July 18, 2024 • 6 mins
The AI boom is continuing to hype up investors, as new developments keep occurring.
The rise of AI in art, literature, media and even medicine has experts speculating about future developments.
Fisher Funds expert Sam Dickie unpacks the phenomenon - and the long-term implications of the technology.
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Speaker 1 (00:00):
And time to get up with Sam Dicky from Fisher
Funds kid A.
Speaker 2 (00:02):
Sam, Hey, Jack, Hey, we want to.
Speaker 1 (00:04):
Talk to you. Yeah, very good, Thanks, talk to you
a little bit about AI. Obviously, so much hype ever
since chat GPT launched in twenty twenty two. A lot
of hype baked into stock prices. But there's a fundamental
question when it comes to investments, right, can the reality
actually live up to the hype?
Speaker 2 (00:25):
That's right, Yes, there is a lot of Yeah, I
didn't notice that was the question. Yeah, I agree with you.
And there is a lot of hype around animal spirits
or irrational exuberance, and people are obviously excited that AI
is going to change the way with business, the way
we search, how we interact with companies, and the marker
is convinced a few companies are going to make literally
trillions of dolls out of that. And I think it
(00:46):
was Roy Emara, who's a futurist. Don't if you know
many futurists, Jack unfortunately said, we typically overestimate new technologies
in the short term and underestimate them in the long term,
and only eighteen to two months into the modern AI era,
we're most definitely in the short term at the moment.
Speaker 1 (01:04):
Yeah. Yeah, that's a very interesting content day. And there
are lots of other technologies in the past where that
is certainly born out over time. So can you paint
a bit of a picture for us about the hype
around AI the moment, give some numbers for context.
Speaker 2 (01:18):
Yeah, So, I guess the bluntest and simplest number is
we can just see how much market capitalization or stock
market valuation creation has been in a handful of stocks.
So we'll take in Video obviously, Apple, TCMC, Advanced Micro
broad Common, Microsoft, So I think it's half a dozen stocks.
And that's a combination of AI chip designers, AI chip manufacturers,
(01:41):
and AI software sellers. So the people are using the
chips to sell software to.
Speaker 1 (01:45):
You and I.
Speaker 2 (01:46):
And so since, as you said, chat Ept was launched,
which kind of kept off the modern AI era, their
market capitalization or valuations have gone up by over ten
trillion New Zealand dollars. And that's only half a dozen companies.
And of course all that ten trillion is related to
this AI phenomenon, but a decent chunk of it is.
And imagine the you know, the tens of thousands of
(02:08):
other companies that are out there that are either listed
on the stock market or they're unlisted startups that have
had their evaluations sore too. So quite a bit of
enthusiasm out there.
Speaker 1 (02:19):
And it's interesting though, like when you when you list
those companies, it's the it's the classic like the people
getting rich at the moment, all the companies getting rich
are generally the ones selling picks and shovels, not the
ones selling the goal.
Speaker 2 (02:31):
Right, well, the picks and shovels are the I guess
the chips.
Speaker 1 (02:39):
Yeah, but back in.
Speaker 2 (02:40):
The day that you sell the you put on the
picks and shovels. Who are providing the picks and shovels
the gold miners in today's parlance or in an AI world,
the picks and shovels are the cloud providers like Amazon
and Microsoft and in Google, who are providing the compute
capacity for people to build all their gold minds on.
(03:02):
But in reality, on the ground, there's just not that
much revenue out there that's been generated on the back
of these chips. And in other words, you and I
are not really prepared to pay that much yet for
this new phenomenon. And you think about post a child
of the AI revolution. So Open Ai created a chat GPT.
The annualized revenue today from selling their AI models is
(03:24):
less than four billion dollars so far, So think about
that ten trillion. I've talked about it before. It was
a bit of a yawning gap.
Speaker 1 (03:31):
Yeah, yeah, it's massive. So talk to us just a
bit more about about what is baked into the stocks
at the stage.
Speaker 2 (03:37):
So there's ten trilli in, there's the blunders. But I
guess another way to think about it is if you
add up all of these accelerated compute chips or AA
chips that have been been sold by in Video and
others to customers who are now desperate to get a
return on their investment and create new killer applications to
sell to you and I to justify the cost of
these chips. If you added up all that we really
(04:01):
need to see today about trillion dollars KEIW of revenue
stemming from these new application today. So one marker in
the sanders Open AI the post of child's generating four billion.
But if I add up all the AI revenue streams today,
you don't even get to one hundred billion dollars. So
we're still sort of nine hundred billion short, Yeah.
Speaker 1 (04:22):
Not even a tenth. How do you marry those things up?
Speaker 2 (04:27):
You wanting gap? That's tricky. So we need one of
two things to happen. I guess we need someone to
launch or discover a new killer AI application that we're
all prepared to pay for and pretty quickly jack because
the market is losing patients. Or we need these AI
stocks to fall in value. It just has to be
one of those two things.
Speaker 1 (04:47):
Yeah, right, right, So how should we think about all
of this from visas? How should vistas be thinking about this?
Speaker 2 (04:55):
I think it means we're in for a bit of
a bumpy rider head. I mean, just remember that comment
is you know, even for AI ball, we overestimated technology
in the short term and underestimating the long term. And
we are and we need a peak of the early
hype cycle eighteen months and so be ready for a
bumpy ride. If you are a long term AI ball,
then make sure you have some dry powder or in
(05:15):
other words, some cash on the sidelines, because there will
inevitably be, as there always is with new technologies, an
air pocket. So make sure you've got some dry powder.
They're ready to go.
Speaker 1 (05:26):
Yeah, it'll be interesting actually, just to see how the
end of this year and the US election kind of
affects some of these stocks, right, because you know, you
think about especially with the big Taiwanese chip market, and
what a Donald Trump presidency might mean, or the volatility
of a Trump presidency might mean for some of the
trade relationships between the US and these big producers could
(05:46):
be very interesting.
Speaker 2 (05:48):
Very much. We saw someone that last night. We saw
a Trump sort of tape bomb and a lot of
these companies lost sort of six, seven, eight nine percent
of their value. Geopolitics is going to be writ large.
Speaker 1 (06:01):
Yeah, I mean that's crazy volatility. That is just nuts, right,
that he can just do that and then it does
six or seven percent.
Speaker 2 (06:07):
God, yes, he had an amazing power with his tweets.
Speaker 1 (06:12):
Yeah, I mean it goes both ways. Let's be honest.
You know, it's like the volatility goes both ways. Hey,
thank you so much, Sam, Really appreciate it. Sam, Dicky
Deer from Fisher Funds. For more from Hither Duplessy Allen Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
And time to get up with Sam Dicky from Fisher
Funds kid A.
Speaker 2 (00:02):
Sam, Hey, Jack, Hey, we want to.
Speaker 1 (00:04):
Talk to you. Yeah, very good, Thanks, talk to you
a little bit about AI. Obviously, so much hype ever
since chat GPT launched in twenty twenty two. A lot
of hype baked into stock prices. But there's a fundamental
question when it comes to investments, right, can the reality
actually live up to the hype?
Speaker 2 (00:25):
That's right, Yes, there is a lot of Yeah, I
didn't notice that was the question. Yeah, I agree with you.
And there is a lot of hype around animal spirits
or irrational exuberance, and people are obviously excited that AI
is going to change the way with business, the way
we search, how we interact with companies, and the marker
is convinced a few companies are going to make literally
trillions of dolls out of that. And I think it
(00:46):
was Roy Emara, who's a futurist. Don't if you know
many futurists, Jack unfortunately said, we typically overestimate new technologies
in the short term and underestimate them in the long term,
and only eighteen to two months into the modern AI era,
we're most definitely in the short term at the moment.
Speaker 1 (01:04):
Yeah. Yeah, that's a very interesting content day. And there
are lots of other technologies in the past where that
is certainly born out over time. So can you paint
a bit of a picture for us about the hype
around AI the moment, give some numbers for context.
Speaker 2 (01:18):
Yeah, So, I guess the bluntest and simplest number is
we can just see how much market capitalization or stock
market valuation creation has been in a handful of stocks.
So we'll take in Video obviously, Apple, TCMC, Advanced Micro
broad Common, Microsoft, So I think it's half a dozen stocks.
And that's a combination of AI chip designers, AI chip manufacturers,
(01:41):
and AI software sellers. So the people are using the
chips to sell software to.
Speaker 1 (01:45):
You and I.
Speaker 2 (01:46):
And so since, as you said, chat Ept was launched,
which kind of kept off the modern AI era, their
market capitalization or valuations have gone up by over ten
trillion New Zealand dollars. And that's only half a dozen companies.
And of course all that ten trillion is related to
this AI phenomenon, but a decent chunk of it is.
And imagine the you know, the tens of thousands of
(02:08):
other companies that are out there that are either listed
on the stock market or they're unlisted startups that have
had their evaluations sore too. So quite a bit of
enthusiasm out there.
Speaker 1 (02:19):
And it's interesting though, like when you when you list
those companies, it's the it's the classic like the people
getting rich at the moment, all the companies getting rich
are generally the ones selling picks and shovels, not the
ones selling the goal.
Speaker 2 (02:31):
Right, well, the picks and shovels are the I guess
the chips.
Speaker 1 (02:39):
Yeah, but back in.
Speaker 2 (02:40):
The day that you sell the you put on the
picks and shovels. Who are providing the picks and shovels
the gold miners in today's parlance or in an AI world,
the picks and shovels are the cloud providers like Amazon
and Microsoft and in Google, who are providing the compute
capacity for people to build all their gold minds on.
(03:02):
But in reality, on the ground, there's just not that
much revenue out there that's been generated on the back
of these chips. And in other words, you and I
are not really prepared to pay that much yet for
this new phenomenon. And you think about post a child
of the AI revolution. So Open Ai created a chat GPT.
The annualized revenue today from selling their AI models is
(03:24):
less than four billion dollars so far, So think about
that ten trillion. I've talked about it before. It was
a bit of a yawning gap.
Speaker 1 (03:31):
Yeah, yeah, it's massive. So talk to us just a
bit more about about what is baked into the stocks
at the stage.
Speaker 2 (03:37):
So there's ten trilli in, there's the blunders. But I
guess another way to think about it is if you
add up all of these accelerated compute chips or AA
chips that have been been sold by in Video and
others to customers who are now desperate to get a
return on their investment and create new killer applications to
sell to you and I to justify the cost of
these chips. If you added up all that we really
(04:01):
need to see today about trillion dollars KEIW of revenue
stemming from these new application today. So one marker in
the sanders Open AI the post of child's generating four billion.
But if I add up all the AI revenue streams today,
you don't even get to one hundred billion dollars. So
we're still sort of nine hundred billion short, Yeah.
Speaker 1 (04:22):
Not even a tenth. How do you marry those things up?
Speaker 2 (04:27):
You wanting gap? That's tricky. So we need one of
two things to happen. I guess we need someone to
launch or discover a new killer AI application that we're
all prepared to pay for and pretty quickly jack because
the market is losing patients. Or we need these AI
stocks to fall in value. It just has to be
one of those two things.
Speaker 1 (04:47):
Yeah, right, right, So how should we think about all
of this from visas? How should vistas be thinking about this?
Speaker 2 (04:55):
I think it means we're in for a bit of
a bumpy rider head. I mean, just remember that comment
is you know, even for AI ball, we overestimated technology
in the short term and underestimating the long term. And
we are and we need a peak of the early
hype cycle eighteen months and so be ready for a
bumpy ride. If you are a long term AI ball,
then make sure you have some dry powder or in
(05:15):
other words, some cash on the sidelines, because there will
inevitably be, as there always is with new technologies, an
air pocket. So make sure you've got some dry powder.
They're ready to go.
Speaker 1 (05:26):
Yeah, it'll be interesting actually, just to see how the
end of this year and the US election kind of
affects some of these stocks, right, because you know, you
think about especially with the big Taiwanese chip market, and
what a Donald Trump presidency might mean, or the volatility
of a Trump presidency might mean for some of the
trade relationships between the US and these big producers could
(05:46):
be very interesting.
Speaker 2 (05:48):
Very much. We saw someone that last night. We saw
a Trump sort of tape bomb and a lot of
these companies lost sort of six, seven, eight nine percent
of their value. Geopolitics is going to be writ large.
Speaker 1 (06:01):
Yeah, I mean that's crazy volatility. That is just nuts, right,
that he can just do that and then it does
six or seven percent.
Speaker 2 (06:07):
God, yes, he had an amazing power with his tweets.
Speaker 1 (06:12):
Yeah, I mean it goes both ways. Let's be honest.
You know, it's like the volatility goes both ways. Hey,
thank you so much, Sam, Really appreciate it. Sam, Dicky
Deer from Fisher Funds. For more from Hither Duplessy Allen Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
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