Special Research Presentation

Investing In The AI Frenzy

By the Stansberry Research Editorial Staff

Artificial intelligence ("AI") is making headlines...

Forbes calls AI "one of the great transformational technologies of the 21st century."

Yet a former key AI researcher says it could take control of humanity... or even annihilate it.

Whether you find the idea wondrous or horrifying, AI is finally going mainstream.

The AI frenzy kicked off last November.

That's when a company called OpenAI and its 375 employees – many of whom are seasoned professionals in advanced algorithms, machine learning, and computer programming – unveiled one of the biggest tech disruptions in decades.

"ChatGPT" – short for Chat Generative Pre-Trained Transformer – wowed users with its human-like conversation. It also served up quick answers to complex questions – greatly cutting down on research time.

Unlike previously hyped tech trends like the metaverse, generative AI has immediate applications and uses... for better or worse.

And if you're not paying attention to it... you should be.

The global AI market is expected to grow by a compound annual rate of 37% between 2023 and 2030, and ultimately reach $1.6 trillion.

The stakes are high already. After all, AI is a money printer.

Already, AI-affiliated stocks may make up most of the gains we've seen in the market this year.

According to one strategist from French financial firm Société Générale, "The AI boom and hype is strong... so strong that without the AI-popular stocks, the S&P 500 would be down 2% this year."

It can provide massive good for all humanity – but as we've hinted at, there's a dark side to this emerging story, too. One that most Americans haven't even considered.

Many may worry about what an AI-driven future will look like – and exactly how us humans will fit into the picture.

The tech revolution is not going to stop. It's going to continue to accelerate. And if you don't understand it, you will definitely be left behind.

AI is already part of our everyday life. You see it everywhere, like the facial recognition that unlocks your iPhone, Amazon's virtual assistant Alexa, and Google's "Call Screen" feature.

In January, Microsoft (MSFT) paid $10 billion for a 46% ownership stake in OpenAI. The technology behemoth plans to add generative AI to its Microsoft Office Suite and its Bing search engine.

While the mainstream media is predominately fixated on big deals like this, there's another associated technology to appreciate, too. In addition to AI-generated articles, essays, jokes, poetry, and job applications, OpenAI has developed AI-imaging tools.

The innovations that come from generative AI will create countless investment opportunities down the road.

But as history has taught us, with great progress comes great risk...

What Really Matters With AI

In 2005, digital cameras were run by big, chunky circuits that included at least three microchips. But soon, a new set of chips produced what would be a huge breakthrough... a way to run cameras with a single silicon chip that could outdo the quality of three standard chips. The economy and quality of this new chip would soon upend the nascent digital camera industry.

Two years later, Apple released the very first iPhone – boasting a camera with a single silicon microchip. This was groundbreaking stuff back then.

It's likely that what's happening in the AI space is giving you flashbacks to the Internet craze of the late 1990s.

When the folks who made a fortune from the rise of the Internet make a huge investment in AI, you should pay attention.

You might remember when people used to say, "Why would I need a computer in my house?"

This is where we're at today with AI, because folks just don't get it yet...

Now, almost every piece of technology we use relies on silicon chips... smartphones, televisions, cars, military jets, pacemakers, CT scan machines, and the massive data servers that power the cloud.

Today, the largest members in the game, Taiwan Semiconductor Manufacturing, Intel, and Samsung have all moved into using 7-nanometer to 10-nanometer chips. A chip could include nearly 24 billion transistors, although the exact number is a trade secret.

A mid-tier laptop – like what a workplace would purchase, can create realistic cartoons in real time. But a single 2022 PC chip can build photorealistic images in real time.

With 10 billion transistors per chip going into nearly 100 million PCs and a server a year... that's 1 quintillion transistors every single year.

To put this into scale, if transistors were as large 1970s vacuum tubes – the size of a roll of quarters – then 1 quintillion transistors would cover the entire United States... every mountain, every lake, every steeple.

Of course, we don't use vacuum tubes any longer. Instead, we use silicon. That shrinks those quintillion transistors so much, they go from covering the entire U.S. to covering less than the White House lawn. All the same technology, in a much smaller space. That's part of the incredibly transformative power of silicon.

The first smartphones were nothing like the miniature computers we carry around in our pockets today. A 2005 Nokia phone didn't use the Internet at all. Instead, it used a telephone communications band with a tiny digital back channel.

But kids in Finland started to use this back channel for texting – specifically, texting 1,000 times a day with their friends to build a de facto social network. That networking effect set the stage for the boom in wireless Internet, starting with the iPhone.

Compare where we are with AI today with the dawn of the Internet integration in 1995...

The first second the Internet clicked online on August 6, 1991, it became almost inevitable that we'd end up here.

Data Is King

Generative-AI models are designed to respond to you like a human would. In some cases, they can generate audio or video files with a human voice.

To do that, AIs use pattern recognition to make sense of large data sets. And the more data you feed the models, the "smarter" they get.

Generative-AI systems like ChatGPT are computing systems with interconnected nodes that work much like neurons in the human brain, with each node having its own computational processes. It accepts data, processes them, and usually pushes the output to a new node with new parameters within the network.

This kind of computing incorporates "neural networks," a type of machine learning. Neural networks can distinguish, cluster, and classify hidden patterns in raw data. Over time, the system learns and improves.

What is important to understand about machine learning is that there is a human element to advancing the functions of these systems.

The more people who use a model, the better the model gets. It "learns" through human interactions and feedback. So, there's value in being a first mover in this space because it means you'll collect more feedback than competitors who get a later start.

As we mentioned, the "GPT" in ChatGPT is short for generative pre-trained transformer. In layman's terms, this means it can process a vast databank of words (about 300 billion) lightning quick to identify key patterns. It has been trained in multiple languages, including English, Spanish, French, and Japanese.

But that means generative-AI models are only as good as the data they're fed, or "trained" on.

The Revolution in Business

A large part of growth will come from AI for self-driving vehicles...

Electric-car maker Tesla (TSLA) is the leader in autonomous driving right now, but Apple (AAPL), Uber (UBER), Mercedes-Benz, BMW, and others are also breaking into the field.

Increasing applications for AI technology will mean a lot more data and much higher demand for a place to store it all.

AI is playing a huge role in the data analytics across many industries.

Today, autonomous drones can capture aerial images of a farm and optimize a seed-planting plan to maximize crop yield. The world's largest producer of agricultural equipment Deere (DE) just unveiled its first autonomous tractor – powered by AI.

All a farmer has to do is get the tractor to their fields and configure it to their specific farm. They can then control it using an app, and the tractor takes care of the rest. It uses GPS technology and a slew of sensors and ultra-fast graphics processing units to complete everyday tasks.

Even more impressive, Deere said that the autonomous tractor is accurate to within one inch.

In February 2023, the first-ever passenger-carrying autonomous flight occurred in Japan. This is also accompanied by the first time an electric vertical takeoff and landing ("eVTOL") had ever carried passengers in the country.

This is a successful stride toward a full commercial launch of air taxis.

Another thing that will drive the burgeoning AI sector moving forward is virtual, augmented, and mixed reality ("VR," "AR," and "MR,").

VR products are everything from immersive video games that make you feel like you're in another world to training systems that make you think you are in the real world. For example, every brand of the armed forces is using VR for training purposes for everything from ground combat to paratrooper training.

In health care, surgeons can perform operations in a VR environment to hone their skills and improve their outcomes when it comes to real patients.

There's no doubt that AI will change the way we do things. It has the potential to automate repetitive and time-consuming tasks. And that will give employees more time to focus on other – and more important – duties.

And if you don't understand what's happening and why... and specifically what you need to do right now, you will get left behind...

Early Adopters Are Set for Sky-High Profits

There's no doubt that AI will change the way we do things.

Throughout history, there have always been periods when new innovations disrupt everything about how human societies function.

It's no secret that if you put your money behind life-changing technology disruptors like flight, automobiles, or the Internet early on... you could have made incredible gains.

Today, we are at yet another major disruptive point in our history.

Investors don't get many chances like these.

AI is this century's disruptive tech that could produce trillions in economic value.

But like any great innovation, benefits will not be evenly distributed. Not at first...

They'll go to those who see what's coming.

A lot of people are so interested in this next-generation technology because they're concerned that it will take over jobs – leaving some careers obsolete.

While AI still has a long way to go, it's replacing the need for humans in multiple industries – art, writing, video, even human resources – in real time... right here and right now.

Many companies are now facing a fork in the road.

They can either embrace these changes and thrive or ignore them and risk obsolescence.

As generative AI continues to perfect its contributions to the industry, it's set to drive significant growth for recommendations in the future.