AI looks likely to cause major changes to society over the next decade.

Financial markets have mostly not reacted to this forecast yet. I expect it will be at least a few months, maybe even years, before markets have a large reaction to AI. I'd much rather buy too early than too late, so I'm trying to reposition my investments this winter to prepare for AI.

This post will focus on scenarios where AI reaches roughly human levels sometime around 2030 to 2035, and has effects that are at most 10 times as dramatic as the industrial revolution. I'm not confident that such scenarios are realistic. I'm only saying that they're plausible enough to affect my investment strategies.

Companies working on AI

Google's DeepMind seems a bit more likely than any other company to produce valuable AI. That's a good enough reason to hold a modest position in Google. TPU and Waymo are additional AI-related reasons for holding Google stock.

OpenAI is a serious contender. Microsoft has a $1 billion stake in OpenAI. But profits from that seem to be capped at 100x, so the best case scenario seems to be that Microsoft shareholders get $13.40 per share from that stake. Maybe Microsoft will invest more in OpenAI. I only see Microsoft getting a modest boost from AI.

Conjecture sounds quite promising. I offered to invest $100k in them this summer. They don't seem interested in investments that small.

There are other new private companies that I haven't been able to evaluate. Here are some that seem worth paying some attention to:

That's a dramatic pace of new startups being founded that look potentially important. VC's seem to have been throwing enough money at them in mid-2022 that they likely had little reason to talk to more ordinary investors such as myself. Investment in such startups has maybe cooled slightly now that FTX has stopped throwing money at them, but I'm guessing it hasn't cooled much.

I see a 50% chance that one or more of these new startups will make DeepMind and OpenAI irrelevant. I have little hope of being able to buy a diversified portfolio of such startups, so I don't expect to profit from direct investments in companies working on AI.

Computing Hardware Companies

The most promising investments involve the hardware needed to power AI. That mostly means semiconductors.

Semiconductor capital equ...

Fran MG

Fran MG

Fran MG

Fran MG