We don’t know how the ChatGPT artificial intelligence (AI) system will change our lives, despite the fact that bullion is written about this innovative software product.
He can hold a conversation, take an exam, compose a report, a rap song or a sonnet – and he also copes “terribly well” with the tasks.
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At least that’s what Elon Musk, one of the founders of OpenAI, developer of ChatGPT, currently the most popular startup in Silicon Valley, says.
But even Musk can only guess at the extent of the system’s potential impact on society and how it could be used in areas such as productivity.
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The publicity surrounding the threat posed by “generative” large learning model (LLM) systems such as ChatGPT, which deploy huge datasets for analysis and content creation, has overshadowed debate about the constructive role they could play.
In light of this, if you think ChatGPT could be good for your portfolio, a 19th century strategy could be a way to capitalize on this 21st century revolution.
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“Terrible good”: Elon Musk’s verdict in ChatGPT
Sellers of picks and shovels mostly enriched themselves during the California Gold Rush of 1848. Similarly, investors in the sheer quantity of semiconductor microchips required for ChatGPT and other “generative” AI systems such as Google’s Bard and Microsoft’s Bing could be in an advantageous position. Tech giant stocks have been hit hard by interest rate hikes in 2022. However, some of their stock prices have risen due to the ChatGPT hype, reinforcing the notion that you should never bet against these companies for too long.
Buying their shares is a bet not only on what the future holds for ChatGPT, but also on what will happen to interest rates. If you’re nervous but still want a stake in a very different future, check out what stocks the funds in your portfolio own.
American semiconductor colossus Nvidia supplies powerful GPUs that dominate the AI market. Nvidia stock, which has jumped 81 percent this year, is held by Polar Capital Global Technology, Sanlam Global Artificial Intelligence, Fundsmith, and Scottish Mortgage (I’m an investor in the latter two).
Shares in ASML, the Dutch giant that makes lithography machines that play a key role in the semiconductor industry, are up 22% since January. The shares are one of the largest holdings of Fidelity European. The share price of Alphabet, the Google group, has jumped 22% this year. His Bard generative system has its critics. But updates are promised, and the group has developed a Tensor Processing Unit chip that is claimed to be faster than the Nvidia counterpart.
Microsoft, which is up 21% this year, plans to integrate OpenAI technology into all of its products.
In 2019, Microsoft prudently acquired a $13 billion stake in Open AI.
If some of the ambitions of these two AI titans materialize, investors with money in trusts like Allianz Technology, F&C and Scottish American could be satisfied. I have a small amount in F&C, but I note with interest that Allianz Technology’s share price has a 14 percent discount to its net worth.
Optimism about the prospects of ChatGPT and its imitators contrasts with uncertainty about the world’s number one semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC).
Apple’s supplier is at the center of contention between the US and China, which claims an independent Taiwan as its own.
These geopolitical tensions, which have intensified of late, were one of the reasons Warren Buffett cited this week for his decision to sell his Berkshire Hathaway fund’s TSMC stake in February.
News of a slowdown in sales at TSMC’s Taiwan facilities hints at a longer-than-usual slowdown in the chip manufacturing cycle.
However, a 17% rise in TSMC shares this year suggests that this mighty corporation can handle such challenges. Nvidia, one of TSMC’s biggest customers, is promising to use factories in Arizona to “manufacture” its chips.
TSMC is the largest holding of the Temple Emerging Markets trust, known as Temit.
Chetan Sehgal, co-manager of the trust, says companies of all types will demand the chips. He says: “Artificial intelligence is the growth engine of the semiconductor industry. Demand for increasingly powerful semiconductors could skyrocket in the coming years as non-technology companies invest in specialized LLMs for their own use.”
Slave following fashion when creating a portfolio is not a good idea. But acknowledging trends makes sense – and ChatGPT is part of a mega-trend, as disturbing as it may be.