These days, it’s common to see the word “revolution” tied to artificial intelligence (AI); investors and tech enthusiasts alike are enthusiastic about how accurate the descriptor is.
Predictably, there are compelling investment implications, some of which are accessible via exchange traded funds such as the ARK Autonomous Technology & Robotics ETF (ARKQ). Higher by 6.54% over the past 90 days, ARKQ is proving responsive to the spate of AI news flow that’s permeating markets this year. More importantly, the long-term outlook for the ETF more attractive than the near-term view.
Much of that rosy view is tied to generative AI, which Piper Sandler’s Brent Bracelin says is the technology sector’s next $100 billion-plus revolution.
“We see Generative AI as the next major revolution in technology that could have far reaching implications across both consumer and enterprise sectors,” he wrote in a Friday note to clients.
Some of the specific industry-level opportunities for generative AI represent potentially significant growth avenues for ARKQ member firms. For example, AI-enabled search advertising and enterprise application sales are slated to be just $2 billion this year, but that figure could swell to $100 billion by 2030, according to Bracelin.
“The democratization of foundational [large language models]via APIs suggest the rapid pace of innovation could occur at an unprecedented pace in 2023 and into 2024 with potential for [graphics processing unit]shortages emerging as one of the gating factors to broader adoption over the next 1-3 year,” noted the analyst.
That’s relevant to ARKQ holdings such as Google parent Alphabet (GOOG), which could increase its internet search dominance with its Bard chatbot, which is powered by generative AI. Google and Nvidia (NVDA), another ARKQ holding, are among Piper Sandler’s top AI stock ideas.
“In our view, Nvidia is the clear early leader in the generative AI space as we estimate that 80% of all AI workloads are currently run on NVDA chips,” wrote Piper Sandler analyst Harsh Kumar. “Looking forward, Nvidia has the ability to further capitalize on this share with their software solutions that increase the value proposition for AI customers.”
Last Friday, reports surfaced that Elon Musk is planning a rival to Bard and ChatGPT that will be powered by Nvidia chips. How those plans affect Tesla (TSLA), which is ARKQ’s largest holding, remains to be seen.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.