August 21, 2024
How Can Investors Best Take Advantage of AI’s Potential?
We are entering a new age of productivity propelled by ever-increasing chip processing speeds and the accelerating evolution of artificial intelligence (AI) technology. Recent advances in computing power and computing system architecture, particularly through the parallel processing associated with graphic processing units (GPUs) and the work done by Nvidia Corporation to innovate around their GPUs and create these systems, have led to dramatic progress in the application of AI.
In addition to infrastructure advancements, the transformer model has significantly improved natural language processing, allowing AI models to better understand context and generate more coherent human-like text. This same technology has been applied to models that can work with video and images, unlocking the ability to generate content seamlessly and, with that, a new generation of AI. It is anticipated that generative AI will enable productivity gains and compelling enterprise and consumer products and services, creating a pull for capital and the opportunity for long-term investment gains.
AI is a long-term, pervasive shift or transformation that is already starting to have a significant impact on societies, economies, industries and individuals. Over time, it has the potential to be as transformative as the Internet. It represents a major trend that is still in its early stages.
The first investment wave of this new era in AI is in the build-out of the compute infrastructure required to train and fine-tune these massive models. All of the hyperscale internet companies are effectively in an arms race to ensure they are not left behind. The CEOs of Meta and Google have both stated that the risk of underinvesting is far greater than the risk of overinvesting, given they believe that not having this technology exposes them to existential risk. Meanwhile, demand remains insatiable.
The first wave of investment heavily favours the supply chain. However, we believe the pendulum will swing back to those investing and ultimately those that can use the tools the industry creates. After all, AI is on a trajectory that is making it critical for every major company across all industries. Incorporating AI into software will improve productivity and make AI even more pervasive. While today there are very few examples of companies that are monetizing generative AI, since we are in the very early innings, there are a staggering number of projects in the works. Identifying companies that will be able to monetize generative AI and those that will be disrupted by generative AI will reveal great investment opportunities.
Unlike passive thematic funds that capture everything, including stocks without a strong underlying business, active management by CI Global Asset Management puts expert eyes on the portfolio to optimize returns. With CI Global Artificial Intelligence ETF (TSX: CIAI), we are offering an actively managed AI ETF with exposure to a diversified portfolio of companies at the forefront of AI development and implementation. These companies are leveraging AI technologies to drive innovation, improve efficiency and gain a competitive edge in their respective sectors.
Investors should consider seeking exposure to AI, within personal risk tolerances, because this technology has significant potential to enhance long-term portfolio returns and wealth creation.
About the Author
Thomas Galikowski, Vice-President, and Institutional Portfolio Manager has more than 20 years of investment management sales experience. Thomas joined CI GAM in 2015, initially working as an ETF Specialist and later joining the broader sales team focusing on the IIROC channel. He progressively moved into the Institutional Portfolio Manager role in 2023 and covers CI GAMs equity product suite. As the IPM for Equities at CI GAM, Thomas acts as a liaison between the equity portfolio managers and the sales team, helping with strategy, sales positioning and support, competitive analytics and providing advisors with a deeper understanding of our equity product solutions. He has extensive sales experience, working previously with leading Canadian Investment Management and Bank investment distribution organizations across an array of investment product structures. Mr. Galikowski is a graduate of the University of Toronto with an Honours degree (HBA) in Economics and Political Science, holds the Chartered Market Technician (CMT) designation, the Canadian Investment Manager (CIM) designation, and is a Fellow of the Canadian Securities Institute (FSCI).
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