Hot Takes for the AI Investor

FUTURE

What does it really mean to invest in AI?

We are answering this today, but I want to do so while changing your mindset. The reason is that the question is fundamentally wrong already.

There’s no such thing as ‘investing in AI.’ If you’re an investor and your framing is ‘I want to invest in AI,’ you’re already fucked, if you’ll excuse my words, because you’re giving way for incumbents to mislead you about what’s possible or not with AI. You need to understand what you’re investing in.

Let’s fix that today. This essay breaks into three parts:

We will first explain AI’s true intelligence level using first principles analysis, shedding light on what AI has proven capable of and the current limits that incumbents continuously tell you we have surpassed (but it’s all a big lie). In fact, I will prove that the term ‘AI’ is still an unachieved milestone. After this part, you will not only be better equipped to make better investment decisions, but you will also be able to predict the roadmap of frontier AI Labs.

Then, we will move on to discuss hot takes on industries that stand to benefit the most from AI disruption, like lifestyle companies (you’ll learn why the gym around the corner of your house will benefit from AI massively)

And finally, what companies and industries will have massive negative disruption, even possibly ending in the entire market disappearing, with hot examples like higher education or professional services, and will give you intuition as to why everyone is enamored of Palantir.

You won’t find obvious choices here because I’ve purposely avoided generic takes and declaring winners and losers based on capabilities AIs are projected to have.

That’s setting ourselves up for failure.

Instead, we will focus on companies and industries impacted by AI capabilities that have been proven to exist, leaving the predictions based on wet dreams for other newsletters.

Let’s dive in.

Understanding AI’s Value.

In an industry filled with extremely-hyped, unprovable claims, AI is made to look much more complex than it really is.

What the ‘I’ in ‘AI’ Should Be.

I’ll just go and say it: AI should not be called AI. Or, put another way, our current ‘AIs’ aren’t ‘AIs,’ as the word ‘Intelligence’ does a lot of work here. Therefore, one of my goals today is to expose AI in a new light that is more grounded in reality and makes you waterproof from nonsensical hyped claims.

There are three components to ‘intelligence’ or, put another way, there are three things AIs should be capable of to prove intelligence.

These are:

Pattern matching, aka intuition, or being capable of finding patterns in data that allow the intelligent being to have ideas with a higher-than-chance probability of being correct

Search. Intuition takes us so far in some instances. Sometimes, you need to search for other alternatives your intuition suggests.

On-the-fly adaptation. In other cases, your experience on the matter is zero, meaning no intuition at all.…

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