The investment parallels to the 90s … why today is an even better time to invest … two sectors that will soar based on AI … a special live AI event with Luke Lango tomorrow night
You and I are extraordinarily lucky.
Through no effort of our own, we’re standing at the beginning of the greatest period of wealth-creation in history thanks to Artificial Intelligence.
This might sound like tiresome hyperbole, but it’s reality.
The volume of dollars that will flood the economy and investment markets this decade will be like nothing we’ve ever seen – including the 90s internet boom.
But to help us contextualize the enormity of the financial tsunami on the way, let’s compare it to that 90s internet boom. After all, legendary trader Jim Simons once said, “past performance is the best predictor of success.”
What the past predicts about the future
From an investment perspective, what was the market’s “past performance” during the 90s boom that might help predict AI’s coming success?
Let’s begin broadly.
From the research paper “Net value: wealth creation (and destruction) during the internet boom” by Robert J. Hendershott:
During the internet bubble, dot-com stocks rose by a factor of 35.
A 35X return turns $10,000 into $350,000. And to be clear, do you see Hendershott tying this 35X gain to only the top echelon of best-performing dot-com stocks?
No – this 35X return applies to the broad group. If we zoom in on that top echelon, the results are staggering.
Take EMC. It was a beloved data storage stock that exploded in the 90s.
When the research group Ned Davis compiled the top performing stocks of that decade, EMC was number two. So, what did that mean for investors?
From its closing stock price on the last trading day of 1989 through the end of 2000, a $10,000 investment in EMC would have grown into roughly $7 million.
That’s not a 35X winner, that’s a 699X winner.
Using this as our anchor, let’s turn to Nvidia’s CEO Jensen Huang
Huang is among the small group of individuals positioned to forecast the future of AI most accurately.
After all, Nvidia is the world’s preeminent supplier of AI-related semiconductor chips. As CEO, Huang’s principal responsibility is to understand what’s coming in terms of chip capability and demand (mostly related to AI), its scope, and then position Nvidia appropriately.
Here’s Huang top-line take on AI:
Generative AI is the single most significant platform transition in computing history.
In the last 40 years, nothing has been this big. It’s bigger than PC, it’s bigger than mobile, and it’s going to be bigger than the internet, by far.
Last year, Nvidia provided a faint glimmer of just how big it will be. While simplistic versions of AI have been around for a handful of years, 2023 was AI’s real debut when ChatGPT hit the scene. This was the starting gun, resulting in the first wave of companies adopting AI into their business models.
Many of these early adopters turned to Nvidia for their semiconductor needs. So, how did that impact Nvidia’s revenues?
The chart below shows Nvidia’s trailing 12-month revenues from 10/31/2009 through 11/01/2023.
Notice anything unusual last year?
This revenue spike is based on just a handful of early adopters embracing AI. As a loose equivalent, it’s like the starting gun of a marathon just fired and the runners have taken only a few initial steps.
The size of what’s coming
The size of the global GDP – so the collective value of every bit of productivity our world creates – is about $88 trillion.
Goldman Sachs estimates that generative AI alone could raise this global GDP by 7%.
Meanwhile, the consultant group McKinsey & Co, estimates AI will contribute $13 trillion to the global economy by 2030.
How much is that?
Well, we’ve been comparing AI to the 90s Dot Com period. But let’s look at it a different way.
As older investors will recall, the Dot Com stock market meltdown was titanic. For example, the Nasdaq 100 lost 78%. Many stocks went to $0 as high-flying companies imploded.
Overall, the collective market cap of these losses was roughly $5 trillion.
So, If McKinsey is right, within just six short years, AI will contribute enough wealth to the global economy to absorb more than two-and-a-half Dot Com crashes.
Imagine its financial contribution over a decade…or two.
And here you and I are, by sheer luck, at the beginning of this growth explosion.
The question everyone is asking is “what’s the best way to ride this explosion higher?”
Tomorrow night at 8 PM Eastern, our hypergrowth expert Luke Lango will answer that question when he holds his AI Endgame event. The evening centers on the best way to invest in AI today.
If you’re new to the Digest, Luke has been an AI bull from the beginning. His early recognition of leading AI stocks, and the ensuing recommendations for his subscribers, have already resulted in a series of triple-digit winners. Luke’s subscribers also locked in a 1,000% return on Nvidia.
Keep in mind, those gains have taken place despite being only on that 1-yard line of this AI trend. Or, as we put it earlier, just a few steps into the marathon.
The question investors need to ask is “is my portfolio positioned for this?”
Here’s Luke:
AI stock investors are making money hand over fist, while other investors are not.
I am confident that this is the new norm, and that artificial intelligence will divide society into two groups.
On one side are investors and businesses who embrace AI, invest in it, and use it to enhance productivity…
On the other side are those who neglect AI, do not invest in AI stocks, and fail to adopt the technology in their daily lives. I believe these individuals are setting themselves up for failure for the next several decades.
On Tuesday, Luke will detail exactly how he’s investing in AI today, and where he sees the biggest opportunities.
To give you a preview of where Luke is looking for the biggest AI opportunities, let’s zero in on one sector…
Biotech.
Back to Luke:
The human body is the greatest mystery of the modern world. AI has the potential to solve this mystery and, by doing so, address numerous issues that affect all humans.
Consider the following: Developing a new, successful drug typically requires about $900 million and 13.5 years.
The drug development process is so costly and time-consuming that companies cannot afford to advance many drugs. This results in a significant shortage of drug candidates and programs, despite the vast possibilities presented by human biological data.
However, AI could significantly reduce the time and cost of this process…
Research firm Deep Pharma Intelligence estimates that investments in the field of AI-powered drug discovery have tripled over the past four years to nearly $25 billion. Morgan Stanley believes this tech will lead to an additional 50 novel therapies being brought to market over the next decade, with annual sales in excess of $50 billion!
In other words, a $50 billion AI drug discovery revolution starts now.
Is your portfolio positioned for it?
If not, you could begin by investing in a handful of biotech ETFs.
For example, there’s XBI, which is the SPDR S&P Biotech ETF. It holds Cytokinetics, Sarepta Therapeutics, Moderna, and Vertex, to name a few leading biotechs.
There are also niche ETFs within the broader biotech sector.
For example, the Invesco Dynamic Biotechnology & Genome ETF (PBE) gives you concentrated exposure to leading genomics biotechs. Or if you want to play drug discovery breakthroughs, you might be interested in a pharmaceutical ETF such as PPH, which is the VanEck Pharmaceutical ETF.
Luke will talk more about the investments that have him most excited tomorrow night. You can reserve your seat for the free event by clicking here.
One more AI freebie for you
Look at AI software.
By next year, the number of internet-connected devices worldwide is forecasted to reach 75.44 billion. All of them will generate data that will then be analyzed by AI software algorithms.
Back to Goldman Sachs:
…Advances in AI are expected to have far-reaching implications for the global enterprise software…
With well-known tech giants poised to roll out their own generative AI tools, the enterprise software industry appears to be embarking on the next wave of innovation, after the development of the internet, mobile and cloud computing transformed the ways we operate as a society.
Like biotechs, leading software companies will be on the receiving end of billions of dollars.
We’re barely scratching the surface here. Tomorrow night, Luke will touch on many more important details about the coming opportunities that investors need to know.
But stepping back, let’s return to the big-picture takeaway…
Congratulations! This is the single greatest wealth-creation opportunity in history. And we’re here, able to take advantage of it.
And if you think I’m being hyperbolic, we’ll end today with three quotes from people who are in a far better position to comment than me. Perhaps you’ll believe them.
“Artificial intelligence and generative AI may be the most important technology of any lifetime.”
– Marc Benioff, chair, CEO, and co-founder, Salesforce
“I’ve always thought of AI as the most profound technology humanity is working on—more profound than fire or electricity or anything that we’ve done in the past.”
– Sundar Pichai, CEO Google
“Success in creating AI would be the biggest event in human history.”
– Stephen Hawking, theoretical physicist and cosmologist
Have a good evening,
Jeff Remsburg
