Colin’s Note: Who stands to gain the most from artificial intelligence?
It’s the question on everyone’s mind after Nvidia’s spectacular rise to prominence this year. Which industries and companies should we be focusing on next?
I’ve been writing you about how the AI boom will play out in three stages: hardware, software, everywhere. And 2023 was the year the hardware phase took off.
Chipmakers like Nvidia and AMD have been leading the charge while companies like Microsoft and Salesforce are catching eyes now as the software phase begins to take root.
And 2024 will see some industries transform completely as they integrate AI into their businesses… And AI makes its way into every facet of our society.
I want to put two of those industries on your radar today. It’s all in today’s video. Just click below to access it or read on for the edited transcript.
In today’s episode, we’re diving into an intriguing question for 2024…
Which companies stand to gain the most from AI?
And more importantly, what are some under-the-radar picks most investors aren’t picking up on yet?
Well, I’ve got two under-the-radar AI plays that should begin using AI to transform their business next year.
It’s been roughly a year since ChatGPT burst onto the scene. AI has been a staple in tech news ever since.
If you’ve been tuning into my channel and reading my newsletter, you’ll recall my frequent discussions about how the AI industry is unfolding in a pattern reminiscent of past tech revolutions.
It’s unfolding in three stages. Hardware first… followed by software… then, finally, we’ll see widespread integration of the technology everywhere.
Hardware. Software. Everywhere.
Reflecting on the personal computer boom of the 1980s and 1990s, we saw hardware manufacturers like IBM, Commodore, Compaq, and Gateway skyrocket in stock value.
But that was merely the opening act of an even more extraordinary era of wealth creation.
With personal computers becoming a household staple, the software phase emerged with giants like Microsoft leading the charge.
A similar trend materialized during the internet revolution.
Initially, it was hardware-focused companies like Cisco Systems taking the lead. And what followed was a software surge marked by companies like Netscape and AOL that were achieving valuations in the billions.
This hardware-software pattern is a recurring theme in the tech world. And now, we’re witnessing this very pattern unfold in the AI sector.
First, the all-too-important hardware phase has been leading the way. Companies like Nvidia and AMD have had great years from an investment standpoint. They’re two of the leading chipmakers powering innovations in AI right now.
The software phase is also starting to attract investors’ attention with Microsoft, Salesforce, and others skyrocketing to new highs.
So let’s delve into two key players poised to lead the AI revolution as it spreads into every facet of our lives.
One sector that’s caught my attention is the insurance industry. The potential for AI to completely transform this industry is enormous.
At its core, insurance still operates with a traditional approach. It relies heavily on direct client-agent interactions through phone and email.
This is where significant change can happen. AI can lower costs and back-office expenses at the agent level.
But what’s truly fascinating is the data-centric nature of insurance. Whether it’s calculating risk for homeowners’ insurance concerning natural disasters or assessing auto insurance needs… AI stands to revolutionize these processes.
Imagine a shift from insuring your car based on estimated mileage to a system that insures based on the exact miles driven. This would take into account factors like the frequency of using self-driving features and the types of roads you travel on.
This is just the tip of the iceberg in how AI can reshape the insurance landscape.
An easy way to take advantage of advancements in AI revolutionizing the insurance industry is the IAK ETF.
The next under-the-radar AI play will be video games.
And before you write off video games as child’s play… realize the video game industry is bigger than Hollywood and the music industry combined.
Whenever you have that much money flowing through an industry… even a minor uptick in efficiency in creating the games can lead to huge results.
With video games, advancements in generative AI are going to make creating graphics, dialog, and custom code far easier than previous generations of game-making.
This will allow game makers to release games faster and cheaper.
This is a major challenge in the industry. Take-Two Interactive’s Grand Theft Auto VI will be released in 2025… more than a decade since the previous game.
AI is going to shrink the time these game studios need to create epic games that earn billions.
The key companies in the gaming industry are Take-Two, Electronic Arts, Sony, and Microsoft.
I also believe platform companies like Apple and Google should benefit as more games are released on mobile devices.
Like insurance, look for video games to not only lower operating costs but also create new and exciting products it can sell.
These two industries are gigantic. Virtually everyone buys some form of insurance. And video games are one of the top activities people gravitate towards for leisure.
So while the attention of AI will be on hardware names like Nvidia and software names like Microsoft… There are plenty of under-the-radar industries capable of transforming existing businesses that are already massive with the help of AI.
That should create some exciting investment opportunities in 2024. I look forward to tracking them as we get into next year.
Hope you enjoyed today’s video. Let me know if you know of any industries that will benefit from AI that few people are talking about. I’d love to hear from you at [email protected]. My name is Colin Tedards. That was today’s Bleeding Edge.