Seven Trillion dollars, should do the trick!
My article, ‘AMD and Nvidia will boil the oceans’ got a lot of attention, and now Sam Altman of Open AI has confirmed that by reportedly looking for $7 trillion dollars to go to the next level in AI.
It sounds like a ‘Dr Evil’ Meme from a yet to be made Austin Powers movie but the demand has gone in. This sum is about the GDP of Japan and the UK combined. It’s a budget worthy for WW3, or according to less than totally reliable figures more than the total cost of WW2.
Perhaps this is because the battle for AI dominance is WW3, as there is no second place when it come to competition for dominance and the ultimate tool is brainpower which after all is why the naked apes got to rule planet earth.
At this point I feel somewhat guilt to point out that therefore this is a superb opportunity to make money. There is no point is weeping that some dumb folks are going to be wielding some pretty genius hardware. If you think humanity is going to go down the pan the only way to prevail is to lay in some New Zealand bunker money from what comes next. If AI is going to boil the oceans there will be more than enough economic expansion to be sitting pretty before Arnie shows up looking for a kid called John Conner.
The calculus is this.
AI = Computing = Energy
Energy = Money
AI therefore causes a kind of economic thermal runaway. That in any event will mean there will be lots of money to be made.
Whether you are a company or a state you simply cannot stop running flat out to have the most AI. If you hold back you lose everything to your competitors. No country can sit still and watch itself become as dumb as a box of rocks in comparison to their neighbours.
When the King of AI pops up asking for sums equivalent to a fair slice of the total US national debt, you can sense that something huge is happening and its not worth being a pessimist about it, being passive aggressive will get you know where. At the very least AI should produce spectacular economic growth which for the investor is great news. Artificial muscles in the form of machines did put most of the population out of work within a few decades of its invention but the new jobs were way more valuable, and life improved tremendously, so there is plenty to go right.
The thought should be this. Artificial intelligence will lower the amount of natural stupidity in the system and we know that this ‘NS’ is everywhere and that it will be great to be rid of it.
The question is therefore, what to invest in?
I remain ultra bullish on AMD and of course Nvidia needs no supporters in the stock market beauty pageant. All things silicon will be red hot so even contrarian plays like Intel should do very well. We are back to a boom bubble scenario the likes of which we haven’t seen in a generation and its probably significantly bigger. This is my main point, AI will produce wild economic times where the worrywarts have little input in the race to keep up.
The only doubt to consider before accepting this idea is whether AI is real. Could Chatgpt be a one off phenomenon, flattering with its incredibly accessible performance a less developed broad AI scene?
AI used to be like ‘Fusion’ power generation, something on the brink of a revolution since the 1960s. However I do not think large language models and generative AI are flukes. I believe AI is here and it will create an ongoing flood of new functionality with a rolling sequence of developments.
AI is going to be like the Dot.com on steroids. Where the dot.com bubble was as much about a fusion of art and science, words and pictures and computing combining to create a breakthrough, AI is just brute technology. Dotcom was Leonardo art and invention, AI is Boulton and Watt, powering ships and emptying flooded mines.
While AI’s applications are hugely valuable its demands on resources dwarf what has gone before. An AI card needs about as much power as a human, so you can start to adjust expectations when you think of AI everywhere for everybody.
It wont just be the AMD/Nvidia companies prospering, the whole supply chain of AI will undergo huge growth and that supply chain goes all the way back to companies pulling energy from the earth, through to the 50 million miles of new cables the IEA say we are going to need in any event for new electrification, to the providers of big air con cooled sheds to hold the giant data centres that are coming, and so on.
The driver of what comes next is there will never be enough AI, no matter how efficient it becomes, or how much techniques advance. Like chess most things in life can not be solved but the challenge can be dominated by being smarter than your opponent. So demand is unbounded and a cap on supply will not be an option
So the way to invest is to think, “If Sam Altman get $7 trillion dollars what is he going to spend it on?” Whatever that is, it is going up in value a long way, be it the stuff needed to build out the new AI utopia or the companies providing it. Yet even if he doesn’t get the funds, the investment is still coming, just not in one monolithic block.
The next big thing is here and it is the biggest one ever.
In investing nothing beats a one-way bet. And here it is.