Dotcom bust offers lessons for those in search of the next AI winner
Pioneering technology companies can often falter. The next big player in AI could be among currently nascent, private entities
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IT SEEMS like every other article recently has been on artificial intelligence (AI). Even non-investment magazines are featuring front-cover articles on AI. It is enough to make every contrarian investor’s hair stand on end.
The potential of AI is being touted as a game changer, primed to revamp our ways of doing business and drastically increase productivity, revenue and profits. Yet, when it comes to solid advice for investors, the conversation is still relatively muted. Perhaps this is because AI is a greenfield sector. Predicting its trajectory is akin to weather forecasting in its infancy.
My inaugural encounter with AI investment research harks back to a 2018 Morgan Stanley recommendation. Their line-up included tech heavyweights Alphabet (Google), Microsoft, Nvidia, Amazon, Alibaba and Baidu. Quite a prescient list, and while the two China companies have lost 30 per cent to 50 per cent of their value, the rest have thrived, with Nvidia stealing the spotlight with an impressive gain of almost 700 per cent (65 per cent annualised).
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