My life was running fine – and then my colleagues Jake and Heather nudged me to finally engage with artificial intelligence (“AI”) technology. I recently did; now I’m hooked on AI and my life is suddenly more complicated and enriched by the new indulgence.
I’m no slide rule user but by the same token I can be a skeptical holdout when it comes to new technology. I remember in the 1990s thinking out loud that “I don’t see the utility of using e-mail”. I would not hire me as a futurist.
Same goes with AI. When Chat GPT burst on the scene in late 2022, I ignored it, lumping it with video gaming and virtual reality technology. Interesting perhaps, but not game changing.
Whoops. Color me astonished how briskly AI is being infused into every corner of business. I’ve come to realize that generative AI large language model technology may be more revolutionary than the internet decades ago. It’s “cool-scary”– or vice versa.
AI has evolved from writing college term papers to standing ready to act as your personal digital concierge. Here’s a few examples of how AI is enriching my life outside of work:
· Late on a Saturday, with no tech support to call and a confusing instruction manual, Chat GPT successfully walked me through connecting my garage door remote device.
· AI created the perfect London one-day itinerary for our trip across the pond later this summer, complete with strategic pub stops during the day.
· AI did the deep research supporting my case that that York’s proud son, four-star General Jacob Devers, deserves a spot next to George Washington and US Grant among America’s top three most accomplished military leaders.
· I lost a chunk of spare time creating an AI personal avatar. It took several iterations and was not complete until I prompted it to make the cheeks plumper (sigh).
I now prefer Chat GPT for richer, tailored online search answers. Carrie, who is less thrilled with AI, recently complained “Great - another device I have to compete with for your attention”. I looked up from my tablet and said, “What’s that again?”.
AI isn’t just a topic for techno nerds anymore – it’s a global economic movement in the early stages of transformation. Like the railroad, electricity and the internet, it’s both a disruptive force and an engine for future productivity growth. I am a convert.
Yes, there’s hype. Economic benefits are still hard to measure and will not materialize in a straight line. However, its future long-term economic impact is real and potentially spectacular.
Consider Nvidia. Once a niche game-chip maker, NVIDIA was a profitable mid-cap stock before 2022. Starting in 2023, NVIDIA’s share price exploded thanks to its dominance in GPU computer chip production and the AI boom. It is now the second most valued publicly traded company in the world, trailing only Microsoft – stunning.
Other big corporate winners since 2023 include the mega tech “hyper-scalers” – Microsoft, Meta, Google and Amazon et al – who are buying massive quantities of GPU chips to power their growing number of ginormous data centers running AI large language models.
Beyond technology, AI is already improving productivity in traditional business sectors. Walmart is a stand out. Per a recent investor call, the company revealed it is using AI to forecast supply chain needs, to better align inventory with demand and to streamline everything from employee scheduling to vendor contracts, all boosting operating margins in the process.
Closer to home, we’re using AI technology as a virtual scribe in our client meetings to take detailed notes and enabling us to better focus on the conversation. We also leverage AI to better analyze client portfolio investments in this turbulent investment climate.
AI is definitely in the early-stages of its adoption cycle. Many firms are investing in costly AI pilots without obvious near-term payoffs. As with past disruptive technology events, the future of AI technology will be a windy road and the long-term winners are unknowable.
Other risks abound. AI-fueled mega-cap tech stocks now dominate stock market indices and trade at lofty valuations - priced for perfection and uninterrupted growth. The concern is that much of this growth assumption is already baked into their stock prices.
Then came DeepSeek – a high performing, low-cost Chinese AI model – which briefly roiled the stock market earlier this year. This unexpected development was a reminder of how competitive threats could upset perfectly priced mega tech stocks.
There are other risks as well: regulation, geopolitics, supply chain dynamics and capital misallocation. A hallmark of the dot.com era was the multitude of silly “dot.com” business failures that ensnared overly exuberant investors.
Invariably, AI startups will fail and much dumb money will be lost, so be careful out there.
Lastly, there’s the human cost. AI will definitely result in the permanent elimination of many jobs, blue and white collar alike. Re-shoring of US manufacturing due to de-globalization could help, but these new factories will be staffed largely by robots, not workers. The reality is that future AI benefits will likely tilt to business owners and investors, not labor.
For investors, the AI promise is overshadowed by short term uncertainty – tariff tensions, tax law dynamics and economic headwinds. Once the clouds part, AI will likely prove to be a major profit tailwind for businesses over time and could create a myriad mix of investment opportunities across the broad stock market, not just the tech sector.
Until next time, be well… Tim
PS – Yes, this blog was run through AI for editing.