The AI Boom: Why AI Stocks are Rising in Price?
Jun 20, 2023
The AI boom is here, and it has just begun. AI will destroy your investment portfolio as well if you don’t get ready for it. Why? Because AI will divide society forever. You might believe there are “haves” and “have-nots” in today’s society.
The gap will only widen in the Age of AI, though. Investors in AI stocks will become extremely wealthy, while everyone else will have to play catch-up for the next ten years.
That is, businesses that efficiently create, market, and employ AI will devour entire industries and grow to be corporate titans. All the businesses that don’t follow suit will be destroyed in the process.
The outcome? Stocks on the winning side of the AI divide will skyrocket throughout the course of the next ten years, not just this one. The wrong side’s stocks will also plummet. This is already happening as we speak.
As everyone is aware, companies with direct exposure to AI have been on fire this year, from C3.ai (AI), which has nearly quadrupled, to Nvidia (NVDA), which has nearly tripled in 2023. And up until lately, it was pretty much the single factor boosting AI stocks. As long as it doesn’t cost us our jobs, we’d like to join the AI bandwagon as well.
AI is Driving a Generational Shift.
You might have seen. Although stocks have increased this year, the gain has been quite limited. In actuality, the only stocks taking part are those in technology and AI. They’re flying high. Almost everything else is broken!
This year, the Global X Artificial Intelligence ETF (AIQ) has increased by more than 40%. Consumer goods stockpiles are flat right now. Financial and healthcare stocks both experienced declines of 3%. Energy and utility equities have both fallen by 8% and 5%, respectively.
The price of AI stocks is rising. Every other item is declining. This is typical of a new technological paradigm shift. We last experienced a significant change during the early 1990s, when the internet became widely used. Then, internet stocks began to outperform all other market sectors, and they continued to do so for a full ten years.
The value of tech stocks increased by more than 1,100% in the 1990s. Consumer goods stocks, however, only increased by 200%. Utility stock gains were only 50%, while energy stock gains were less than 140%.
Not that I’m mocking a 50% gain. But over ten years? That’s not very amazing, especially considering that tech stocks offered investors the possibility to earn returns that were more than 20X higher.
Let’s just say that early 1990s stock investors who passed on Internet stocks are still kicking themselves now. Today, we are in a comparable predicament. With the advent of AI, in the early 2020s, investors who place the proper bets on the appropriate AI stocks now have the opportunity to turn thousands of dollars into millions. Investors who declare this a bubble and purchase safe utility companies instead are unlikely to profit significantly (if at all) during the ensuing ten years.