Stephen McBride: Chris, to catch readers up... all week long you and I are talking about artificial intelligence (AI). It’s the biggest disruption on the planet, and we want all RiskHedge readers to be prepared for what comes next.
We left off talking about SHEIN, the company that’s used AI to become the fastest-growing clothing brand in history. It absolutely blindsided the big, established players in the industry.
Chris Wood: It’s worth talking about the key element here: speed.
ChatGPT is now the fastest-growing technology in human history. It’s surpassed the internet—and every product that was launched as a result of the internet. Let’s put some numbers to it...
It took Netflix (NFLX) three-and-a-half years to get to 1 million users.
It took Facebook (META) 10 months.
It took the iPhone 74 days.
ChatGPT did it in less than two months.
It also beat TikTok’s record on the “first to 100 million” users. That’s particularly impressive since TikTok is specifically designed to be shareable and addictive—ChatGPT is not.
Stephen: You’re hitting on something crucial. Widespread, rapid adoption of a new consumer technology —like we’re seeing now—often releases a huge wave of wealth creation in the stock market. The iPhone is a great comparison.
Apple (AAPL) launched the iPhone in 2007. Compared to other phones at the time, it was a Ferrari. Over the next eight years, Apple became the #1 smartphone seller in the world. Its revenues 10X’d... the stock rose for 218% peak gains.
Of course, the iPhone also made possible new disruptive companies like Uber (UBER). And it’s been integral in the growth of some of the world’s biggest, most dominant tech companies—like Amazon, Google (GOOGL), and Netflix... which soared as high as 954%, 1,066%, and 6,564% after adding their respective apps to the iPhone.
Chris: This is one of the surest patterns in all of investing. When a new consumer-facing technology arrives and achieves rapid adoption, watch out! The same thing happened with the internet.
The internet was actually around since the 1980s, created by the Department of Defense. But it was not user friendly or accessible, so no one used it. Its breakout moment came with the creation of the web browser Internet Explorer, which launched in 1995.
It led to fortunes being made in the dot-com era.
Stephen: It even happened with the computer itself. Ever see a picture of one of the early computers? In 1944, engineers at Harvard built the first “all-purpose” computer. The Mark 1 stretched 51 feet long, and 530 miles of wires and cables ran inside!
Then IBM made a computer that could go on desktops. Millions of people bought one. 1,400% gains followed.
Or remember Microsoft’s (MSFT) early MS-DOS operating system? You pretty much had to know how to code to use the computer.
Then Microsoft rolled out “Windows,” which we all still use today. It came along with easy-to-click icons.
Chris: AI and ChatGPT fit this pattern to a T.
AI has been around for 50+ years. But the advanced stuff was confined mostly to labs and scientists. ChatGPT is AI’s breakout moment.
Even billionaire Elon Musk said:
The AI has been advanced for a while. It just didn’t have a user interface that was accessible to most people.
Musk is the cofounder of OpenAI, the AI research company that developed ChatGPT. He’s 100% spot on. ChatGPT is the interface that unleashes the potential of AI.
Chris: And there’s no shortage of predictions on the massive amounts of money AI will soon unlock.
Peter Diamandis—named one of the world’s 50 greatest leaders by Fortune magazine, and founder of Singularity University, a top tech innovation school—says, “AI will create several NEW trillionaires over the next decade.”
Tech entrepreneur and Dallas Mavericks owner Mark Cuban agrees: “I’m telling you, the world’s first trillionaires are going to come from somebody who masters AI.”
Bill Gates, founder of Microsoft—which bought a large stake in OpenAI—says, “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the internet, and the mobile phone. ...Entire industries will reorient around it.”
Chris: These guys sure are dramatic. I guess when you’re already a billionaire, you think about moving up to trillionaire status. We’re focused on helping the average guy make money investing in AI.
Stephen: And the average investor has the opportunity to move the needle on their wealth, if they commit to understanding AI and really staying on top of it. It’s all changing so rapidly, new opportunities are abundant. But so are new threats.
I think if you’re already a millionaire, smartly investing in AI could make you a multimillionaire. And if you’re not, it could help you make your first million.
Let’s stay on the topic of speed for one more second. Chris, you’re a leading expert on Moore’s Law. You even recommend an investment related to it, which turned out to be quite successful...
Chris: Moore’s Law used to be the world’s most powerful technological force, guiding most of the advancements in tech over the last 50 years. Named after Intel (INTC) founder Gordon Moore (who just passed away last month), Moore’s Law states computing power doubles every 18 months.
The key is that Moore’s Law is exponential. By doubling every 18 months, it grows faster and faster... and all this momentum eventually leads to vertical gains. All the internet companies that made investors rich have Moore’s Law to thank.
AI followed Moore’s Law for the last six decades. Its training computation abilities—which is basically how AI learns—increased in line with Moore’s Law, doubling roughly every 20 months.
Now, it’s doubling about every six months!
Some folks are dubbing this a new “AI Law.” Basically, the potential of AI has accelerated beyond Moore’s Law.
It’s why ChatGPT-4, which was just released a few weeks ago, blew ChatGPT-3 out of the water.
GPT-3 uses 175 billion parameters to generate answers. GPT-4 will use 100 trillion.
Each new version gets exponentially better. Imagine what GPT-5 or 6 will be able to do.
Stephen: Things are moving so fast that it’s an exciting time to be an informed AI investor. That’s why you and I got on camera to talk specific AI stocks and sectors.
We pinpointed a couple of AI stocks we like, and three popular ones we don’t. This is an unfiltered, off-the-cuff conversation—no time for a producer or a host, or any of that.
Go here to watch our “How to Act on the AI Revolution” talk.
Chief Analyst, RiskHedge