What the internet boom can tell us about the road to AGI

Hello, reader.

Think January 2000.

The Internet was the next big thing, a recession was a year away, and the dot-com bubble was inflating. Wide leg jeans were all the rage.

This may sound a bit like today.

But over 20 years ago, investors knew that the internet would change the world. So they bid up the market values ​​of the top 5 tech stocks to record highs…

• Microsoft Corp. (MSFT) to 600 billion dollars
• Cisco Systems Inc. (CSCO) to 316 billion dollars
• Oracle Corp. (ORCL) to 308 billion dollars
• Intel Corp. (INTC) to 275 billion dollars
• IBM Corp. (IBM) to 188 billion dollars

All of this felt perfectly reasonable at the time.

These five companies represented the leading software, hardware and infrastructure firms of the day. They were clearly the key drivers of the Internet age, and investors were happy to buy these stocks at any price.

However, these companies could not stay at those lofty valuations, and all but IBM declined over the next decade. In fact, Cisco and Intel are still trading below their 2000 peaks.

The truth is that high stock prices have a habit of robbing future investors of profits. If a stock goes up 10% today, that usually means 10% Less upside is available for tomorrow. And even the highest-growth companies can take decades to “fill in” inflated market valuations… if they ever do.

The opposite is also true. Of the 361 S&P 500 companies that made it through the 2000s without merging or going bankrupt, the top five performers of that decade were…

• A nearly bankrupt computer manufacturer: Apple Inc. (AAPL) +720%
• A construction company: McDermott International Ltd. (RM) +695%
• A fossil fuel company: Occidental Petroleum Corp. (OXY) +652%
• A railway: Kansas City Southern (KSU): +609%
• And an oil driller: APA Corp. (WATER) +545%

With the exception of Apple, the top performers had close nothing to do with the internet.

Instead, these were high-performing companies that simply sold off during the dot-com boom as investors needed cash to bid on expensive tech stocks. Twenty-nine of the top 30 performers of the 2000s tracked by Refinitiv, a provider of financial markets data, were non-tech firms.

Just as the Internet boom created surprising winners, so will it The Road to Artificial General Intelligence (AGI).

AGI is when AI becomes capable of “generalized” cognitive abilities, allowing it to achieve superhuman cognition.

To further illustrate, consider a separate industry where the need for AI is relatively easy to imagine: self-driving vehicles.

The real winners of the Road to AGI

At first glance, observers might think that the Road to AGI involves winners, such as automakers General Motors Co. (GM)and losers, sharing firms such as Uber Technology Inc. (UBER).

However, a closer look at the industry reveals that the opposite may be true once autonomous vehicles (AVs) really take off. Ride-hailing firms could emerge as winners, while automakers become losers.

Here’s why…

Automakers have long known that cars are parked about 95 percent of the time. Most vehicles are required on demand and we simply leave them in driveways or parking lots because they cannot move on their own.

But what if they could?

A single vehicle could theoretically drop one person off on a morning commute, return home to take another family member grocery shopping, then bring another to daycare…and so on. Suddenly, there would be no need to have 1.8 cars per household when you can share a single vehicle with multiple family members or neighbors.

Consultancy Oliver Wyman estimates that driverless vehicles could reduce net demand for cars by up to 15% by 2035, even though the number of people USING the cars go up. It’s no wonder why GM is willing to speed up the development of its autonomous vehicles. Losing the self-driving revolution would be disastrous for automakers given the high fixed costs of production.

Meanwhile, ride-hailing company Uber sold its self-driving unit in 2020 as it realized it was largely immune to being replaced by self-driving vehicles. Instead, the rideshare company will benefit from AGI because it can quickly become a market for these services. Why buy a Tesla Robotaxi when Uber can send you the nearest car at the lowest price?

So if ride-sharing companies like Uber play their cards right, them would be the ones who benefit the most on the Road to AGI, rather than the automakers who eventually perfect autonomous driving.

During my special event next Thursday, The road to the AGI Summit (join me by going here), I will share my action idea no. 1 to invest in AGI. It is a fast-growing startup with practically unlimited potential on the road to AGI. In addition, I will present my “future” project to prepare for this rapidly evolving landscape.

As AGI is reaching a point of no return for the development of AI technology, this event is crucial for anyone who wants to stay ahead of and capitalize on this upcoming technological revolution.

I will give all the details in my time The road to the AGI Summit on Thursday, August 22nd at 1:00 PM ET.

Click here to book your place.

Sincerely,

Eric Fry