Artificial Intelligence (AI) has taken Wall Street by storm. Reminiscent of the rise of Internet and Dot.com companies in the late 90’s, AI promises a quantum leap in technological advancement changing the way humans interact with the world around us. It is unclear today just how much this new technology will impact our lives. Many are fearful AI could somehow morph into an Arnold Schwarzenegger Terminator style “self-awareness” that threatens mankind itself. Others believe AI will bridge the gap between man and machine for the benefit of society that propels tremendous gains in productivity, higher standards of living, and – dare I say it – leisure time.
What is Artificial Intelligence?
According to consulting firm, Mckinsey & Co., Artificial Intelligence is a machine’s ability to perform the cognitive functions we usually associate with human minds.
Examples of use cases for AI range from predicting the failure rate of mission critical parts and processes to customer service applications such as delivering a higher quality, more efficient customer experience.
AI can process and analyze enormous amounts of data in ways that formulate possible solutions that a human could never do in the same amount of time.
This ability to ‘learn’ and validate potential solutions accelerates the problem-solving process. For example, the drug industry has historically relied on trial-and-error testing as part of the drug discovery process. With new advances in AI, drug companies can now test millions of chemical combinations most likely to be successful in the treatment of diseases. This would dramatically lower the cost and effort to develop new drugs.
How would one invest in the promise of AI?
Many of today’s largest technology companies have already incorporated AI into their business plans. Microsoft, Google in software, and Nvidia in computer chips are well on their way in developing products and solutions in software and hardware that will change the way people do business. That doesn’t mean they will make investors rich.
Since nearly all business sectors will benefit from AI, investing in a diversified portfolio of stocks for the long term remains the best way to take advantage of the promise of AI. Investing in individual companies promising to be the next leader in AI can be risky. There will be winners and losers.
But more broadly, most companies in America will likely benefit from the promise of AI in the way they do business. In other words, companies large and small will find new ways to increase profits and deliver better solutions for their customers via AI.
If you would like more information about how to best manage your investments and more importantly, how to manage your risk relative to your financial goals, please give me a call at 480-330-4878. I am a fiduciary. I act in your best interest. I am a fee only investment advisor. No commission sales. No minimum investment balance necessary. I work with all investors young and old no matter how much money they have.
Brad Singer, CFA is a local financial advisor and is owner of Vail Financial Advisors, a Registered Investment Advisor in the state of Arizona. This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Investment performance statistics were as of December 20, 2022, the date of this article.
