By Jacques-Aurélien Marcireau, Co-Head of Equities
THEMATIC OVERFLOW
For almost three years now, AI has single-handedly dominated financial news headlines, generating a flurry of content and analysis. But never has it been so difficult to make a pragmatic assessment of its potential and its advancement.
The confusion today stems from three factors: first, technology is developing at a startling rate. I still remember, back in 2019, reading Architects of Intelligence: The truth about AI from the people building it, a collection of 23 lengthy interviews with the most eminent AI specialists at the time. The recent breakthroughs have undeniably taken the world by surprise - including executives at Meta and Microsoft, and even Elon Musk.
Since, and this is my second point, the war of words being fought out by the world’s top tech entrepreneurs is rife with overstatements, superlatives and even lies or manipulations to ensure their company comes across as the prime industry leader. While financial regulation is very strict on corporate fundamentals and accounting practices, “forward looking statements” only bind those who believe in them. Disinformation is ubiquitous. The huge amounts of money invested in artificial intelligence are unheard of in the history of humanity: trillions of dollars that add to the giddiness of the narrative.
Finally, these first two factors combined are raising new questions and sowing doubts about our relationship with the future, the relevance of our skills, the organisation of our societies, and importantly, how we should educate the new generation. Depending on our backgrounds and occupations, these thoughts can rouse excitement or anxiety, but either way, do not leave any of us indifferent.
INVESTING TODAY
Fast progress, over-the-top rhetoric, and unprecedented investments made by the world’s most powerful men… all converging to disrupt our vision of the world. This is the perfect recipe for FOMO – Fear of Missing Out – or the fear of missing an investment opportunity.
And yet, the statements loaded with conviction we are submerged with daily originate from those same minds who had not anticipated recent evolutions. Has foreknowledge magically appeared in 24 months? The history of capitalism and of similar bubbles abounds with stories of brilliant entrepreneurs who spent fortunes on projects that ultimately failed to fulfill their promises.
HOW IS THIS APPLIED TO OUR PORTFOLIOS?
Ten years ago, we launched a fund dedicated to “big data” – the fuel without which artificial intelligence cannot operate.
We are convinced that the most technologically nimble companies, owning scalable sets of proprietary data, will emerge as the main winners of the ongoing revolution and will be attractive investments. Vertical software players (catering to specific sectors) and leaders in Cloud computing in their respective areas are also worthy of attention.
Today, it would be simple for us to promote the AI thematic.
But we prefer to promote diligence. More than ever before, updating our assumptions, checking the accuracy of statements, testing the plausibility of assumptions and the expected return on investment are essential tasks if we are to operate rationally in the current environment. In a world where passive managers and a growing number of industry players no longer carry out this work, we believe it is the best possible way we can add value and serve the interests of our investors.