Picks and Shovels of the AI Gold Rush
The advent of advanced Artificial Intelligence is now impossible to ignore. Though many voices are splitting hairs on the timeline, we see a positive feedback loop with the potential for a much higher velocity in terms of R&D and innovation in coming months.
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In this issue, among other things, we will walk you through the current moats we see in the Artificial Intelligence space.
Currently, many LLM (Large Language Model) and Platform players are emerging and capturing market share in the AI Space, such as Scale AI, Anthropic, C3AI, and UIPath.
While dominant AI Unicorns may not materialize for a decade, in terms of investing, we look to established Enterprise SAAS companies standing to benefit from data mining and model-training capabilities, longstanding implementers, and complementary Quantum Computing companies. In our eyes, vertical scaling and integration will prove key when it comes to the AI supply chain and overall market.
In other words, vertical scaling and integration will prove key when it comes to the AI supply chain and overall growth opportunities.
Which players are primed for creative destruction of competitors?
Companies with either proven experience implementing AI solutions or existing access to non-identifier/non-PII/non-NMPI data stand to carve out chunks of the upcoming AI marketplace.
Picks:
PLTR 0.00%↑ - While OpenAI begs for legislative guardrails to prevent runaway Artificial Intelligence, Palantir has spent over a decade implementing tangible AI solutions to clients such as the US Government, Tyson and Airbus. Palantir’s CEO Alex Karp has detailed the company’s values extensively, and it is clear that the company already operates with established ethics, governance protocols and corporate controls.
Palantir initially established itself with US Defense contracts, but the company can shapeshift; for example, the company’s hospital solution software currently manages 10% of hospital beds in the US
Palantir’s MetaConstellation tool is currently playing a pivotal role on the ground in Ukraine, and CEO Alex Karp has made his allegiances clear. Palantir is a Pro-West company, and has even turned down non-friendly countries’ business in the past
Further, Palantir’s Forward Deployed Engineering business model embeds developers with clients for robust requirement gathering, enabling custom AI solutions fueled by the company’s product suite
While chiefly a software company, Palantir’s consulting capabilities partially influence our outlook on valuation; Accenture ACN 0.00%↑ for example, a consulting firm that recently announced a $3 billion investment in developing AI services, has been trading at a price of $250 to $323 per share in the past year
With the company expected to announce earnings in coming weeks, concerns of revenue may soon be assuaged by a new multiyear contract with Panasonic and a partnership with Microsoft accompanied by FedRAMP authorization and accreditation with the US Department of Defense
In the case that the Federal Government enacts a blanket legislative pause on AI R&D and/or sales, we doubt that Palantir would be subject to said law, as it currently enjoys a client relationship with various Federal agencies, such as the CIA and DOD
Existing Enterprise ERP & CRM SAAS Plays:
While WDAY 0.00%↑ offers a longstanding HR SAAS product, proven track record, and extensive book of business, Workday is currently dealing with a possible bellwether case in AI Law - we remain neutral on the stock at this time
CRM 0.00%↑ Salesforce has already been in the Artificial Intelligence space for years, first launching embedded AI via Einstein in 2016, chatbot Einstein GPT this past year, and AI Cloud last month in an effort to supercharge the company’s existing suite of products - almost everyone uses Salesforce, and we believe datamining will play a key role in the company’s navigation of upcoming AI headwaters
Quantum Shovels:
Quantum computing and semiconductors will play a large role in the AI gold rush, as researchers, companies, and clients will all need extensive computing power to handle the onslaught of prompts, for example. All of those questions you currently ask ChatGPT are fueled by gas of some sort, after all. Below are 3 relatively cheap stocks we’d recommend adding to your portfolio (nominally) and holding for the next 10 years:
On the horizon…
We are interested to see what 2024 has in store for Typeface
