How Can Investors Navigate Recent Market Volatility?
In our latest Summer Capital Markets report, Alger CEO and CIO Dan Chung and Director of Market Strategy Brad Neuman, CFA , explore the potential investment opportunities in innovative industries. Read their insights into AI — and AI-adjacent industries?— below.
Investing in Innovative Industries?
Could certain industries be less susceptible to economic volatility? In our view, technologies with a high potential for market share gains may be able to weather challenging market conditions. In the chart below, we outlined some of these industries, including AI and electric vehicles.
Source: Alger. Investing in innovation is not without risk and there is no guarantee that investments in research and development will result in a company gaining market share or achieving enhanced revenue.
Investing in Smart AI?
The first chart below compares Chat GPT-3.5 to the newer Chat GPT-4, illustrating how AI technology is continually getting smarter across several categories. As the demand for more sophisticated AI solutions grows, AI-based software and hardware companies must continually innovate to stay competitive, which presents an opportunity for investors, in our view.?
Source: OpenAI (2023). Chat GPT-4, which launched March 13, 2023, is a more advanced language model than Chat GPT-3.5. Doubling time from Intel, Our World in Data, Alger. Doubling time refers to the amount of compute or “training” utilized by AI programs, while Moore’s Law refers to length of time that it takes for the number of transistors per integrated circuit to double. Evaluation periods vary.
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Investing in AI-Adjacent Industries?
Last but certainly not least, what about industries that will be impacted by the growing usage of AI??
As AI continues to permeate both business and consumer sectors, this demand is leading to increased power consumption. Consider the first chart below which shows the watt-hours per query of Google compared to Chat GPT. The infrastructure that supports AI applications, such as data centers, may be an attractive investment opportunity for investors.
Source: Google and New Yorker (left); Edison Electric Institute and Alger estimates from 2023 through 2030 (right).
In case you missed it, Brad presented updated bull and bear points for the economy in this video. For those who weren’t able to watch the Capital Markets webinar, tune in to the full replay, hosted by Alan Kirby .
Stay updated with the latest trends in technology and innovation by subscribing to The Alger Recap newsletter. For more market insights, follow Alger on LinkedIn and Instagram, and Alger CEO and CIO Dan Chung on LinkedIn.