Generative AI Is the Hottest Trend in Tech
Generative AI has joined the ranks of crypto and Web3 as one of the latest breakthroughs investors are putting on their radars.
Billions of dollars are flowing into this space. In 2022, the total market for generative AI solutions will likely reach $2.3 billion. According to PitchBook, a private market data provider, this area of tech could grow by 17% each year between now and 2025.
What’s the difference between “normal” AI and generative AI?
“Normal” AI uses databases of text, images, or other data to train its models to recognize patterns.
For example, if you give an AI model enough pictures of cars to process, it’ll be able to recognize a car in a photo that wasn’t included in the “training” set.
A generative AI model can draw a car that looks realistic.
We used one of the most popular generative AI models, DALL·E, to create an image based on this description: “photorealistic flying car.”
Here’s the result:
This image is unique. It was created in response to our specific request. Even if you re-run the model with the same description, the output is different.
Again, this picture is unique, and it was generated by an AI model.
These models can do other things, of course.
They can analyze and produce text, for example. ChatGPT is the latest iteration of the language model developed by OpenAI, one of the most prominent players in the generative AI space.
ChatGPT works like a chatbot. We asked ChatGPT to tell us what it is. The response was surprisingly coherent.
ChatGPT can be used to model language, provide translation services, and improve customer service chatbots.
ChatGPT is so powerful some call it “the Google killer.” Because of its ability to provide single answers to practically any query, it can replace Google as the go-to search service for millions of people.
Investors should take note that Microsoft, an early investor in OpenAI, has the first right to commercialize the results of the company’s research.
Microsoft invested over $1 billion in OpenAI. Among its other investors are the co-founder of PayPal, Peter Thiel, and Tesla’s Elon Musk.
Professional Investors Expect Double-Digit Returns in 2023
As the end of 2022 draws near, investors are thinking about what they can expect from the markets next year.
This year was turbulent. From rising interest rates to geopolitical crises such as the war in Ukraine, there have been plenty of trends and events that stressed the markets.
They have suffered the worst loss since 2008, according to Bloomberg.
The good news is that investors have become much more realistic during the volatile 2022. They have “priced in” a lot of potential uncertainty into the valuations of stocks and bonds.
A new Bloomberg survey says that the world’s largest investors expect stocks to generate about 10% next year.
Should we trust them? Well, the survey’s respondents were mostly right when they made their predictions back in 2021. They said that aggressive policy tightening would be the biggest threat to markets in 2022. As we know now, it was precisely what happened.
More than half of the survey’s respondents said that they were optimistic about the tech sector. After taking a massive beating in 2022 (the NASDAQ index is down 30% at the time of writing), tech stocks look inexpensive to more than half of the world’s largest fund managers.
The companies that could potentially maintain their profitability through a mild recession are in favor.
Nobody knows precisely how deep the potential recession will be or how long it will last. But investors looking to protect themselves against the volatility that negative growth could bring should focus on defensive sectors, low valuations, and ongoing fundamentally driven megatrends.
Thank you for your loyal readership,
The Financial Star team