Like nanotechnology before it, there won't be an AI "industry".
From January's "Whatever Happened to Nanotechnology? The Same Thing That Is Happening to Tech Right Now":
1) Since Feynman coined the word there has been a misconception among investors that there would be a nano-technology "industry". This has proven not to be the case and won't be in the future. Rather nano is a tool, an approach toward problem solving.
There will be some breakthroughs that make their discoverers instantly (after 10 years of research) wealthy but the real beneficiaries will be companies like Kyocera and 3M and Siemens. They will use the technology to do what they are already doing, just better, faster, cheaper, more.
2) In spite of the fact that there will be few pure plays we are convinced that nano combined with advances in materials science and manufacturing technology is what will spur the next secular bull market.... When it becomes ubiquitous, the distinctions blur, the drive for creativity recedes, stasis, then death.
Wait what? Entropy! I meant to co-opt the physically precise concept of entropy to metaphorically describe the trend. Not death.And from Nanalyze, April 2017:
No, death bad, Sand Hill Road good....
Is Artificial Intelligence the Next Dot-Com Bubble?
If you’ve played Texas Hold’em, then you know how tough it is to be a good poker player. Lots of venture capitalists like to play poker, so it wasn’t surprising to see one who thought to himself “let’s see how good artificial intelligence (AI) really is“. He consulted a team of engineers and computer scientists to see where they might be able to exploit the AI agent named Lengpudashi. They then played 36,000 hands over 5 days and the AI agent kicked the isht out of them. We’ll stick to playing rock-paper-scissors with AI, but all of this is leading to some serious visibility for AI as an emerging technology – which as investors make us want to get some skin in the game. The problem is, there aren’t many ways to do that yet.
The recent news that artificial intelligence (AI) startup Afiniti may have confidentially filed for IPO was the first time that we started to feel like this thing might be revving up for real now. It wasn’t just because this would be the first pure-play AI startup to see an IPO, it was because we really couldn’t believe how effective Afiniti’s technology was in adding value. Afiniti is so confident in their AI technology that their business model is simply to take a cut of all the money you make as a result of using their technology. That there is real value, but don’t expect to see that everywhere. As the bright minds at CB Insights said, “if you have a website now, you have AI”. We believe it is equally important to focus on “AI pretenders” as it is to focus on the real “AI pure-plays” because we want all the investment dollars channeled to the appropriate places. This is one reason we go out of our way to expose over-the-counter (OTC) stocks.
When the media is not expressing moral outrage over someone’s bad decisions on an aircraft, they seem to be talking more and more about AI which made us think. Will we see history repeat itself and have the “dot-com bubble” we saw peak in early 2000s all over again, except this time with AI? If you’re under the age of 25, you weren’t even born when the dot-com bubble ended but for those of you that were, here’s something that will jog your memory:
Maybe the most significant unanswered question from the dot-com era is, how the heck did Elon Musk not only grow his hair back but also get better looking over time? It’s a proven fact that a billion dollars will turn a male 6 into a male 8, but this seems inexplicable. The next most important question is, how could the dot-com bubble even happen? First, let’s start with a refresher.Well, at least we'll always have the Richter Scales:
What Happened During the Dot-Com Era?
Essentially what happened in a nutshell is that personal computers became a thing thanks to Windows 95 and then once everyone got online, every entrepreneur out there started building websites ending in “.com” and promising immense future riches. Everyone got greedy, then, here’s how good/bad things got:
While some good companies like Amazon.com (NASDAQ:AMZN) came out of the dot-com era to emerge as winners, most didn’t and a tremendous amount of wealth just evaporated thanks to greed or what was famously coined as “irrational exuberance”. We know we’re trying to draw a parallel between AI and dot-com way too early but that’s the point. Let’s first start by anticipating what path AI might take if it were to turn into the next dot-com....MUCH MORE
- From 1995 to 2000, the value of the NASDAQ Composite index rose +400% reaching a P/E of 200 (P/E is a largely useless term we use in finance to make it sound like we know more than you do but to put this into perspective, the NASDAQ P/E value today is just 27.8)
- At the peak of the hype on March 10, 2000 when all the bag-holders had loaded up, the market fell -78% over the next 30 months
- The most “successful” stock in that period was Xcelera.com which rose +74,000% in a single year. It was delisted and worthless 4 years later
- The most “successful” IPO saw a +606% share price increase in the first day of trading before it saw shares fall from $97 to just 10 cents
