Technology Investors Maintain Vigilance In AI Investment

Investors are chasing exposure to a generative AI. (photo: dock. pexels)

JAKARTA - Experienced technology investors are looking for opportunities that are too low in value in overvalued spaces.

At stake is the best way to invest in Artificial Intelligence (AI) potential, which surged forward in November when Microsoft-backed OpenAI released the ChatGPT bot, without being involved in the bubble.

Nvidia shares, which make computer chips to train AI systems, have almost doubled since the launch of ChatGPT. The company's market value, around US$940 billion (RP14,107 trillion), is more than double that of Nestle in Europe. Nvidia shares jumped by about 25% in just one day after predicting an increase in sales.

Shares of unprofitable AI software company C3.AI, which earned share quotation, rose 149% this year and Palaltir Technologies, which has launched its own AI platform, up 91% so far this year.

Investors are pursuing exposure to a generative AI, a technology run by ChatGPT that learns from analyzing large datasets to generate text, images, and computer codes. Business attempts to use generative AI to speed up video editing, recruitment, and even legal work.

PwC consultants estimate that AI-related savings and investments will generate global economic output of US$15.7 trillion (Rp14.1 quadrillion) by 2030, almost equivalent to China's Gross Domestic Product.

The question for investors is whether they should join the current AI trend, or be careful, especially given the growing concern among regulators about the impact this technology may have.

"It seems that there will be winners in all of this," said Niall O'Sullivan, head of multi-asset investment for EMEA in Neuberger Berman. "It's just that it's very difficult to be completely true for the whole market."

Instead of supporting popular startups or rushing into highly valued AI businesses that may fail, experienced investors take a lateral view to support proven tech companies and may benefit from long-term trends.

"It's going to be something very transformative like the internet, mobile internet andputer computers," said Alison Porter, technology fund manager at Janus Henderson, who has a position in Nvidia, with Microsoft as their biggest holding.

However, Porter also warned that "we are still very early in using cases for AI."

He prefers big tech groups like Microsoft and Alphabet because they have a "strong financial balance" that makes them "able to invest in a variety of technological advances", including their latest focus on AI.

Be careful with Hype Congested Values have made some investors wary of the cycle of technology hysteria. This concept, popular with Gartner consultants, begins with triggers, such as the launch of ChatGPT, followed by expectations that are too high and then disappointment. Even if a technology moves towards mass adoption, many early-stage innovators can fail along the way.

"There are questions about where we are in that curve with AI, where the hype is so visible," said Mark Hawtin, director of investment at GAM Investments. "There is a way to get exposure to AI themes without choosing something very high-value."

Pilihan, Alat-alat Porter dari Janus merekomendasikan mendukung perusahaan yang sudah terbukti dan dapat menjadi "penerima manfaat besar dalam hal menyediakan infrastruktur" untuk tren masa depan dalam AI generif yang saat ini belum jelas.

Hawtin of GAM said he had also been looking for companies that provide the "alats" needed to enable new AI technologies.

For example, AI systems require large volumes of data to be analyzed and studied, but only 1% of the global data currently captured, stored, and used, according to the Bank of America.

Dana Hawtin holds shares of Seagate Technology, which makes data storage hard drives and products, as well as chipmaker Marvell Technology, for this reason, he said.

Jon Guinness, technology portfolio manager at Fidelity International, said that management consulting firm Accenture is in its portfolio because when businesses considered how to use AI, "I'm very sure you're calling experts."

Staying with Big Tech Trevor Greetham, head of multi-asset at Royal London Investment Management, said he was "overweight" in dominant tech stocks, partly because AI supported their valuation, but he warned about AI-themed stocks.

"There will be many lottery tickets that fail," he said, recalling the fall of the dotcom in the early 2000s.

Also stick with Big Tech, Fidelity's Guinness says its funds hold Amazon shares, in part because of the company's efforts to make AI cheaper for businesses. For example, Amazon's Bedrock service allows companies to customize a generative AI model rather than invest in developing it themselves.

"AI's great benefit," said Porter of Janus, "will happen in the long term."

"Investors want to invest in AI now and they expect something to happen now," he added. "But we're not going to buy AI blindly and we're not doing anything at any price."