October 8 was a bittersweet day for Geoffrey Hinton. That’s the day he and John Hopfield were awarded a Nobel Prize in Physics.
Hinton was awarded the prize for his work on “foundational discoveries and inventions that enable machine learning with artificial neural networks.” It’s why he’s known as the “Godfather of AI.”
In other words, Hinton is responsible for laying the groundwork for how AI functions today.
But just as Alfred Nobel came to regret his invention – dynamite – that would be used as a weapon of war, Hinton at least partially regrets his work.
Since May 2023, he’s been warning folks about the dangers posed by this burgeoning technology. In fact, he publicly resigned from Alphabet Inc. (GOOG) to be able to speak out more freely about it.
And last Tuesday, when asked about the effect that AI would have on our society, he said:
It will be comparable with the industrial revolution. But instead of exceeding people in physical strength, it’s going to exceed people in intellectual ability. We have no experience of what it’s like to have things smarter than us.
I bring this up because I think we’re at a tipping point with the AI Boom.
Here’s what I mean…
A Massive Shift in America
If you think the world is changing fast around us right now, I’ve got news for you.
You haven’t seen anything yet, folks.
At the heart of it all is technology. Our daily lives, our homes and our jobs are all going through a process of computerization, automation and technological adoption.
History tells us that if a revolutionary technology improves our lives, or makes things cheaper, or more efficient – then the adoption of that technology spreads like wildfire… no matter what.
Thanks to AI, we will soon ride in Robotaxis, have personalized treatment plans for major diseases and much more… totally transforming the way we work, live, and play.
However, some things will change for the worse…
A couple of weeks ago, I wrote about the dockworkers’ strike and how one of their aims was a total ban on further automation at our nation’s ports. I believed that this was a hopelessly futile endeavor – that AI-driven automation was eventually coming whether they liked it or not.
But it’s not just the dockworkers that should be worried. AI is coming for tech jobs, too.
In fact, TechCrunch reported that Amazon.com, Apple, Inc., Alphabet, Meta and Microsoft laid off roughly 94,400 people in 2023!
And so far this year, the total for tech layoffs so far is about 141,076!
In all fairness, some of these layoffs are due to workers who were reluctant to return to the office. But many of these layoffs are related to AI as companies rely on software, rather than people, to become more efficient.
Unfortunately, this is just the beginning. We will see layoffs in law enforcement, customer service, medicine, mining, transportation and much more.
Up to 800 million global workers could lose their jobs by 2030, according to a McKinsey study, and 70% of all existing occupations could see a pay cut, according to Wired magazine.
We’re talking about a massive wave of economic and societal change.
And it will happen once the “second generation” of the AI Boom – the Real AI Boom – begins.
How to Prepare for the Real AI Boom
Right now, most investors are still pouring their money into the “first generation” of AI stocks – like NVIDIA Corporation (NVDA), for example. And while I think NVIDIA will still make investors money, it’s old news at this point.
Instead, the real money will be made in the “second generation” of AI stocks. Simply put, these are the companies that will use generative AI to create profitable companies and reshape existing industries. This will launch the kind of transformational change we only see once every 25 years.
Those who adapt to the coming second wave of AI will take off, leading to years of outperformance… while those that don’t will lag behind – and may eventually go to zero.
In other words, we’re about to see a major sea change in the stock market. A bifurcation, if you will. And the unfortunate reality is that for all the good AI will bring to the world, it will also destroy old and antiquated businesses and industries.
The Real AI Boom will create a new set of market leaders. Millionaires will be created (and billionaires, for that matter). But hundreds, if not thousands, of stocks worldwide could also go to zero.
It’s already playing out in a big way. The snowball is already rolling down the hill.
Thanks to my Stock Grader, I found six next-gen AI companies that should outperform during the Real AI Boom… but they’re not the kinds of companies you’d expect. For example, one is an insurance firm that is pioneering the use of AI to improve its underwriting practices. And then there’s the company using AI to transform the travel industry. Both have been on strong runs this year, and as the Real AI Boom gains steam, these companies should, too.
But you’ll need to act fast, because this briefing will only be available for a few more days.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA)
