As mentioned in my last post, after attending the Richmond Fed conference, I’m looking to discount some of the initial trends related to Artificial Intelligence (AI) as it took off in a surprising fashion yesterday and continues to trend today. I will continue to be floored. Nvidia Sense (NVDA) Sky Level Assessment and NASDAQ. And, my disclaimer, I don’t normally write in depth in this area, so forgive the omissions, but hear the connections.
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As I try to wrap my head around the prospects of AI, a Bloomberg newsletter summary said it best:
Artificial intelligence has led Citigroup strategists to overweight tech stocks. Overall US stocks upgraded to neutral on AI and expectations of a Fed rate hike and steady US economic growth. with China and Europe.
U.S. stocks are doing well with bets on AI, as they have high exposure to tech megacaps.
The Nasdaq 100 index rose 27 percent.
Strategists cut European stocks to underweight and Chinese stocks to neutral.
The implications of AI and large-scale linguistic models (LLMs) such as ChatGPT are far-reaching. One can see creativity and productivity gains of 10, 20, or 50% for “cognitive workers”. According to Anton Korinek, the expert who presented at the conference, for monetary policy, inflation, natural interest rate, etc. It is considered a positive supply shock. LL.M.’s are the leading category in the field.
Basically, this is the news the tech industry has been hoping for after seeing a 30% discount for some companies. It’s a creative disaster. More than enough, only part of the creation, that is, a new beginning, with some endings. Sometimes in the economic literature one hears that productivity gains are decreasing. This trend is reversible and while many forces are inflationary, it is a positive trend that I will discuss (here). The benefits of AI in the energy space are also top of mind. I can already imagine many applications.
Many tech companies are taking advantage of Spotlight. A few are left behind. “The Innovation Economy: Tectonic Shifts and Use Cases?” As I discussed in the article. Yesterday, the trend towards re-industries caught the tail wind from the advances in AI. Globally reengineering supply chains are equally influential in many ways.
Check out some of the ideas surrounding the next generation of AI.