AI

12
Mar
2024

A Deep Dive Into What AI Means For Corporate America Pt 3.

By Graham Summers, MBA

We’re picking up where we left off our A Deep Dive Into What AI Means For Corporate America investment series. If you missed the first two parts from this series, you can access them here and here.

By brief way of review:

  1. Artificial Intelligence (AI) is the dominant theme in the investing world today.
  2. Currently AI is capable of accessing vast swathes of available information and integrating it in such a way that AI appears to be creating something from scratch.
  3. Current AI models are being deployed in practically every sector of the economy from entertainment to marketing, operations and more.
  4. While the areas of the economy that AI is impacting are different, the implications are all the same:
    1. Improving productivity (getting more results for less effort).
    2. Cutting costs (salaries, benefits, office space, etc.).

This is why AI is so exciting for the economy and investors. In a best-case scenario, AI will lead to a massive increase in profitability as revenues grow and costs decrease. And that is what has triggered a kind of mania for AI-related stocks.

The flipside of this is that AI is currently a kind of Wild West in which “anything goes.” There are no legal, legislative, or societal frameworks for this technology. As a result, advances are being made with few if any ethical considerations.

In this sense, AI is following a pattern we’ve seen with other technological revolutions in the past. That pattern consists of two phases is:

  1. The initial breakthrough phase, which occurs before social/legal frameworks are in place.
  2. The “normalization” phase during which social/legal frameworks are implemented, giving the technology a societal and financial legitimacy.

If you need a real-world example of this, think of the electronic music file or MP3 revolution. 

The first phase was Napster in 1999, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology). During this initial phase Napster exploded in popularity particularly among young people. At its peak Napster had tens of millions of users. Then came the lawsuits, Napster went bankrupt, and social/ legal frameworks were introduced for this new technology. During this time Apple introduced iTunes: a version of MP3 technology in which MP3s could be bought and sold in a legally acceptable form.

Napster is still around. Its marketing promotes the fact it is “100% legal.” And it has about five million users. By way of contrast, at its peak, iTunes had 500+ million users and accounted for 63% of all digital music sales. It is now in the process of being converted over to Apple Music, a new service that also offers music streaming and other services in order to compete with Spotify which is the new market leader. So once again, the technology has changed and requires adaption.

AI as it stands today, is in its “Napster” phase. As investors we can profit from this by riding key players in the space, but we need to do so with our eyes open to risks, in particular the risk that at some point, the threat of a regulatory framework for AI will appear. And when it does, much of the “froth” in AI stocks will disappear as hot money/ momentum investors leave the space out of fear.

This doesn’t mean that AI will be “dead” at that time. Indeed, the BIG money will be made as market leaders emerge from the ashes of that collapse.

We’ll delve deeper into this in tomorrow’s article…

In the meantime, if you’re interested in profiting from this technological revolution, we are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.

To receive this special report when it’s published later this week, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.

To do so, go to: https://gainspainscapital.com/subscribe/

Good Investing!

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in AI, It's a Bull Market
11
Mar
2024

A Deep Dive Into What AI Means For Corporate America Pt 2.

By Graham Summers, MBA

We’re picking up where we left off our A Deep Dive Into What AI Means For Corporate America investment series. If you missed the first part from this series last week, you can access it here.

By brief way of review:

  1. Artificial Intelligence (AI) is the dominant theme in the investing world today.
  2. Currently AI is capable of accessing vast swathes of available information and integrating it in such a way that AI appears to be creating something from scratch.

We’ve already detailed the impact this technology will have on the entertainment industry: creating videos/ movies/ commercials used to require  dozens of people (directors, actors, lighting technicians, sound technicians, editors, etc.) Courtesy of AI, ONE person can serve all of those functions.

Today, we’re going to assess the impact AI can have on other industries.

In the corporate world, AI can perform many tasks that previously required several people if not entire departments. AI can write an entire marketing piece and even create a visual advertisement for a product using a few words/ phrases entered by one user.

Interactive Investor recently used to AI to develop an entire online marketing campaign including thousands of ads and keywords. The results saw an increase in account creation and decrease in acquisition costs.

AI can do legal work as well, performing document review, analyzing contracts, and even preparing a deposition. There are now several examples of AI “legal assistants” located online.

AI can even alter business operations. Whole Foods has begun introducing “Just Walk Out” stores in which you simply walk in, take whatever you want from the shelves, and walk out. Sensors and cameras take care of the payment side of things.

The above examples of AI technology pertain to very different areas of the economy: making movies, performing legal diligence, shopping for groceries, etc. However, for investors, the implications of AI all boil down to just two items:

  1. Improving productivity (getting more results for less effort).
  2. Cutting costs (salaries, benefits, office space, etc.).

This is why AI is so exciting for the economy and investors. In a best-case scenario, AI will lead to a massive increase in profitability as revenues grow and costs decrease. And that is what has triggered a kind of mania for AI-related stocks: Nvidia, Super Micro Computers, etc.

The flipside of this is that AI is currently a kind of Wild West in which “anything goes.” There are no legal, legislative, or societal frameworks for this technology. As a result, advances are being made with few if any ethical considerations. 

We’ll be assessing those in tomorrow’s article.

In the meantime, if you’re interested in profiting from this technological revolution, we are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.

To receive this special report when it’s published later this week, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.

To do so, go to: https://gainspainscapital.com/subscribe/

Posted by Phoenix Capital Research in AI, It's a Bull Market
07
Mar
2024

A Deep Dive Into What AI Means For Corporate America Pt 1.

Artificial Intelligence (AI) is the dominant theme in the investing world today.

If you’re unfamiliar with AI, the concept is as follows: AI represents technology that can “think for itself.”

That sounds pretty advanced, but the reality is that AI in its current form is something of a misnomer. What I mean by this is that the technology doesn’t actually “think,” rather it accesses vast swathes of available information and integrates it in such a way that AI appears to be creating something from scratch.

The results can be incredible or ridiculous, depending on your perception.

For example, below is a screenshot from a video that was generated by an AI technology called “Sora.” The image on the left is a photo of a real person. The image on the right is a still shot from a video that was generated by AI to show the woman singing the lyrics to a pop song. AI took the fixed image from the left and generated a full 90 seconds of facial movements to make it appear as if the woman was singing a song. It’s astonishing.

H/T Min Choi

The obvious implication here is that AI will be highly disruptive for the entertainment industry. Previously, creating movies required dozens of people (directors, actors, lighting technicians, sound technicians, editors, etc.) Courtesy of AI, ONE person can serve all of those functions. This is why the Writers Guild of America (screenwriters) writers went on strike last year: many if not ALL of these people are in danger of losing their jobs as AI progresses.

The entertainment industry isn’t the only part of the economy at risk of disruption by AI.

I’ll detail what AI means for other industries tomorrow. But in the meantime, if you’re interested in profiting from this technological revolution, we are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.

To receive this special report when it’s published, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.

To do so, go to: https://gainspainscapital.com/subscribe/

Posted by Phoenix Capital Research in AI
04
Mar
2024

This is the SINGLE MOST IMPORTANT Thing For Investing In AI Today

By Graham Summers, MBA.

I’m about to share the single most important thing about investing in Artificial Intelligence (AI) today…

If you keep this in mind, you’ll avoid the basic mistake that 99% of investors are making when they put capital to work in AI.

Are you ready? Here it comes…

Over 99% of commentators have no idea what they’re talking about.

I’m not trying to be rude, nor facetious. There are plenty of brilliant, insightful people commenting about AI today. But investors often act as if strategists and analysts are psychic.

They’re not. 

Human innovation is too messy, chaotic, and ever-changing for lots of people to accurately predict. This is especially true when it comes to technological revolutions with far-reaching implications.

If you don’t believe me, let’s consider what happened with search engines, one of the recent technological revolutions that produced incredible profits for investors who played it correctly.

Today, Alphabet (GOOGL) is THE search engine of the world, accounting for over 90% of global searches. At a market cap of $1.7 TRILLION company, it is one of the 10 largest companies in the world. It routinely produces tens of billions of dollars in profits. In fact, its 2023 profits were greater than the market capitalizations of Ford (F) and U.S. Steel (X) combined.

However, back in the 1990s when search engine technology first came to market, Alphabet (then Google) wasn’t a market leader. Rather, the company was competing for market share with numerous other firms including Yahoo!, Hot Bot, Excite, Ask Jeeves, AltaVista, AOL Search, MSN Search and others. 

Indeed, at that time, Yahoo! was the largest search engine company with a market capitalization of $125 billion. In fact, Yahoo! had a chance to buy the Alphabet for just $1 billion in 2002! Fast forward to 2017, and Yahoo! was sold to Verizon for less than $5 billion… by which point Alphabet was a $730 billion company.

Who saw that coming?

My point here is that, the internet, specifically search engines, represented an incredible revolution that changed the world. However, few if any people were able to accurately predict how it would play out.

And this didn’t just concern picking winners vs. losers… it also concerned the technology as a whole: many investors thought that the Tech Crash of the early ’00s meant that the opportunity for profiting from search engines was over. They couldn’t have been more wrong as the below chart illustrates.

The great news is that those who were able to navigate the markets to profit from search engines made truly STAGGERING amounts of money. And if you could pick the future market leaders in advance… while riding the booms and busts with proper risk management… well, the above chart of Alphabet shows you the kind of returns you could generate.

Thus, the key for investing in AI today is determining who the future leaders will be. That’s where the REAL money will be made. 

We are currently putting the finishing touches on a special investment reporting that outlines some of the larger implications for AI as well as several of the most likely market leaders.

To receive this special report when it’s published, all you need to do is sign up for our FREE daily investment commentary Gains Pains & Capital.

To do so, go to: https://gainspainscapital.com/subscribe/

Posted by Phoenix Capital Research in AI, It's a Bull Market
25
May
2023

The AI Plays Wall Street Doesn’t Want You to Know About

Looks like I underestimated this one!

Yesterday I noted that the Artificial Intelligence (AI) bubble was still going strong, but that large players like Nvidia (NVDA) were probably “tapped out.”

At that time, I noted that the ratio between NVDA and the broader market has just hit a new all-time high. Now, regardless of how much AI really changes the world, do you think NVDA should be outperforming the S&P 500 even more than it did during the economic shutdowns when the Fed was pumping trillions of dollars into the financial system?

Seeing this I thought NVDA’s stock was probably close to a top of sorts. I mentioned that I wouldn’t be surprised for this chart to close out the month of May down from current levels, which means NVDA underperforms the broader market in the coming weeks.

NVDA reported results after the bell on Wednesday, and it completely SMASHED expectations to the upside. The stock EXPLODED higher by 27% in the after hours.

Yes, a $750+ billion company is up 27% in a single day,

This is the thing about bubbles, they can last longer and go much further than anyone believes. NVDA stock which was already up over 100% this year is now exploding even higher. How high will it go? To a market cap of $1 trillion? $2 trillion? 

I have no idea.

This is why George Soros always argued you should “buy a bubble” as soon as you recognize it. Bubbles, like all manias, can exceed even your wildest expectations.

The crypto currency bubble of 2020-2022 lasted between 6 and 12 months depending on how you measure it. It saw Bitcoin (BTC) rise 600%…

… while smaller crypto currencies like Ethereum rose 3000%!

If the AI bubble began in late 2022/ early 2023, we are probably about halfway through this situation (see NVDA’s results yesterday).

Does this bubble defy reason and logic? Yes. But traders and speculators aren’t looking for reason… they are looking for profits! 

And right now, AI is where the biggest profits lie.

Societe General has noted that AI-associated stocks account for ALL of the gains in the broader stock market this year. Put another way, without the influence of AI as an investment theme, the S&P 500 would be DOWN this year.

So if you feel like you’ve “missed the boat” in AI, do not be alarmed. These things take much longer and go much farther than anyone ever believes!

On that note, we are putting together an Executive Summary outlining the real impact of AI as well as which companies are best positioned to profit from this major trend when the froth is taken out of the market.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed next week, you can join the wait-list here.

https://phoenixcapitalmarketing.com/inflationstorm2.html

We’ll even send you a special investment report on inflation and how to profit from it while you wait!

Posted by Phoenix Capital Research in AI
18
May
2023

How to Profit From the AI Revolution

By Graham Summers, MBA

Artificial Intelligence (A)I is the current major them for the markets. With economically related companies (TGT, X, etc) showing lower returns, investors are piling into AI as the next major source of growth for corporate top lines (revenues) and profit margins (presumably AI will replace many employees which will lower operating costs).

As far as market price action is concerned, anything associated with AI is in a strong uptrend. The most notable example is Nvidia (NVDA) which has more than doubled year to date. Even the multi-trillion dollar market cap giant Microsoft (MSFT) has caught a bid due to its exposure to AI. MSFT is up 30% year to date. 

AI is THE market mover for 2023. Societe General has noted that AI-associated stocks account for ALL of the gains in the broader stock market this year. Put another way, without the influence of AI as an investment theme, the S&P 500 would be DOWN this year.

Indeed, things are becoming so frothy as far as AI is concerned that executives are mentioning AI as frequently as possible during earnings calls… even if their company has little if any exposure to the new technology!

What does this all mean?

AI is yet another “game changer” technology being touted by Wall Street. It, like the internet in the ‘90s, the “cloud” in the mid 2010s, and even crypto in the last five years is a novel item, the impact of which is difficult to quantify. We are currently in the “froth” stage in which everyone is manic about this idea. The REAL money will appear when the key players who will go on to dominate this trend emerge.

Consider what happened with the internet bubble in the 1990s. 

At that time, anything associated with e-commerce or internet exposure exploded higher. However, the REAL money came in the years AFTER the bubble burst as  Amazon (AMZN), and other internet market leaders emerged.

See for yourself.

So if you feel like you’ve “missed the boat” in AI, do not be alarmed. This is the mania phase: the phase in which everyone is trying to align themselves with a trend in order to score some easy price appreciation.

The REAL money will appear when this passes and the true market leaders in AI emerge. And we are currently positioning our clients to profit from it.

On that note, we are putting together an Executive Summary outlining the real impact of AI as well as which companies are best positioned to profit from this major trend when the froth is taken out of the market.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here.

https://gainspainscapital.com/

Posted by Phoenix Capital Research in AI