It is easy to draw parallels between today’s excitement for generative artificial intelligence and the feeling at the end of the 1990s with the emergence of the internet.
With hindsight, it is hard to imagine a company not benefiting from the advent of e-commerce 25 years ago.
Yes, there was a lot of hype and many failures, but for every Pets.com, or Boo.com, there is an Amazon and a Google. The story of the internet is not just those big winners however, it has completely changed the way business is done.
Coincidentally, one of the biggest breakthroughs in machine learning was also in the late 90s when a black box the size of a wardrobe beat a chess grandmaster at his own game.
Many would view such an historic event as a harbinger of future technological advance and innovation for its creator, IBM.
But some were sceptical of the relevance to financial markets. An analyst was reported in the New York Times saying: “This is an $80bn company. I cannot believe that machine chess is going to contribute that much to overall revenue and earnings.”
That analyst missed the point. The potential of AI is, of course, not limited to winning chess games or writing our kids’ homework. It is as a tool to processes and organise data; to identify patterns and summarise information or make suggestions.
In doing this, AI has already grown to permeate our everyday lives.
Have you noticed your phone offer an unsolicited ETA for your commute when you get in your car? Does your text app suggest replies based on the context of your overall message? Congrats, you are an AI user.
Breakthroughs in GenAI seem poised to benefit a similarly wide gamut of businesses as did the internet in the late 1990s. Nvidia has been an early winner in the current AI movement, and its stock has reflected this success. From the start of 2023 to the end of June 2024, Nvidia returned 746 per cent.
AI can make businesses more efficient if used as a tool for what some describe as 'assisted implementation' – interrogating data, servicing clients, or making processes more efficient.
For example, AI can be very helpful for firms with massive data sets on their customers’ activities. It can help those firms identify what their customers are more likely to buy next and advertise in a smart way.
The cascade effect of GenAI has already spread, just as e-commerce benefits millions of businesses around the world today.
Companies providing support to data centres are benefiting. For example, Vertiv Holdings provides liquid cooling products for these servers, which tend to run very hot. Powell Industries and IES Holdings, provide power and infrastructure to data centres.
These three companies are selling shovels in a gold rush and joined Nvidia in dwarfing the S&P 500 index’s return since 2023.
