Inside Our Approach To Investing In The Rise of AI and Automation
- This Signal is on one of our Granny Shot themes, the Rise of AI/Automation. Our Head of Research, Tom Lee, rebalanced our Granny Shots last week. You can find the full list here.
- We introduce some of the issues with evaluating and understanding AI and why it is very easy for folks to draw incorrect conclusions when assessing this strategic investing theme.
- We explain in detail our process for selecting and evaluating companies that are either suppliers or beneficiaries of the ongoing AI/Automation revolution.
- We provide five stocks that we believe will benefit from the rise of AI/Automation over an investment horizon of three to five years and discuss some of their AI/Automation achievements.
Alphabet CEO Sundar Pichai believes Artificial Intelligence (AI) will be more profound for humans than fire, electricity, or the internet. Many experts suspect he may very well be correct, but the history of Artificial Intelligence claims is also littered with the hyperbolic, exaggerations, and sometimes even the dubious. In 1986, T. Rozak complained in the New Scientist that "AI's record of barefaced public deception is unparalleled in the annals of academic study." This is why we have specific rules connected to other secular trends like changing global balances in labor supply to drive which companies we pick when thematically investing in the rise of AI and Automation.
Indeed, just in the way many companies try to get the benefit of ESG investment by "greenwashing," some companies undoubtedly find ways to work AI into their communications to benefit from the hype while not necessarily having the plan or wherewithal to deliver. Therefore, it is crucial to understand these prominent trends with a discerning and informed eye or with the help of our unique selection process. We want to introduce one of our key themes and provide some of the stocks we feel are using AI/Automation in a way that will be accretive to shareholders.
Sometimes, AI can play tricks on us, just like an Arabian stallion named Hans and his German trainer did around the turn of the century. He had a traveling exhibition where it seemed certain to many that his horse could successfully conduct arithmetic. The trainer would write math problems or ask the square root of 16. Hans, the horse, would reply with four taps to the amazement of crowds and even undiscerning experts. At the time, the theory of Charles Darwin was fashionable and discussed extensively. Pseudo-scientists connected Hans's seemingly impressive achievements to that profound theory that, like AI is today, was a shiny subject in the discourse of many folks who may have misunderstood it. In reality, the famous horse was reading cues from his trainer.
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