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AI Hasn’t Completely Taken Over Yet, But It’s About To
Artificial intelligence offers opportunity and potential confusion for investors. However, The Juice’s stance on how to invest in AI is actually pretty straightforward:
Stay away from companies chasing the AI trend. Doing AI for the sake of doing AI because it has suddenly burst into pop culture and the public’s consciousness. The key is to buy companies at the forefront of employing AI. Companies who just so happen to be Nvidia customers, but who are AI-focused, not merely AI-adjacent …
The companies who have been thinking about and developing AI approaches to their businesses for a long time are the ones to buy on weakness and, going forward, even on strength. The companies basically in bed with Nvidia. Meta, yes. And Microsoft (MSFT) …
Today’s Trackstar top 5 is a great place to start for AI stocks.
While we have spent a lot of time talking about Nvidia (NVDA), the last name on today’s list – Taiwan Semiconductor Manufacturing (TSM) – might deserve more attention. TSM designs and manufactures chips for companies, such as, you guessed it, Nvidia and Advanced Micro Devices (AMD), not to mention, its largest customer, Apple (AAPL).
TSM stock is up 21% YTD. Relatively paltry when compared to the outsized gains of the top 4 Trackstar names.
Just a thought to say the backbone of AI definitely should be your starting point for investing in AI.
This said, it helps to keep up on AI trends, particularly the extent to which companies of all shapes and sizes from around the world are using the technology.
To get a handle on this, The Juice spent some time with a recent McKinsey survey that:
[…] garnered responses from 1,684 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 913 said their organizations had adopted AI in at least one function and were asked questions about their organizations’ AI use.
Expanding on this initial finding that 913 said their organizations had adopted AI in at least one function, not surprisingly 14% of respondents in tech, media and telecom said they regularly use AI for work. An additional 19% in this sector regularly use AI at work and outside of work. The next closest areas for regular AI use at work were financial services (8%) and consumer goods/retail and business, legal and professional services (both at 7%).
Things get more interesting when you dive deeper into this data. Broken done by region, here are the percentage of respondents who use AI regularly at work:
North America ranked lower than we thought it would. However, not so fast.
Twenty-two percent of North American respondents use AI regularly at work and outside of work, compared to 18% in Asia-Pacific, 14% in Europe, 11% in developing markets and just 10% in China.
In terms of how these organizations are using AI, the most prevalent functions appear to be speeding up basic word processing tasks, such as creating first drafts of and summarizing documents. Next, it’s a blend of consumer marketing and customer service, as AI drives functions such as identifying consumer trends and powering chatbots for customer service.
If you have tried making a call to a company’s helpline or initiating a request online, you know chatbots are more of a thing now than ever.
Finally, the biggest area of concern for many people who are worried about or flat out against AI: job loss. The McKinsey survey produced encouraging results:
The Bottom Line: Change can be scary. While change doesn’t always persist (we sometimes call this type of a “change” a fad), some change becomes a trend that becomes a part of our society. At work and in popular, practical, everyday culture.
We think AI is here to stay.
So, instead of kicking and screaming into the future, The Juice thinks smart investors will understand AI – what it is and how it’s being used now and going forward – and single out the best names in the space for long-term investment. Having a broad view of the AI landscape can help you separate the winners from everybody else (including the losers).
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