Since the 1930s, the notion of artificial intelligence (AI) has sparked intrigue, fueled by the mathematician and computer scientist Alan Turing – a pioneer in both the development of the modern computer and the creation of algorithms. In the present age, recent breakthroughs in generative AI have captivated the minds of many, exemplified by OpenAI’s ChatGPT. As we approach a new era, Ark Investment Management’s Cathie Wood and her team predict AI software could become a $14 trillion revenue opportunity by the end of this decade. Notably, some affluent hedge fund billionaires search for ways to monetize this enthusiasm, buying up shares in companies that may benefit from AI’s incorporation into our everyday lives. The following presents two AI-centric stocks that billionaires are eagerly investing in.
Seth Klarman, a billionaire philanthropist and hedge fund manager, is a revered figure in value investing. With more than $30 billion in assets under management, his Baupost Group has made a significant bet on e-commerce behemoth Amazon (NASDAQ: AMZN), purchasing 742,000 shares in the fourth quarter. This move increased Baupost Group’s stake by 299%, totaling 990,000 shares now worth approximately $104 million. Amazon’s connection to AI is transparent, as revealed in their 2022 shareholder letter penned by CEO Andy Jassy.
Jassy outlined how Amazon has leveraged machine learning (a subtype of AI) for over 25 years across various sectors, including customized e-commerce recommendations, fulfillment center pick paths, Prime Air drones, Alexa, and numerous AI services provided by Amazon Web Services (AWS). Furthermore, Jassy declared Amazon’s plans to invest heavily in AI, asserting it would vastly enhance virtually every customer experience. With this commitment to AI integration, Amazon announced the launch of its generative AI service, codenamed Bedrock.
Available to AWS cloud customers, Bedrock will grant users access to Amazon’s Titan large language model (LLM), sharing similarities with the technology behind ChatGPT. Users can modify Titan to suit their specific requirements. Jassy highlighted in a recent interview that it takes ‘billions of dollars’ and ‘many years’ to train ‘really good’ LLMs, a resource commitment that most companies cannot fulfill. It’s worth noting that the AI connection likely wasn’t Klarman’s primary focus, but rather Amazon’s robust business and historically low valuation.
Currently trading at roughly two times sales, Amazon’s stock resides comfortably in the bargain range of a price-to-sales ratio between one and two. In fact, the last occurrence of Amazon stock at such an affordable valuation was nearly eight years ago, in early 2015.
Familiar to many investors, Ken Griffin, billionaire founder and CEO of Citadel Advisors, has already achieved legendary status on Wall Street for anticipating the 1987 market crash. Adding to his list of accomplishments, Citadel became the most profitable hedge fund in history in 2022, generating $16 billion in gains. In the fourth quarter, the hedge fund made a massive bet on Adobe (NASDAQ: ADBE), a creative powerhouse, buying up 802,267 shares – a 96% increase that brought the total to over 1.57 million shares, currently valued at more than $598 million.
Adobe recognized the potential of AI early on and introduced its Sensei platform in 2016. This system supplied creators with AI tools, leading to innovations in image searching, digital facial expression alterations, and content categorization, among other capabilities. Embracing this long-term tradition, Adobe recently launched irefly – a generative AI editing instrument for creators.
With an initial focus on image and text effect generation, the AI models within irefly will be integrated across Adobe’s Creative Cloud, Document Cloud, Experience Cloud, and Adobe Express. This adoption will be facilitated by text-based prompts, enhancing the creative workflow while reducing the time wasted on mundane yet necessary tasks. These advanced tools are currently available in beta, with Adobe eagerly seeking user feedback for further improvement.
Despite a 750% increase in Adobe’s stock over the past decade, the current price-to-sales ratio of roughly nine offers an attractive valuation. The last time Adobe was this affordable was in early 2017, which could have contributed to Griffin’s enthusiastic investing decision.
The investment interests of these influential billionaires highlight the potential for AI advancements to transform the business world. As more technological breakthroughs emerge, the fusion of AI within industries becomes increasingly vital, offering substantial profits for those who invest wisely.
As the world grows more interconnected, AI’s role in shaping our future becomes critical. The integration of advanced technologies within companies such as Amazon and Adobe is a testament to a world increasingly driven by machine learning and an evolving digital landscape.
Futurists who have long predicted the central role of AI in modern life find themselves vindicated as these powerful entities invest in AI-driven solutions. The rapid rise of transformative tools like ChatGPT, Bedrock, and irefly, combined with the financial support of savvy hedge fund billionaires, drive the promise that a more efficient, streamlined, and AI-enhanced future is within reach.
The accumulation of wealth within the AI sector is not only drawing attention from seasoned investors but also fostering a sense of excitement and urgency among futurists. With previously unimaginable possibilities brought within reach by the likes of OpenAI’s ChatGPT, the potential for AI innovations to shape our lives, industries, and economies is palpable.
Generative AI may spark far-reaching consequences across various fields, including ecommerce, creative management, and cloud services. This revolutionary technology is backed by a blend of academic visionaries and Wall Street titans, a powerful pairing combining intellectual prowess and financial resources to push the boundaries of what AI is capable of.
Embracing the cyberpunk aesthetic, the unfolding narrative of AI’s rapid proliferation serves as a potent influence on futurists and investors alike. As the world undergoes a digital metamorphosis driven by artificially intelligent technologies, the investments made by these billionaire market leaders offer a glimpse into a future simultaneously familiar yet vastly transformed.