help me be more productive with my brainstorming, writing, and other tasks.

I could be wrong about this, but from what I’ve gathered Microsoft stands to gain from ChatGPT. It can be potentially integrated into their platform.
investorpeter
Posts: 607
Joined: Sun Jul 31, 2016 5:46 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by investorpeter »

NVDA is very close to an all-time high. I don’t think the drop in 2021-22 was so much due to crypto crashing as much as a general decline in large-cap tech. But the recovery this year in NVDA has been far better than the rest of large cap tech, I think largely because of the interest in ChatGPT and the need for massive training power for generative AI systems. There aren’t many other individual stocks right that would benefit more from generative AI. Google and Microsoft, of course, but they are so large, generative AI is unlikely to move the needle much for them.

NVDA did drop significantly in the 2018 crypto crash when they failed to account for the fact that all the GPUs used for mining coming onto the secondary market would destroy their market for new gaming graphics cards. I think they learned their lesson from that episode and that didn’t really happen with the latest crypto crash. NVDA now makes more from data center than from selling gaming cards anyway.
User avatar
burritoLover
Posts: 4097
Joined: Sun Jul 05, 2020 12:13 pm

Re: ChatGPT

Post by burritoLover »

nisiprius wrote: Sun May 21, 2023 12:01 pm
burritoLover wrote: Sun May 21, 2023 9:42 am No, what happens is everyone else already knows that AI will likely be big - so they bid up all companies in the space. All companies are not going to be dominant in the industry in the future so if you invest in an AI-focused fund, you are probably going to underperform the market unless the market is just completely underestimating AI's potential. The only way to make money is predict which specific companies will be dominant in the future AND are underpriced (the last part is key - they could be dominant in the future but you still underperform the market because they are overpriced now). Either that or ride the coat-tails of this bubble and get out before the bubble pops. Both options are excessively difficult even for big-brained professional traders who make you or I look like financial toddlers in comparison.
Indeed.

But there's another factor, too. I'm cribbing and paraphrasing from what I learned in a Rational Reminder podcast, Lighting your Money on Fire with Thematic ETFs and elsewhere. It's not merely that all companies already in the space will be bid up. It's that the obvious opportunity will attract a flood of new businesses into the space. The shares you own in AI companies will represent a smaller and smaller percentage of all of the shares of stock in the AI space. You will own a narrower and narrower slice of the growing pie.
Good point.
Logan Roy
Posts: 1794
Joined: Sun May 29, 2022 10:15 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Logan Roy »

You always have to think two or three steps ahead with themes.. Technologies themselves can revolutionise the world without being profitable.. Consumer Staples were the most profitable sector from about 1960-2010, while Tech was the least.. Tech brought us microprocessors, software, the Internet, smartphones.. Staples just kept selling us coke and toothpaste.

Thematic ETFs seem to be cashing in on 'dumb money'. Not long ago, banal micro-cap businesses could put 'blockchain' in their titles and have their share prices climb 1,500%.

Who does ChatGPT really benefit? How easy will it be to reproduce the results or build something better? How soon will similar technologies be open source? Am I benefiting more, using ChatGPT, or the developers, charging a few cents every time I ask it something? It's really not obvious it gives Microsoft any persistent advantage – unless it proves impossible to replicate, or they manage to stay ahead.. All you need is a slightly better implementation, and a GPT competitor might evolve 20% faster? .. I think it makes more sense to consider social and cultural implications of AGI.. Are we really going to be using Microsoft or Apple's implementations (heavily censored and constrained), or is it just going to become ubiquitous, decentralised? I still think Apple's a pretty good bet. Wherever it goes, I think they'll probably be providing the interfaces and design for a long while to come. They'll be slow, but they'll probably get it right, bringing it to the masses.
rockstar
Posts: 6308
Joined: Mon Feb 03, 2020 5:51 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by rockstar »

I have both a QQQ and TQQQ position. I feel good about my extra concentration in companies like MSFT.

Personally, I'm starting to use ChatGPT at work to increase my efficiency.
PoorHomieQuan
Posts: 153
Joined: Thu Aug 25, 2022 8:07 pm

Re: ChatGPT

Post by PoorHomieQuan »

runner3081 wrote: Sun May 21, 2023 9:44 am Once everyone starts talking about it, it is way too late.
You would think this, but over shorter timeframes, momentum works really well. One reason is because of your mindset --- people resist buying investments that have recently gone up, even if the investment is not at its fair value yet.

However overall I find the question rather odd for this forum. Obviously it's a form of trading, as no investment in AI is going to be a good one for many decades. We buy VTI here because the successful investments keep rotating and we don't want to incur capital gains by switching between them (as if we knew in advance what they'd be).
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Valuethinker »

nisiprius wrote: Sun May 21, 2023 2:07 pm
carne_asada wrote: Sun May 21, 2023 12:33 pm
nisiprius wrote: Sun May 21, 2023 12:16 pm It seems like only yesterday (2011) that IBM's Watson beat Ken Jennings in Jeopardy! and everybody was saying all the same things about Watson.

So, how has IBM stock done since then?
IBM picked the wrong horse in the AI race and they quickly hit the limits of the the approach used for Jeopardy!
That's kind of the point. It's easy to say "AI" (or cannabis or aviation or personal computers or the Internet) has a bright future, but picking a broad category that everybody can see the potential of doesn't mean you don't have to pick the right horse. Picking the right horse is the hard part.
Not much talked about, but I think the Canadian cannabis stocks have pretty much all crashed. It wasn't such a great business after all.

Another example of there's a bubble, people pile in, the bubble eventually blows, and for the vast majority of investors, we are none the wiser.

Dot com bubble was unusual because it was so widespread. US housing 2002-2006 (2008/9) was perhaps the biggest bubble in all of financial history (if you accept back-casting of GDP numbers through the centuries). So when those blew, it was noticeable and in the US case precipitated a Global Financial Crisis.

On the other hand, China has run a real estate bubble even larger than the US one, and it is expiring. But so far the PRC government has managed to keep the effects localised - a sort of managed workout.

The key transmission mechanism is typically the banking system. Adverse shocks causing bank runs and thus a contagion across the economy (and the world). Except we now have a "Shadow Banking System" which is about the same in size as the global banking system-- ie protected to a very varying extent by regulation, whereas banks are much more heavily regulated than they were. So we are once again in uncharted waters as to whether *that* will exhibit similar characteristics in a crash.
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT

Post by Valuethinker »

PoorHomieQuan wrote: Sun May 21, 2023 9:17 pm
runner3081 wrote: Sun May 21, 2023 9:44 am Once everyone starts talking about it, it is way too late.
Obviously it's a form of trading, as no investment in AI is going to be a good one for many decades.
That seems an overly conservative timetable.

I know there's a hype bubble around LLMs, as predicted by that Gartner curve. But there's also some very real stuff going on there. The rate of improvement seems to be just nuts.

If you meant purely from an investment point of view, the early winners (Nvidia especially) are quite clear? Also possibly the losers (Google). What it does to the tech ecosystem generally is not yet clear (at least to me).
freakyfriday
Posts: 184
Joined: Tue Aug 23, 2022 10:00 am
Location: London

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by freakyfriday »

In my view the risk with a gold rush is that you invest in a mine and not in shovels.

OpenAI, Google, Meta etc are mine companies, AMD, Nvidia, Microsoft, Google, Amazon are shovel companies.

No matter who has the Next Great AI idea they will need to train the model on graphics cards in sever farms, and run it on (probably) graphics cards in server farms.
User avatar
sperry8
Posts: 3065
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by sperry8 »

A guy named Walayat trades in what he calls Quantum AI Tech stocks. You can find his list here if it interests you: https://www.marketoracle.co.uk/Article70544.html

I own many of these stocks through my Index fund. In fact via that Index fund many of the stocks make up a good % of my portfolio. :moneybag
BH Contests: 23 #89 of 607 | 22 #512 of 674 | 21 #66 of 636 |20 #253/664 |19 #233/645 |18 #150/493 |17 #516/647 |16 #121/610 |15 #18/552 |14 #225/503 |13 #383/433 |12 #366/410 |11 #113/369 |10 #53/282
gips
Posts: 1752
Joined: Mon May 13, 2013 5:42 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by gips »

how to make money from AI trend in three easy steps:
1. create etf with “AI” in security name and ticker
2. ask chatgpt which companies in the russell 2000 will benefit the most from AI
3. announce etf creation on infamous reddit forum
cjking
Posts: 2039
Joined: Mon Jun 30, 2008 4:30 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by cjking »

My current investment strategy has resulted in me having a slightly higher exposure to renewable energy than I'm comfortable with. I have no explicit policy in that direction, it's simply where seeking a good medium-term history of profits has taken me. According to a random Youtube video I watched yesterday, one consequence of AI might be nuclear fusion gets solved, and virtually unlimited cheap energy becomes available. I don't take such prognosticating seriously enough to change my strategy, but I think the lesson is that the world may be disrupted in all sorts of ways we can't really anticipate, and the best investment response might simply to be to diversify. In the unlikely event I do anything in response to the AI hype, it will be to diversify, stop trying to outperform, and revert to a more default strategy of owning the world index, which would be safer.
User avatar
LadyGeek
Site Admin
Posts: 95466
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by LadyGeek »

I moved nisiprius' post and a follow-up into a related thread: Re: Bogleheads and ChatGPT

This is a broad topic, but remember that we are an investing and personal finance forum. Please stay focused on those aspects.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
jarjarM
Posts: 2502
Joined: Mon Jul 16, 2018 1:21 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by jarjarM »

investorpeter wrote: Sun May 21, 2023 1:31 pm Nvidia has already benefited greatly from the ChatGPT / Generative AI frenzy. Up 118.4% YTD.
As someone who's main task is to watch these "AI" servers put together, there's a frenzy of hyperscale grabbing any available A100/H100 chips from Nvidia, given that they're the only game in town at the moment. However, it's going to change in the next 3-4 yrs, with several large FAANG types designing (or in GOOG's case already have it running inhouse) their own ASIC for genAI specific applications. AMD is also getting in on the game as well. Currently the word on the street (by that I mean among those running the actual models), Nvidia's advantage is really in their firmware (CUDA), several gens ahead of the field. So we should see the field changing in the next 3-4 yrs but Nvidia will still have a lead.
garlandwhizzer
Posts: 3562
Joined: Fri Aug 06, 2010 3:42 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by garlandwhizzer »

Let us assume that NVDA does in fact have the current secret sauce for production of AI chips. How much is that worth? The current PE of NVDA is 179.6. No one would pay $180 for $1 of current annual profits unless there were great expectations for the future. That IMO implies huge amounts of optimism about massive future outperformance not just in the next 6 -12 months but over a multiyear period, assuming NVDA's dominant position relative to competitors will be maintained, a risky assumption. It also implies that the US market apart from the AI space has rather dim prospects going forward. VTI which is currently tech/growth dominated has a PE of 20.2 and in the SCV space, IJS has a PE of 10.3. The disparity in PE is striking. The market seems to be anticipating not only that AI's future returns will shine like an investment supernova but also that AI will also be massively disruptive and destructive toward diversified equity and especially so value stocks.

I do not know the future up front. Importantly, I know I don't know it and am skeptical of those to claim to know it. Not hoping on board the NVDA, ChatBot train is an easy choice for me. I suspect that AI will indeed turn out to be economically transformative, but picking future winners over the next 5 or 10 years is akin in my view buying a lottery ticket. I also suspect that both the broad market (TSM) and its ugly ducklings (SCV) will adopt AI into their business plans when it becomes economically feasible in the future to do so and therefore benefit from it. It is important to remember that those who made the fortunes in the California gold rush were not those who discovered the gold or those who directly mined it, but instead those like Leland Stanford whose businesses profited from selling goods and services to those groups and the growing economy it created.

I am not a gambler when it comes to investing. I believe it to be a loser's game for most who try it. In addition to gambling, the current AI investing craze shows herd behavior, FOMO. I believe strongly in diversification as a risk reduction strategy. I also believe strongly that the tech landscape is volatile and can change so quickly and so dramatically that reliably picking the ultimate winners of a new trend over the next 5 to 10 years is somewhere between extremely difficult and impossible. I see no reason to alter my investment strategy at this point due to the current AI mania.

Garland Whizzer
pal99
Posts: 1
Joined: Wed Feb 08, 2023 8:19 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by pal99 »

Here’s an interesting article on this topic, that’s a bit different, that Barry Ritholtz shared this weekend https://www.riskhedge.com/outplacement/ ... -big-stock.

(Not that I invest in any of it)
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by nisiprius »

There's no way to know whether AI (in the form of language model chatbots) is being overhyped, underhyped, or hyped just the right amount.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
PoorHomieQuan
Posts: 153
Joined: Thu Aug 25, 2022 8:07 pm

Re: ChatGPT

Post by PoorHomieQuan »

Valuethinker wrote: Mon May 22, 2023 3:09 am
PoorHomieQuan wrote: Sun May 21, 2023 9:17 pm
runner3081 wrote: Sun May 21, 2023 9:44 am Once everyone starts talking about it, it is way too late.
Obviously it's a form of trading, as no investment in AI is going to be a good one for many decades.
That seems an overly conservative timetable.

I know there's a hype bubble around LLMs, as predicted by that Gartner curve. But there's also some very real stuff going on there. The rate of improvement seems to be just nuts.

If you meant purely from an investment point of view, the early winners (Nvidia especially) are quite clear? Also possibly the losers (Google). What it does to the tech ecosystem generally is not yet clear (at least to me).
Yes, NVDA would have been a great ticker to buy 6 months ago. Is it a great ticker to buy now? Who knows. But I would not gamble by holding it for the next 30 years. Even if AI takes over the world, how do you know if NVDA is going to 30x their revenue as some market participants seem to be anticipating? NVDA has a p/s ratio of 30(!). Meanwhile there are plenty of smart electrical engineers in the world not employed by NVDA.

Also GOOGL seems to be doing pretty much alright... not sure why anyone thought the world's leading AI firm would not benefit from sudden public awareness of AI? But you're not alone there. Plenty of people got that one very wrong this year.
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Valuethinker »

nisiprius wrote: Mon May 22, 2023 6:08 pm There's no way to know whether AI (in the form of language model chatbots) is being overhyped, underhyped, or hyped just the right amount.
Maybe we should ask ChatGPT?

:? :? :wink:
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT

Post by Valuethinker »

PoorHomieQuan wrote: Mon May 22, 2023 8:17 pm
Valuethinker wrote: Mon May 22, 2023 3:09 am
PoorHomieQuan wrote: Sun May 21, 2023 9:17 pm
runner3081 wrote: Sun May 21, 2023 9:44 am Once everyone starts talking about it, it is way too late.
Obviously it's a form of trading, as no investment in AI is going to be a good one for many decades.
That seems an overly conservative timetable.

I know there's a hype bubble around LLMs, as predicted by that Gartner curve. But there's also some very real stuff going on there. The rate of improvement seems to be just nuts.

If you meant purely from an investment point of view, the early winners (Nvidia especially) are quite clear? Also possibly the losers (Google). What it does to the tech ecosystem generally is not yet clear (at least to me).
Yes, NVDA would have been a great ticker to buy 6 months ago. Is it a great ticker to buy now? Who knows. But I would not gamble by holding it for the next 30 years. Even if AI takes over the world, how do you know if NVDA is going to 30x their revenue as some market participants seem to be anticipating? NVDA has a p/s ratio of 30(!). Meanwhile there are plenty of smart electrical engineers in the world not employed by NVDA.

Also GOOGL seems to be doing pretty much alright... not sure why anyone thought the world's leading AI firm would not benefit from sudden public awareness of AI? But you're not alone there. Plenty of people got that one very wrong this year.
Google sees AI as an existential threat. So maybe they will have reacted fast enough. There's a long history of industry incumbents (not just in tech) being unable to respond to a disruptive innovation. Not because they don't see it, but because their existing business model meets the needs of the existing customers too well. IBM and mainframes. DEC and minicomputers. Tesla and the car industry might be another example-- it is filling a gap that shouldn't have been opened by the auto OEMs, but was (Daimler had a 10% stake, which saved the company (Tesla) at the time, and they sold it for 5x their money, when it would now be worth several times what Daimler itself is worth).

I agree this doesn't make for good stock picking. Even the managers of these businesses cannot accurately predict the outcomes, let alone us as outsiders.

Agree with NVidia's forbidding ratings. Although IP type companies do tend to have incredible ratings (see ARM, when it re-lists). But as an individual punt? Well, it's one of the most popular stocks out there with small investors, which suggests to me the smart money has already moved (small investors being composed of people who really know the industry because they work in it, and truly dumb investors such as myself).
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Valuethinker »

garlandwhizzer wrote: Mon May 22, 2023 2:28 pm Let us assume that NVDA does in fact have the current secret sauce for production of AI chips. How much is that worth? The current PE of NVDA is 179.6. No one would pay $180 for $1 of current annual profits unless there were great expectations for the future. That IMO implies huge amounts of optimism about massive future outperformance not just in the next 6 -12 months but over a multiyear period, assuming NVDA's dominant position relative to competitors will be maintained, a risky assumption. It also implies that the US market apart from the AI space has rather dim prospects going forward. VTI which is currently tech/growth dominated has a PE of 20.2 and in the SCV space, IJS has a PE of 10.3. The disparity in PE is striking. The market seems to be anticipating not only that AI's future returns will shine like an investment supernova but also that AI will also be massively disruptive and destructive toward diversified equity and especially so value stocks.

I do not know the future up front. Importantly, I know I don't know it and am skeptical of those to claim to know it. Not hoping on board the NVDA, ChatBot train is an easy choice for me. I suspect that AI will indeed turn out to be economically transformative, but picking future winners over the next 5 or 10 years is akin in my view buying a lottery ticket. I also suspect that both the broad market (TSM) and its ugly ducklings (SCV) will adopt AI into their business plans when it becomes economically feasible in the future to do so and therefore benefit from it. It is important to remember that those who made the fortunes in the California gold rush were not those who discovered the gold or those who directly mined it, but instead those like Leland Stanford whose businesses profited from selling goods and services to those groups and the growing economy it created.

I am not a gambler when it comes to investing. I believe it to be a loser's game for most who try it. In addition to gambling, the current AI investing craze shows herd behavior, FOMO. I believe strongly in diversification as a risk reduction strategy. I also believe strongly that the tech landscape is volatile and can change so quickly and so dramatically that reliably picking the ultimate winners of a new trend over the next 5 to 10 years is somewhere between extremely difficult and impossible. I see no reason to alter my investment strategy at this point due to the current AI mania.

Garland Whizzer
This is all very well reasoned.
That IMO implies huge amounts of optimism about massive future outperformance not just in the next 6 -12 months but over a multiyear period, assuming NVDA's dominant position relative to competitors will be maintained, a risky assumption.
AFAIK Nvidia is fabless. They don't have control of a key element of their value chain. Maybe that does not matter. But someone like Apple can create an equivalent processor, with entirely their own IP, and get it made at the same factory as an Nvidia chip (if they are, indeed, fabless)?
In addition to gambling, the current AI investing craze shows herd behavior, FOMO. I believe strongly in diversification as a risk reduction strategy. I also believe strongly that the tech landscape is volatile and can change so quickly and so dramatically that reliably picking the ultimate winners of a new trend over the next 5 to 10 years is somewhere between extremely difficult and impossible.
Absolutely true about tech investing. In 2000, you might have picked Hewlett Packard, Cisco, Yahoo, AOL Time Warner, Oracle, Sun Microsystems, IBM - all likely winners from the age of the internet. Or you might have picked Amazon, Microsoft (Google wasn't listed, Meta had yet to be formed)-- and with those 2 it would have taken something like 14 years to make your money back? Apple we should remember was an also-ran in 2000 -- the company would have declined to irrelevance without the iphone (launched 2006?).
Valuethinker
Posts: 48944
Joined: Fri May 11, 2007 11:07 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Valuethinker »

cjking wrote: Mon May 22, 2023 5:39 am My current investment strategy has resulted in me having a slightly higher exposure to renewable energy than I'm comfortable with. I have no explicit policy in that direction, it's simply where seeking a good medium-term history of profits has taken me. According to a random Youtube video I watched yesterday, one consequence of AI might be nuclear fusion gets solved, and virtually unlimited cheap energy becomes available. I don't take such prognosticating seriously enough to change my strategy, but I think the lesson is that the world may be disrupted in all sorts of ways we can't really anticipate, and the best investment response might simply to be to diversify. In the unlikely event I do anything in response to the AI hype, it will be to diversify, stop trying to outperform, and revert to a more default strategy of owning the world index, which would be safer.
Commercial nuclear fusion was 50 years off when I wrote my first school essay about it -- in the early 1970s.

AFAIK it still is 50 years off. We have made progress, but the barriers to economic fusion still seem very high.

"Virtually unlimited cheap energy". In fact that already exists - solar PV - the solar resource (ie potential) that hits the surface of this planet is many times our actual civilisational energy consumption. If you follow those cost curves down, it is not finished getting cheaper.* However storage is a big issue: in effect what was generation 20 years ago as the constraint, it's now energy storage. In the way that EVs require ever growing amounts of cheaper batteries.

I am not sure there are many pure plays on renewable energy. I know there are ETFs. But if you look at the latest offshore wind farms, for example, you find big oil companies as bidders. One does have Orsted (offshore wind), Vestas (turbines), First Solar etc. Some of the utilities are positioning themselves as renewable energy only.

It's not something one can set a portfolio strategy around. One scenario - of diminishing investment in new fossil fuel resources - implies *higher* prices for fossil fuels, not lower. That depends on tricky demand forecasts though: EM growth in demand vs developed market flat to down.

Tobacco is a dying industry - literally as well as figuratively. However shareholders in tobacco companies have made a lot of money in the last 30 years. The companies are cash machines. Oil & gas extraction may be the same.


* at the level of the PV cell or array. Due to things like higher interest rates, the cost of commercial projects has been rising of late. No reason to believe this is a permanent upward trend. The technology is still in many ways immature.
User avatar
stickman731
Posts: 417
Joined: Sun Jan 01, 2012 9:42 am
Location: New Jersey

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by stickman731 »

In my opinion, the companies with the largest datasets will prevail - GOOG=BIDU > APPL> AMZN=BABA > MSFT=META but there will also be industry specific players (like healthcare , possibly UNH or defense maybe PLTR, travel = BKNG, retail (specifically grocery) - any large chains with loyalty programs (they know a lot about you and your preference) or TSLA has more driving data, particularly for autonomous driving.

I would also not rule out Bloomberg as they have immense financial data and how companies interrelate. I suspect they are already using it and being private do not publicize it.
MH2
Posts: 598
Joined: Thu Oct 28, 2021 3:46 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by MH2 »

Valuethinker wrote: Tue May 23, 2023 3:36 am AFAIK Nvidia is fabless. They don't have control of a key element of their value chain. Maybe that does not matter. But someone like Apple can create an equivalent processor, with entirely their own IP, and get it made at the same factory as an Nvidia chip (if they are, indeed, fabless)?
It doesn't matter over the short term.

1. NVIDIA CUDA has lock-in with the most popular deep learning libraries (e.g., Pytorch & Tensorflow). There are alternatives - e.g., AMD ROCM and Google Cloud TPU - but there are major issues (ROCM) or hardware/access frictions (TPU).

2. NVIDIA is a leader in the personal GPU space. Anyone who wants to start running GPU enabled models locally can simply buy and install a cheap NVIDIA consumer GPU. Their more advanced consumer GPUs are almost as powerful as their professional hardware and are substantially cheaper.

3. NVIDIA has also been at this longer than pretty much anyone. Online tutorials, Stack Overflow posts, and other miscellanea absolutely matter.

Long term I still don't think fab ownership will matter. Fab access, however, is and will remain important.
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by nisiprius »

Within just ten years, we've gone from FAN to FAANG to MAMAA. And now nVIDIA is in the top five, and nobody has changed the acronym yet. While Netflix is just another megacap accounting for 0.38% of the market.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
PoorHomieQuan
Posts: 153
Joined: Thu Aug 25, 2022 8:07 pm

Re: ChatGPT

Post by PoorHomieQuan »

Valuethinker wrote: Tue May 23, 2023 3:30 am Google sees AI as an existential threat.
That's just a media narrative. Google has spent more money on AI research than any other company in history, and it didn't start doing that last year. Do yourself a favor and watch AlphaGo the Movie, if you haven't already. Google researchers invented LLMs, are leading in self-driving tech, and said AI more times than you can imagine at the last earnings call. What more could you want?!
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by ThankYouJack »

PoorHomieQuan wrote: Tue May 23, 2023 2:46 pm
Valuethinker wrote: Tue May 23, 2023 3:30 am Google sees AI as an existential threat.
That's just a media narrative. Google has spent more money on AI research than any other company in history, and it didn't start doing that last year. Do yourself a favor and watch AlphaGo the Movie, if you haven't already. Google researchers invented LLMs, are leading in self-driving tech, and said AI more times than you can imagine at the last earnings call. What more could you want?!
As an investor, I would want to know:
1) how much revenue they anticipate losing in search (their bread and butter) because of AI
2) their revenue plan for AI
3) why Bard is (IMO) behind chatGPT if they’ve spent the most time and resources on AI

It’ll be interesting to see what happens. Just because google is pouring money into it doesn’t mean they’ll be the industry leader. they put a ton of resources into Facebook’s competitor, Google plus, and that failed miserably.
PoorHomieQuan
Posts: 153
Joined: Thu Aug 25, 2022 8:07 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by PoorHomieQuan »

ThankYouJack wrote: Tue May 23, 2023 3:43 pm
PoorHomieQuan wrote: Tue May 23, 2023 2:46 pm
Valuethinker wrote: Tue May 23, 2023 3:30 am Google sees AI as an existential threat.
That's just a media narrative. Google has spent more money on AI research than any other company in history, and it didn't start doing that last year. Do yourself a favor and watch AlphaGo the Movie, if you haven't already. Google researchers invented LLMs, are leading in self-driving tech, and said AI more times than you can imagine at the last earnings call. What more could you want?!
As an investor, I would want to know:
1) how much revenue they anticipate losing in search (their bread and butter) because of AI
2) their revenue plan for AI
3) why Bard is (IMO) behind chatGPT if they’ve spent the most time and resources on AI

It’ll be interesting to see what happens. Just because google is pouring money into it doesn’t mean they’ll be the industry leader. they put a ton of resources into Facebook’s competitor, Google plus, and that failed miserably.
I think the focus on AI wrt search is overblown. It was always the case that the world would evolve and the web and web search as we know it is not exempt from that. I happen to think AI is more likely to destroy the web by filling it with likely-sounding garbage than it is to solve search. And using it in place of search --- that just seems ludicrous to me given the propensity of these things to hallucinate. I do agree Google investors had better hope there is a plan b. But Google also happens to have 4 other products with over 2 billion users --- search is just one step in a long funnel. I think the smart home and smartphone ecosystem is really the key to delivering useful AI-derived products to users, and that puts Google and Apple in the driver's seat. Amazon on the back foot, Microsoft laughably out of contention everywhere except your work computer.

I don't think ChatGPT's lead in LLMs is either durable or large enough to matter. (Neither is Bard at a competitive advantage over what Amazon has brewing, or heck, the open source community.) What matters is how that tech is leveraged in your daily life in a convenient way, and since this is an investment forum, in a monetizable way.

Since you bring it up, Google Plus was absolutely without a sliver of doubt a much more polished product than Facebook. It just so happens that the network effect makes it near-impossible to unseat the dominant social network. In the realms where AI will be useful, the network effect works in Google's favor.

If you think that having money to invest in something does not lend one a competitive advantage, then what is the point of capital markets?
Whakamole
Posts: 1763
Joined: Wed Jan 13, 2016 8:59 pm

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by Whakamole »

ThankYouJack wrote: Tue May 23, 2023 3:43 pm 3) why Bard is (IMO) behind chatGPT if they’ve spent the most time and resources on AI
That is simple. Neither is AI.
dissentmemo
Posts: 25
Joined: Sun May 14, 2023 9:01 am

Re: ChatGPT [Investment opportunities in the Artificial Intelligence field]

Post by dissentmemo »

Whakamole wrote: Wed May 24, 2023 8:43 am
ThankYouJack wrote: Tue May 23, 2023 3:43 pm 3) why Bard is (IMO) behind chatGPT if they’ve spent the most time and resources on AI
That is simple. Neither is AI.
Ding
Locked