After 40 years, I finally understand what my father was chasing.
Dad worked at IBM – or “Big Blue” – for close to three decades. In 1981, the company featured him in its flagship magazine, THINK.
Home computers were just starting to take off. They were still limited in their capabilities. And most people saw them as machines that needed to be told what to do.
But Dad saw greater possibilities. He envisioned a future where computers could think for themselves.
In that THINK story, he said: “The future in the computer field is in software.”
And he explained that the true power of computers was in helping businesses and governments save manpower.
So, at IBM, he pioneered a field of forecasting called multivariate analysis.
It was so important, the government contracted IBM and Dad’s team to use it on government data.
In short, this forecasting helps computers analyze large, complex sets of data.
It lies at the heart of every AI today. It’s what enables AI to expand and “learn” on the back of various algorithms.
And as you’ve likely noticed, AI is a huge – and growing – market today.
From $282 Million to $150 Billion in 15 Years
The market for AI applications is on track to reach $192.6 billion by 2025, according to the International Data Corporation (IDC). That’s compound growth of 31.2%.
And, according to Goldman Sachs, investment in AI is set to grow to more than $150 billion over the next two years. That’s growth of 25% per year.
Global executives see the writing on the wall, judging by a recent poll by Accenture.
Accenture asked executives whether they believe AI will play an important role in their business in the next three to five years. Nearly all – 98% – said yes.
It’s easy to see why.
AI accelerates enterprise productivity. Businesses want to be more efficient. It means more profits at the end of the day.
That’s why more organizations are set to rely on AI for digital-first operations. By 2026, IDC says that 75% of large organizations will rely on AI for this.
Today, 45% of organizations have not yet expanded AI beyond a few isolated projects.
That means there’s a huge opportunity for the companies at the forefront of this digital transformation – and huge potential profits for you.
Let me explain…
The Three Phases of the Adoption Curve
New and disruptive ideas don’t catch on overnight. They follow the same path of interest and acceptance, which is known as the “adoption” curve.
The adoption curve has three main phases: innovation, take-off, and saturation.
Invest too early in the “innovation” phase, when the technology is being developed, and you’ll have to wait years… perhaps decades… to see returns, if any.
Investing in the innovation phase would be like investing in the internet in 1983. That’s when, for the first time, computers were all able to “talk” to each other.
But it took all the way until the 1990s for businesses to start going online.
In other words, for over a decade, the internet was just sitting there… waiting around for someone to do something with it.
Then, in 1994, Microsoft got a website. McDonald’s, The New York Times, and Apple launched their websites in 1996.
From there, the web grew exponentially. More businesses realized that having a website was not an option… but a requirement for doing business in the 21st century.
That was when the internet really started to take off. And if you invested in the right internet companies at the right time, you had the chance to get insanely rich.
Take Google, for example. A $1,000 investment in Google in 2005 could have turned into $25,000…
A $1,000 investment in Amazon in 2005 could have turned into $62,000…
And a $1,000 investment in Apple in 2005 could have turned into an astonishing $157,000!
On the flip side, if you invest too late in the adoption curve, you’ll miss all the biggest gains. That’s the “saturation” phase, when everyone knows about it.
But in the middle – in the take-off phase – that’s the time to get in.
AI’s “Take-Off” Phase Is Now
That’s where we are with AI now. How do we know?
First, because we see usage spiking. According to research firm McKinsey, AI adoption is up 2.5x over the past five years alone.
And that’s only going to accelerate.
We can see this through user growth of ChatGPT, the popular AI-enabled chatbot. According to a study from UBS, it was the fastest-growing consumer application in history. It went from zero to 100 million users in only two months!
To put that into perspective, it took TikTok about nine months to reach 100 million users and Instagram 2.5 years, according to data from Sensor Tower.
Second, we follow what the smart money is doing. As I mentioned, Goldman Sachs sees investment in AI growing 25% per year over the next two years.
The insiders – venture capitalists, billionaires, major corporations – they’re all piling in now…
Like Microsoft, which poured $10 billion into OpenAI, the parent company of the ChatGPT program…
Or AI data architecture company Databricks, which raised $1.3 billion from major investors like BlackRock and Fidelity at a $38 billion valuation…
And AI defense startup Anduril, which recently raised $1.48 billion from venture capital powerhouses including Andreessen Horowitz, Valor Equity Partners, and billionaire Peter Thiel’s Founders Fund.
That’s why I’m pounding the table on AI now.
This is the moment. We weren’t there six months ago. And we may be past it in six months. Now is the time to act.
But as I’ve been writing, not every AI company will be a winner. And if you get into the wrong AI companies, you’re likely to get burned.
So how do you know which companies will become the leaders of AI… and which ones will fail?
I put together an urgent briefing, The AI Ultimatum, where I tell you all about my favorite AI company today. It’s trading for only $0.26.
And a major announcement could send this tiny AI company soaring at any point.
See, one of the biggest organizations in the world missed the AI frenzy. And now, they’re scrambling to catch up… to the tune of a just-announced $826 billion spending spree.
I released my urgent briefing, The AI Ultimatum, on Wednesday. You can click here to watch the briefing and learn more about this tiny company… Before we move past AI’s take-off phase.
Editor, Inside Wall Street With Nomi Prins