Editor’s note: “Grab the Best AI Stocks Before They Really Blast Off” was previously published in May 2023. It has since been updated to include the most relevant information available.
There has been a lot of talk and hype about artificial intelligence (ChatGPT, companies in every industry are racing to create an AI-powered tool of their own. ) recently. Following the hugely successful launch of the conversational chatbot
But is all the hype worth it? Will the so-called AI Economy even be that big?
In short, yes, and its global impact will be enormous – nearly as large as (or larger than) the entire U.S. economy.
I know that sounds hyperbolic. It’s not.
The next decade will be defined by the emergence of AI technologies that reshape every facet of our global economy.
That may sound extreme. But we’ve actually seen this rodeo before.
When the internet emerged, it, too, transformed every facet of the global economy.
And by the 2010s, physical retail stores became e-commerce sites. Now e-commerce sites will become AI-powered shopping apps, with machine learning algorithms powering product recommendations and pricing dynamics.
In the 2010s, video rental and music record stores became streaming platforms. Now streaming platforms will become AI streaming apps, with ML algos powering movie and TV show recommendations.
In the 2010s, networking parties and social outings became social media apps. And now social media apps will become AI-driven social media apps, with every feed, post, comment, video, and friend recommendation delivered to you in a hyper-personalized fashion by AI.
Even things like energy infrastructure, electric vehicles, and drug discovery will be propelled forward by AI. Algorithms will be used to optimize energy usage and storage on the grid, create more efficient batteries through endless chemistry simulations, and diagnose and treat diseases more efficiently through novel techniques like genetic mapping.
Investing in the AI Takeover
Much like the internet, AI’s emergence will mean fortunes and empires for some folks – and broken dreams and empty bank accounts for others. That’s because it presents the potential for job displacement. (Though it’s worth noting that privacy concerns and bias in algorithmic decision-making could hinder the widespread adoption of AI and limit its economic potential.)
The internet gave birth to Amazon (AMZN), Alphabet (GOOG, GOOGL), Microsoft (MSFT), and Apple (AAPL). It also laid waste to Sears, JCPenney, RadioShack, Blockbuster, and Polaroid – each of which were, in their heyday, considered titans of corporate America.
The Age of AI will do the same. It will create new multi-trillion-dollar empires and destroy seemingly indestructible ones.
According to the World Economic Forum, the global digital economy measured about $14.5 trillion in 2022.
That’s huge. But it is nothing compared to the size of what the Artificial Intelligence Economy will be one day.
According to PricewaterhouseCoopers (PwC), the AI Economy will grow to $15.7 trillion by 2030 alone. And that’s just eight years away.
The folks over at ARK Invest agree with PwC in thinking that the artificial intelligence market will most likely be worth around $15 trillion by 2030.
But they also see a bull-case scenario for the market growing to $40 trillion by 2030. Moreover, they believe that at 100% adoption, the global AI market could drive global labor productivity to about $200 trillion!
For reference, the entire U.S. economy is worth just over $20 trillion. So, there are pathways for the AI Economy to one day be significantly more valuable than the entire U.S. economy.
The Final Word on AI Stocks
This is the biggest and most important technological revolution of our lifetimes, with the biggest economic stakes of any paradigm shift we’ve ever witnessed.
All of those companies were pretty quiet about AI for years, until OpenAI unveiled ChatGPT in late November 2022.
Within months, Alphabet launched a ChatGPT competitor and Tesla started calling itself the biggest AI company in the world.
Now everyone’s jumping on the AI bandwagon, launching flashy new AI-powered products on a seemingly daily basis. Harvard, the world’s preeminent university, recently announced it would start using AI to grade papers and teach assignments in its most popular coding class. Tax giant Intuit (INTU) just launched a brand-new generative AI operating system to help folks do their taxes. And the list goes on and on.
Coincidence? Not at all.
These companies know that everything is at stake in the emerging Age of AI.
If Alphabet doesn’t create the best AI-powered search platform, it won’t be the world’s most used search engine in 10 years.
If Amazon doesn’t create the best AI-powered e-commerce platform, it won’t be the world’s largest retailer in 10 years.
The stakes are high. So are the potential rewards. And with a likely Fed pause on deck in a matter of days, the gains could quickly become explosive.
And that’s why we aren’t running away from this tech revolution – we’re embracing it.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.