AI as an investment
Companies in the AI sector have become prominent winners in the digital era and continue to utilize the opportunities that technological advances offer. We have passed the point where AI is just future visions. NVIDIA's CEO Satya Nadella highlighted the development in the company's quarterly report: "We have moved from talking about artificial intelligence to implementing AI on a large scale".
Tobias's analysis of AI development
The AI era is still in its infancy and it remains unclear how the landscape will be shaped and who will be the long-term winners. However, it is clear that humans will become more efficient with the support of AI. Some pioneers include virtual assistants from Microsoft, image generation from Midjourney, and support via chatbots from Klarna.
Speculating about potential winners and losers is of course stimulating, but it is also a double-edged sword. For example, CRM companies, which work with customer management systems, could potentially use their position to significantly improve their services. With the support of AI, they can suggest actions based on all the data to their customers and greatly improve their offering. On the other hand, they could face unexpected competition from a groundbreaking competitor who develops a GPT interface (which has a CRM system in the background), but where almost all interaction is chat-driven.
With the rapid development within AI, it is more crucial than ever to stay continuously updated to be ready to adapt. This applies of course to both companies and investors.
Why does TIN Funds invest in companies benefiting from AI development?
It is clear that AI will change society with efficiencies, innovations, and automations. Although we humans tend to overestimate changes in the short term, which risks some over-optimism at the beginning of a shift. More interestingly, humans underestimate the changes in the long term.
We are convinced that most companies will use AI in the near future, and the winners have good prospects to significantly outperform compared to the companies that do not successfully implement AI.
Vilka blir vinnare?
Who will be the direct product winners is still uncertain. However, it is clear that suppliers will continue to have high demand for their products and services, such as chip manufacturers and data storage. A classic metaphor we often use for this type of position is they are not gold diggers, but they sell picks and shovels to all the gold diggers.
Hardware as an investment
The semiconductor sector has long been a difficult sector to invest in – huge investment budgets, oversupply, and fierce competition, constant price pressure fundamentally driven by Moore's law, and a strongly cyclical business. Can the AI race make the semiconductor sector more interesting for long-term investors?
Data has often been described as the new oil. This is particularly relevant as data is the most important ingredient to train an AI. Sam Altman from OpenAI has emphasized that computational power, or "compute", today constitutes an even more important resource. Given the accelerating demands for both training and inference, which increase much faster than Moore's law predicts, access to computing power becomes increasingly valuable.
Companies within the semiconductor sector stand as central players in this development. With increasing demands for computational power, these companies deliver the critical components, which places them in a favorable position for long-term growth and success.
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