5th Apr 2023
It’s been an exciting few months in the world of artificial intelligence. The tech world experienced an earthquake in November 2022 when the San Francisco-based startup OpenAI launched ChatGPT, a groundbreaking chatbot. In fact, ChatGPT is the fastest-growing consumer app ever, gaining 100 million users within two months of its launch 1. Unlike the simple chatbots commonly used in customer service, Chat GPT is built upon OpenAI’s GPT-3.5 large language model (LLM) family 2. GPT-3.5 uses over 175 billion parameters, making it one of the most powerful language-processing AI models available, using machine learning to create human-like responses to texts and queries.
Of course, like with any groundbreaking technology, OpenAI’s competitors aren’t far behind with a variety of new AI models that may be positioned to disrupt industries ranging from education to space discovery, offering exciting opportunities for intrepid investors. However, like with all new technologies, it’s likely that some will rise to market dominance while others could disappear in the blink of an eye. That can make it difficult for investors interested in gaining exposure to this type of emerging computing to know where to invest.
To make it a bit easier for investors looking to invest in machine learning, we’ve put together a list of five AI investments to keep an eye on in 2023.
Disruptive technologies are inherently high risk, especially for investors who have all of their eggs in one basket. That’s why Defiance launched QTUM, an exchange-traded fund (ETF) that focuses on the next generation of computing. The Defiance Quantum ETF seeks to track the total return performance, before fees and expenses, of the BlueStar Quantum Computing and Machine Learning Index. Instead of having to bet on the success of a specific company developing cutting-edge technologies like machine-learning, generative AI, and quantum computing (QC), QTUM offers investors research-based exposure to a variety of machine-learning and quantum computing stocks.
Exposure to quantum computing might not be the obvious way to add AI to your portfolio, but a closer look exposes the mutually reinforcing synergy between them. AI applications need the compute power that quantum computing can deliver, while AI problem-solving can potentially help quantum computing surmount some of the obstacles to success. Companies like Microsoft and Google are targeting investment in both AI and quantum computing, and OpenAI’s founder and CEO Sam Altman has invested in Rigetti and Quantinuum – two avant-garde QC companies.
Based on the BlueStar Quantum Computing and Machine Learning Index, QTUM tracks over 70 globally-listed machine learning and quantum computing companies, making it a convenient way to invest in the potential of quantum computing and AI.
In January 2023, Microsoft announced an expansion of its partnership with OpenAI 3, the company that created ChatGPT and is funded in part by Microsoft. This is the third phase of the partnership between the two companies, and it will focus on three key areas: supercomputing at scale, new AI-powered experiences, and becoming the exclusive cloud provider for OpenAI workloads through its Azure platform. The company also announced a new version of the Bing.com search engine powered by ChatGPT AI, that will enable “better search, more complete answers, a new chat experience, and the ability to generate content “4 and perhaps even give Google fierce competition in the massively profitable search engine domain.
Not to be outdone by Microsoft, Google announced its own generative AI chatbot, Bard, in February 20235. Bard’s knowledge is based on Google’s proprietary LaMDA language model. Unlike ChatGPT, it is only currently open to selected testers in a limited, lightweight version and Google hasn’t yet confirmed when it will be available to the public or when the full-scope model will be launched. But when Bard is available and backed with the power of the world’s largest search engine, it’s likely to make waves in the financial markets, making Google stock one to keep an eye on in 2023.
Many investors are betting on Nvidia as one of the best quantum computing stocks to buy in 2023. Nvidia made its name producing graphics processing units, or GPUs, for highly realistic video games. But the company hasn’t stopped there—today it’s producing the infrastructure that makes many types of AI possible—AI chips. These chips boast high bandwidth memory, fast computation, and parallel processing designed to support deep learning applications and are used in supercomputers, data centers, crypto mining, and even in self-driving electric cars. The global AI chip market size was valued at USD16.86 billion in 2021, and is expected to see a CAGR or 29.7% from 2022-2033.6
In March 2022, Nvidia Corp announced7 new chips that have the capacity to significantly increase the computing speed of complex artificial intelligence algorithms. Since Nvidia already holds a significant share of the market, this new technology may allow it to further expand its share of a rapid-growth market.
AMD is the upstart in the data center world, but it has made impressive progress, capturing a whopping 30% of the CPU market share in 20228. That is partially due to the launch of its AMD EPYC 9004 “Genoa”, a new server ecosystem built on the latest Zen 4 core architecture. It purports to enable the fastest server CPUs ever. In January 2023 AMD signaled its commitment to the AI race when it unveiled a series of x86-based chips that it claims are the first to contain an on-board dedicated AI engine9. AMD CEO Lisa Su: “You can expect additional AI acceleration coming in our server portfolio … So you’re going to see AI broadly across our road maps.”10 AMD is clearly one to watch in the coming months.
As of this writing the following stocks mentioned are current holding of Defiance’s ETF, QTUM: Advanced Micro Devices (AMD: NASDQ), Alphabet, Inc. CL A (GOOGL: NASDAQ), Microsoft Corp. (MSFT: NASDAQ), Nvidia Corp. (NVDA: NASDAQ), Rigetti Computing, Inc. (RGTI: NASDAQ).
1“All you need to know about ChatGPT, the A.I. chatbot that’s got the world talking and tech giants clashing”, February 8, 2023, https://www.cnbc.com/2023/02/08/what-is-chatgpt-viral-ai-chatbot-at-heart-of-microsoft-google-fight.htm
3“Microsoft and OpenAI extend partnership”, January 23, 2023, https://blogs.microsoft.com/blog/2023/01/23/microsoftandopenaiextendpartnership/
5“An important next step on our AI journey”, February 6, 2023, https://blog.google/technology/ai/bard-google-ai-search-updates/
6“Artificial Intelligence (AI) Chip Market Size to Surpass USD 227.48 BN by 2032“ February 8, 2023, https://finance.yahoo.com/news/artificial-intelligence-ai-chip-market-142600980.html
7“Nvidia unveils new technology to speed up AI, launches new supercomputer”, March 22, 2022, https://www.reuters.com/technology/nvidia-unveils-latest-chip-speed-up-ai-computing-2022-03-22
8“AMD Grabs Over 30% CPU Market Share As Intel Continues To Decline”, February 9, 2023, https://wccftech.com/amd-grabs-over-30-percent-market-share-with-epyc-cpus-intel-continues-to-decline/
9AMD doubles down on AI with new Ryzen 7000 chips, January 6, 2023. https://www.techtarget.com/searchenterpriseai/news/252528954/AMD-doubles-down-on-AI-with-new-Ryzen-7000-chips
10AMD sees huge future for AI, with heavy focus on upcoming MI300 superchip, February 1, 2023. https://www.fierceelectronics.com/sensors/amd-sees-huge-future-ai-heavy-focus-upcoming-mi300-superchip