“We have only bits and pieces of information but what we know for certain is that at some point in the early twenty-first century all of mankind was united in celebration. We marveled at our own magnificence as we gave birth to AI.” – Morpheus, The Matrix 1999
For those of you who haven’t seen this iconic sci-fi flick (spoiler alert), this AI thing, which stands for Artificial Intelligence, ends with the whole of humanity being harnessed like batteries for our bio-electrical energy in service to this AI, not a pleasant end.
When compared however to what happened to us in the Terminator movies after AI was realized, which essentially amounted to being reduced to endless heaps of skulls, maybe being a battery isn’t so bad.
As a Sci-fi fan, it’s difficult not to be a little anxious about the discussion of Artificial Intelligence, and I have yet to see a movie about this concept where the AI simply makes our days more convenient, our work more efficient, our cars safer and our consumption of goods and services more seamless and cost effective. But that’s where real world AI is heading, and its gaining momentum.
Sci-fi paranoia aside, I’m beginning to believe Artificial Intelligence, and the companies that create and harness it, may emerge as one of the primary investment themes in the next stage of our current bull market.
Tech giants such as Apple, Amazon, Google, IBM and Microsoft are already investing heavily in AI technology and a whole host of emerging companies are entering this market as well.
So what actually is AI? In its most fundamental form AI is technology (typically a combination of hardware and software) which completes tasks that require intelligence when completed by human beings. So what is intelligence? Well when considered in regard to AI functions, intelligence is inherent with learning, advanced reasoning, perception of the immediate environment, understanding of spoken and perhaps even unspoken human communication, and ultimately advanced problem solving.
The highest profile example of AI in operations today is probably the self-driving car. Just riding in the car while my 15-year-old learns how to drive is an incredibly terrifying example of the advanced thought process required to safely operate a car. While those of us who have been driving for decades may take much of the problem solving nature of driving for granted, seeing it navigated in raw form by a teenager lends incredible appreciation for the advanced nature of the technology employed by a self-driving vehicle.
When I look at the conversation around AI, I can’t help but be reminded of some of the discussion surrounding the internet in the late 90s. It is clear now that AI is coming, it’s clear that this technology will change much of how we conduct our lives, but the “how” and “who” of Artificial Intelligence remain largely to be discovered.
As the current bull market enters its eighth year it may just be the promise represented by AI that serves as the “secret sauce” required to move the market forward once again. As investors it will may become important at some point to be extra diligent in distinguishing opportunity from speculation and approach this emerging technology with some advanced reasoning of the human variety.