Playing around with ChatGPT made me realize that it is quite likely that the next profitable tech breakthrough will probably come from AI technology. What do I mean by this? every few years there is a breakthrough (or a few) in technology that gets massively adopted, gets monetized, and becomes very lucrative and profitable to its owner. In the early 2000s, it was e-commerce and online advertisement. In the late 2000s, it was the smartphone. In the early 2010s it was the subscription model service. In the late 2010s, it was SaaS.
Basically I want to position part of my investment portfolio in a way that I have exposure to the next Apple, Amazon, or Salesforce, which I think will come from a successful monetization of AI technology.
I already own LRNZ (TrueShares AI & Deep Learning Fund) and SMH (VanEck Semiconductor ETF)
I could also increase my exposure to GOOG, META, and MSFT, as they seem to be the public companies best positioned for an AI breakthrough that can be monetized.
I know AI uses quite a bit of computer power so perhaps something like NVDA also makes sense?
Any other ideas?
It seems to me that, all else equal, the more bullish you are on short-term AI progress, the more likely you should think vision-only self driving will work soon.
And TSLA seems like probably the biggest beneficiary of that if it works.
I suspect trucking companies (or truck manufacturers, or maybe logistics companies that suck up all the surplus from truckers) are the biggest beneficiaries. But so much depends on how deeply levered they are and how much is already priced in—TSLA could EASILY already be counting on that in their current valuations. If so, it’ll kill them if it doesn’t happen, but only maintain if it does.
A better plan might be to short (or long-term puts on) the companies you think will be hurt by the things you’re predicting.
Note that Tesla has (just) started producing a truck: https://www.tesla.com/semi. And electric trucks stand to benefit the most from self-driving tech, because their marginal cost of operation is lower than gas powered, so you get a bigger benefit from the higher utilization that not having a driver enables.
Totally fair point, but FWIW, if you look at analyst reports, they’re mostly not factoring in FSD. And basic napkin math suggests the current valuation is reasonable based on vehicle sales alone, if sales continue to grow for the next few years in line with Tesla’s stated production goals.
And while you might think Telsa has a bad track record of hitting their stated goals, they’ve actually done pretty well on the key metrics of cars produced and revenue. Revenue has grown on average 50% per year since 2013 (the first full year of Model S production, which seems like a good place to start counting, so that growth numbers aren’t inflated by starting at zero).
They’ve guided for 50% revenue growth for the next few years as well, and their plan to achieve that seems plausible. For the next year or so it’s just a matter of scaling up production at their new Berlin and Austin factories, and they’re supposedly looking for more factory locations so they can continue growing after that as well.
All that said, I agree that buying TSLA is not a pure play on the AI part — you have to have some view on whether all the stuff I said above about their car business is right or not.
I agree this could be worthwhile. Though I feel that with shorting, timing becomes more important because you have to pay interest on the position.
FWIW this has also been discussed here
In a book by Jeremy Siegel, he gives you the option of investing in an oil company vs IBM back in the very old days.
I do not remember the details, I think it is this book https://www.amazon.co.uk/Stocks-Long-Run-Definitive-Investment/dp/0071800514
The Oil stock beats IBM by a very large margin over several decades with dividends reinvested.
If you are doing this for investment returns then valuation and stable business is what matters.
https://twitter.com/DickgirlsR/status/1599693592125394945
MSFT − 10%
INTEL − 10%
Nvidia − 15%
SMSN − 15%
Goog − 15%
ASML − 15%
TSMC − 20%