Beware of the AI Scam Artists – And Grab This ‘Real’ AI Winner
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We’ve seen this time and again.
It happened with railroads in England in the 1800s, computer tech in the 1960s, dot-com companies in the late 1990s, blockchain just a few years ago – and artificial intelligence (AI) today.
Companies relabel themselves to be out in front for a top spot for all that money looking for a home.
Some of this positioning is legitimate — with companies that were ahead of the curve. But some of it is pure gamesmanship (aka “a scam”) — when companies use dubious connections to cash in on what’s hot.
A classic recent example was in 2017, when Bitcoin (BTC) crossed the $1,000 mark — and climbed like a rocket ship to $20,000 at one point.
That 1,900% gain prompted lots of companies to capitalize on the crypto boom — claiming they were in the “blockchain business” or used “blockchain technology” as a core competency.
But in 2017 in Hicksville, New York, a beverage maker decreed that it was a “blockchain” player. That company, the Long Island Iced Tea Corp., which started rolling iced tea off the production lines in 2011, changed its name to the Long Blockchain Corp.
The company offered the buzzword-filled explanation that they were exploring “opportunities” that “leveraged” blockchain technology… as well as blockchain “acquisitions.”
The strategy worked: With the name change, the company’s stock price soared 200%.
In a day.
But the downfall came almost as quickly, as the company was delisted from the Nasdaq… subpoenaed by the SEC… and investigated for insider trading by the FBI.
Indeed, insider-trading charges were ultimately brought against three investors who allegedly had early knowledge of the name change — and who quickly sold their shares after the stock price shot up.
I’m sharing this anecdote because of what we’re seeing with AI.
AI mentions for S&P 500 companies in the first quarter hit a new record of 110, with the previous record just being set the quarter before with 78 mentions.
The five-year average for AI mentions is 57.
AI is a real technology, with real value — just like railroads, the internet, and the blockchain. But that sizzle will attract bad actors. So as you see more companies claim to be “AI ventures,” you need to be vigilant by understanding which companies are walking the walk – and which ones are just talking the talk. Because talk isn’t just cheap. It’s potentially costly to those who get suckered in.
In short, you only want to invest in “real” AI companies.
And here today, I have just such a company for you to consider.
It’s one that will surprise you — since it’s not loudly broadcasting its AI connection.
What’s Under the Hood Is an AI Chip Company
Despite his dire warnings about AI’s societal risks, Elon Musk’s actions bely his words.Because not only did he file documents to start an AI company called X.AI in March, but he’s been using AI tech for years at Tesla Inc. (TSLA).
In 2021, Musk unveiled a supercomputer — Dojo — that uses AI learning to design Tesla chips and uses video data to train and support Tesla’s machine vision technology for autonomous driving.
This will add muscle to Tesla’s auto industry “edge” since the company will keep outpacing rivals as a “new-school-vehicles” leader.
It’s going to be a profitable segment for Musk, as the as driverless-vehicle market is projected to race from $33.48 billion in value this year to $93.31 billion by 2028 — a surge of nearly 3x in a mere five years.
But Tesla’s work with Dojo transcends cars; it’s transforming Tesla into a super-charged AI company. By sometime next year, Dojo is expected to be one of the five most advanced supercomputers on the planet.
And that supercomputer could make Tesla the most advanced AI-chipmaker in the world — stealing the thunder (and the market) from current leaders like Nvidia Corp. (NVDA).
Nvidia’s A100 and H100 GPU chips are the dominant AI “brains” right now. But that’s a monopoly that Tesla could topple with its self-designed chips. And even though Tesla is focusing on chips for its own use at this moment, it could eventually look to make that a business with external customers — once it’s leaped out to a hefty lead and is working on next-gen semiconductors for its own use.
We’ve already watched Tesla employ this strategy in the charging-station market.
Instead of trying to build out the timely and costly infrastructure of EV charging stations, Ford Motor Co. (F) and General Motors Co. (GM) formed a partnership with Tesla to use Musk’s charging stations.
The partnerships alone could generate an additional $3 billion in revenue for Tesla by 2030.
Going back to the AI chips…
Nvidia’s automotive segment booked $296 million in revenue in its last quarter — a record and an increase of 114%.
And its design-win pipeline for the automotive industry — an estimated size of future use/demand for the product — went from $11 billion to $14 billion in a year.
That means there’s billions of dollars Tesla could add to its own money pool if it sold its AI chips.
But even if Tesla doesn’t drive towards this pathway, the company is still creating what could be some of the most advanced AI chips in the world to increase production, improve efficiencies, and cut costs…
And that translates into more revenue and profits for Tesla — and even-greater gains for shareholders.
So, unlike Long Island Iced Tea, Tesla isn’t talking about changing its name.
It doesn’t need to.
It’s walking the walk.