AI illusions and navigating The Money Trap with Alok Sama | Equity Podcast

14 Sep 2024 (2 months ago)

AI Investments and Productivity

Wber Pinkas is investing in AI that is applied to their portfolio companies and seeing productivity improvements, such as a telecom company cutting customer service costs by 30%. (1m51s)
At the consumer level, AI is in its early stages, with no apps yet demonstrating the radical impact that some experts predict. (2m30s)

Arm Holdings designs energy-efficient chips, which will be increasingly important for AI applications on smartphones and cars, while Nvidia focuses on powerful chips for data centers used by companies like Microsoft and Google. (4m20s)
Nvidia's current performance is not disconnected from reality, with its revenue and profits growing and its forward earnings multiple at 35 to 40 times, which is not considered outrageous. (5m50s)

OpenAI, with a revenue run rate of approximately 3.5 billion, has a potentially circular funding situation where investments from Microsoft and Nvidia could indirectly flow back to them through OpenAI's spending on cloud computing and AI chips. (7m57s)
While there are concerns about potential overinvestment in the AI sector, particularly in the private market, it is argued that the risk of underinvestment is a greater concern, with companies like Microsoft and Google making significant investments in data centers. (10m11s)

Microsoft is used as an example of a company that can afford to over-invest in artificial intelligence. (11m16s)
The number of IPOs has decreased significantly from 2021 to 2023, going from over 1,000 to 150. (14m5s)

High valuations during fundraising can make it difficult for companies to go public or get acquired later on. (15m23s)
Masayoshi Son, despite having a reputation for large investments, passed on an opportunity to invest in Facebook at a $1 billion valuation. (16m56s)

Masayoshi Son, recognizing the potential of TikTok's AI engine and its disruptive nature in the social media landscape, invested in the company at a $75 billion valuation. (17m29s)
Traditional financial metrics, such as discounted cash flow analysis, may not be suitable for evaluating transformative technologies, as exemplified by Masayoshi Son's investment approach. (18m5s)

Alok Sama believes that setting the bar for machines higher than for humans is ironic, using the example that he would trust a machine to drive better than himself in certain situations. (23m16s)
Sama believes that AI can be a productivity tool at both the enterprise and individual levels, as well as an entertainment tool. (23m48s)

Sama feels strongly that recommendation engines are dangerous, citing concerns about the dumbing down of humanity and hindering original thought. (24m13s)