AI Is the Next Internet… Expect Weird Things

I want to write a bit about artificial intelligence from the standpoint of a market person who knows little about technology.

The Greatest Opportunity Since the Internet?

Some people think that programmers will create a superintelligence that will kill us all. I tend to doubt it. What I really foresee unfolding is perhaps the greatest investment opportunity since the internet.

The internet unleashed a huge productivity boom. Dumb example: You can order a book online instead of driving to a bookstore and spending 10 minutes poking around the bookstore looking for the book. You no longer have to order the book if they don’t have it, drive home, then drive back to pick up the book.

Our lives were so much more difficult before the internet, and everyone has pretty much forgotten how difficult things were. Everything was hard. Everything involved a phone call, a fax, or snail mail. When I started The Daily Dirtnap in 2008, I was still taking orders via fax.

But the investment returns didn’t necessarily follow the productivity boom. The investment returns were amazing in the beginning, then terrible for about 10 years, then amazing again.

Every new technology follows this pattern, and the same will be true with AI. The challenge is to find pure-play AI companies. Otherwise, you are investing in things like Microsoft and Google, and it’s all mixed in with the soup.

My guess is that there will be some pure-play AI companies at some point. It doesn’t matter at what valuation they go public—you need to buy them.

Trust me. I have seen this movie before.