Charlie Munger, the long-time Vice Chairman of Berkshire Hathaway, says there are three buckets where investment ideas go: “Yes,” “No,” and “Too Hard.” Most of the prospective artificial intelligence investments we encounter fall squarely into the “too hard” bucket.
For starters, artificial intelligence is not a specific, tangible product like a toaster. It is a broad category of software-enabled processes that take on more shapes and forms than Proteus.
Because AI performs a wide variety of functions across a wide variety of industries, most of us ordinary investors cannot easily determine the value that any one form of AI contributes to a given company.
Secondly, the AI initiatives at many companies are so early in their development that they are years away from generating significant profit growth. Even worse, many of the “pure-play” AI companies are producing sizeable losses and will not become profitable any time soon.
For all of these reasons, most AI investments are simply “too hard.” Normally, therefore, we would ignore them and move on to investments that are easier to understand and quantify. But we don’t really have that luxury… at least not if we want to equip our portfolios to thrive in the years ahead.
Like Glenn Close in the 1980s thriller, Fatal Attraction, AI investments “will not be ignored.” They will demand our attention for years to come.
To provide a sense of the breadth and depth of AI technologies heading our way, consider what I think will be the next companies to hit the coveted trillion-dollar market valuation…
Regards,
Eric
P.S. I was the first person to publicly release footage of Elon Musk’s secretive AI project – what he calls “Project Omega” months before the AI boom went exponential.
Now, I believe the stage is set for AI once again. Only this time, we’re on the verge of seeing an AI panic unlike anything you could ever imagine. “Project Omega” is entering its final phase, and I’m warning everyone to prepare.
