ISSUE 16§INVESTING IN ARTIFICIALINTELLIGENCEWritten by Karl Williamson, CFA Investment Director, Quilter CheviotArtificial Intelligence (AI) has been one ofthe hottest investment themes of 2023, as agrowing number of money managers havebecome increasingly of the view that this potentiallytransformative technology is the next big thing. Thiscollective belief has propelled a number of stockssharply higher, most notably Nvidia, with the SiliconValley based chipmaker becoming just the ninthpublicly listed company to hit a US$1tn valuation. Thestock gained 180% since the turn of the year to hit thislandmark, surging in price from just above 300 to morethan 400 in a matter of days following its latest earningsupdate in late May.Unsurprisingly, the scale of these gains in such shortorder has divided opinion and created polarisingviews on Nvidia’s prospects. More broadly speakingthere has been a huge amount of interest in AI of lateas the realisation of the potential upside to work, andeven whole economies, is becoming more widelyrecognised. That said, while most observers can agreeon the potential benefits that generative AI offers, thereare still a number of voices calling recent market movesclear signs of an investment mania, or bubble.AI is not a new phenomenon with a fair number ofproponents for the technology dating back severalyears. What appears to have changed more recentlythough, and led to the widespread hype, is that practicaluses for everyday people have become abundantly clear.ChatGPT is the fastest growing consumer application toreach 100m users, taking just three months to hit themilestone. To place this in context, TikTok reached thislandmark after nine months, while it took Instagramtwo and a half years.SEARCH VOLUME FOR AI HAS ROCKETED IN RECENT MONTHS3 030
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