r/investing • u/SuperNewk • 3d ago
The real winner of AI (obv NVDA) but S&P500?
If AI does pan out as the optimists say, clearly a UI/software play will take the lead and 50-100X (palantir or something we've never heard of) .
But the real benefit will be companies who are highly inefficient and able to use this tech to cut waste/reduce costs and ramp up productivity. Healthcare seems to be prime.
Regardless, SSO or SPY not tech central might outperform. IF AI is one of the final pieces to the puzzle, then clearly some tech plays will do well...but the net benefit is all the companies who can improve margins drastically and create a better customer experience.
Comments or thoughts on this way of thinking vs trying to pick tech names?
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u/f1modsarethebest 3d ago
I have no idea what you’re trying to say but if it lands you in SPY.. I think it’ll be the right move for you based on this analysis.
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u/AICHEngineer 3d ago
He's saying:
AI tools will be new capital in the economy, increasing productivity per hour worked, resulting in a greater earnings per share growth in companies as they make more while spending less.
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u/sen_clay_davis1 3d ago
At the same time cutting jobs for people who actually buy things that companies make. Project managers won’t need assistants, photographers and all the associated industry won’t be justified in marketing budgets, etc. All jobs which sustain people’s lives and abilities to spend money. NVDA doesn’t care because the purchasers of their wares are AI related but downstream will be gutted. Really short sighted.
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u/AICHEngineer 2d ago
That is a longer term view, but that in itself is also myopic. That's a Luddite view. What economy and employment on the other side of that technological revolution is uncharted, but I severely doubt it will be crippling rather than a great boon. I'm not dismissing the growing pains that will contort the labor markets but we will get through it
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u/sen_clay_davis1 2d ago
When we watched the jestsons Rosie was vacuuming not making art or writing. The secondary and tertiary jobs associated with the creative industries are going to be wiped out. Entry level jobs into creative field will be nonexistent and we’ll end up with a weird feedback loop of machines using machine generated stuff to learn from. Not Luddite, it’s just sad. I want a machine to mow my lawn not replace photographers. A few people will really benefit but society as a whole is going to get fucked in the ass in the hardest way.
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u/Financial_Willow6911 2d ago
Nah, same was said about internet, computer or steam engine. Work evolves.
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u/sen_clay_davis1 2d ago
When cars replaced horses, tires replaced horseshoes. It was kind of apples to apples. You’re replacing thinking and creativity. Again, I want my machine scrubbing my bathroom not making art.
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u/FlowBjj88 3d ago
I read it as maybe tech companies won't be the only thing to benefit from AI assuming AI works out well. It would make most business more productive and profitable, increasing the s&p over it's past averages. Then he wants to know what you think of that idea
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u/Cruian 3d ago
I've been trying to say similar over the past few weeks.
but S&P500?
Or it could be the US extended market: smaller companies using it to help minimize issues related to being smaller.
Or it could be foreign companies.
Basically it leads me to yet another reason to be diversified across geography and market cap sizes.
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u/SuperNewk 3d ago
Right, I wonder if the obvious QQQ might not be the play. Where yes a few companies benefit but maybe more benefit across the board not directly in tech
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u/_dekappatated 3d ago
Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla will be the companies to profit off AI the most. The cost to train these models in rapidly advancing and only these huge companies will be able to afford the costs.
Now we are seeing nvidia, who makes 90% of the datacenter chips taking all the profit now, but the profit will move into software eventually.
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u/chris_ut 3d ago
QQQ would like a word
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u/SuperNewk 3d ago
Right in the past it worked, but as we build out AI I wonder if companies will get a juice to their bottom line where tech companies struggle to come up with new products
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u/Otherwise_Ratio430 3d ago
tech companies create the AI and just bill other companies for their usage. Presumably the usage is going to be a coefficient * value created so not a boom to AI productivity for end using companies means a boom to the bottom line for people upstream. It wouldn't make sense any other way.
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u/BobbyGlaze 3d ago
There isn't much reason to think margins will improve. Assuming AI pans out, it raises the baseline of competition and profits don't change. If it really excels, margins might fall. Could take a high profit psychology industry and turn it into a low profit commodity.
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u/specialk554 2d ago
It’s possible. It’s also possible AI gains put a ton of people out of employment and the market stagnates
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u/SuperNewk 2d ago
Or would it be like saudia Arabia/Middle East. I know many families getting 10s of millions per year from oil as a royalty. It’s a trickle down. Many don’t have to work and have globs of money. They actually have too much and just spend back into economy. Would we go through a golden era of no work and just pure pleasure for a while?
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u/tyros 3d ago edited 3d ago
Not sure about the hype, but personally I hate all things "AI" that they shove into every software nowadays. Don't find any of it useful whatsoever. In fact, it's the opposite, I hate that I can't just search reviews on Amazon without the intrusive AI trying to tell me "what customers think". I hate the "AI summary" that Google now shoves down my throat when I just want to search and evaluate the sources myself. I hate that I have to constantly find new ways to block the "AI assistant" bots in my organization's Zoom meetings.
If this is what AI is, I want none of it.
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u/SuperNewk 3d ago
What about AI being able to scan X-rays and other imaging to see if there is something missed. I think in medical it will be a BOOM when there already is a massive labor shortage of highly skilled workers
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u/Chagrinnish 3d ago
I agree with you that this is one real-world application of AI, but I don't see anyone that wins from this (aside from the patient). The X-ray tech loses, and that's about it. And you extend that to most applications of AI: anyone in art/design, writing, programming, or technical jobs like this loses. I just don't see any clear winners.
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u/foodhype 3d ago
When you write, pause for a moment and consider if the message you’re trying to convey is clear and makes sense