Artificial intelligence (AI) burst onto the scene last year, making headlines and sparking public interest. While the technology has been around in some form or another since the 1950s, recent advances have produced models that can create original content and streamline processes, resulting in dramatic productivity gains. This has captured the attention of Main Street and Wall Street alike.
Veteran Wedbush tech analyst Dan Ives said generative AI could spark the “fourth industrial revolution,” adding “AI is the most transformational technology we have seen since the internet started to take shape.”
That’s a bold view but one that’s spreading through tech like wildfire. Even the most conservative estimates suggest that generative AI could generate more than $1 trillion in incremental spending over the coming decade. Companies positioned to profit from this paradigm shift will capture part of the windfall, enriching shareholders along the way.
My portfolio is rich with AI stocks, but the one I’m most excited about right now is Microsoft (NASDAQ: MSFT).
Image source: Getty Images.
The once and future king
Earlier branches of AI have been used extensively in the tech industry for decades. Recommendations made by streaming services and online retailers, voice and facial recognition on smartphones, and maps and navigation software are just a few of a multitude of ways AI is already enriching our lives.
The coming of generative AI takes that to the next level. Generative AI can create original text and music, summarize data, draft email responses, create presentations from existing data, and even write and debug computer code. Novel uses for the technology are being developed every day.
Microsoft recognized the utility of generative AI early on, investing $1 billion in ChatGPT creator OpenAI as early as 2019, increasing its stake to $13 billion last year. The company quickly integrated this technology into many of its flagship products, imbuing them with AI functionality, resulting in increased productivity for users. Generative AI also has the potential to generate billions…
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