artificial intelligence, or„AI', the revolution is imminent. The financial media and headlines are full of stories about generative “artificial intelligence” and beyond"Industrial Revolution".
Unsurprisingly, with the launch of ChatGPT, the focus has shifted to AI. The advantages of integrating AI into search engines are already obvious. Even videos on TikTok"Earn a Million"The use of AI explains why AI-related stocks have surged in recent months.
The Industrial Revolution is generally regarded as an ongoing event from the 19th century to the present. However, it is best understood as a series of paradigm shifts. The first began in the late 18th century, powered by mechanization and steam power. Mass production, electricity, and the assembly line enabled a second that lasted into the early 20th century. The third began after World War II and made great strides in space exploration, computers, automation, and information technology.
A fourth paradigm shift is underway. This revolution includes the emergence of exponential technologies, from artificial intelligence and intelligent machines to robotics, blockchain and virtual reality. These technologies have been influencing the way we live for more than a decade.
This prosperity offers great opportunities as innovation offers great investment opportunities to capitalize on these advances. Each phase has resulted in tremendous market returns that have lasted for a decade or more while investors sought new opportunities.(We'll come back to the blue-shaded areas later.)
We're going through another guess"Prosperity"Because "generative AI" has fired the imagination of investors. The table below compares the year 1999„Dot.com/Internetrevolutie“Nasdaq Composite compared to 2023"Generative Artificial Intelligence"Revolution.
If this analogy is correct, it points to an opportunity to be seized"arrive"From an investment perspective.
But what about those shaded blue boxes?
those shades of blue boxes
Although the charm"arrive"The potential returns are sure to make investors' mouths water, but the question of valuation remains. As shown, despite the technological advances made by space exploration, the internet has even done so"artificial intelligence"Overestimation can lead to secular stagnation.
Throughout history, the best investment returns have been preceded by low valuations. This is because the low rating allows for multiple expansionsas an investor can "pay"Expected earnings growth. For example, in 1994 investors could buy Microsoft stock (MSFT) at a price-to-sales multiple of about three. As the Internet boom caused more computers to be connected to the Internet, Microsoft's sales accelerated. Today, Microsoft stock is trading at more than 11 times sales. Artificial intelligence should once again ensure enormous increases in sales.
However, therein lies the question of evaluation. With the 11x price changing hands, there's little room for error. Scott McNeely's comment is a good reminder of the importance of scoring. Scott was CEO of Sun Microsystems in 1999, at the height of the dot.com revolution.
"If you multiply your sales 10 times, I have to pay you 100% of sales in dividends for 10 years to give you 10 years of returns.Assuming I can get it from my shareholders. ITonneIt is very difficult for a computer company to assume that the goods I sell are free. Zero costs are assumed, which is very difficult with 39,000 employees. Assuming I don't pay taxes, it's very difficult. And provided you don't pay taxes on your dividends, it's illegal.And let's assume I can sustain my current income for the next 10 years without R&D.Now that it's done, would any of you be willing to buy my stock for $64? Do you know how ridiculous these basic assumptions are? "
That is an important point. At twice that price-to-sales ratio, a company's sales should be growing at about 20% per year. This growth rate will only sustain the normalized price increases necessary to maintain the rate. At 11x, the revenue growth required to sustain this valuation is astronomical.
But not only Microsoft. The table below lists S&P 500 companies with price-to-earnings multiples of five or more. I have highlighted several high profile companies that have been covered in the mainstream media.
Yes, many of these companies would benefit from the use of "artificial intelligence". However, even under optimistic assumptions, it's difficult to justify revenue growth that supports current payout multiples.
Even ChatGPT suggested the same thing.
Paying more than five times the selling price for an investment can present several potential problems for investors.These include overestimating risk, volatile earnings, market saturation, competitive pressures and industry-specific factors.Investors should therefore conduct thorough due diligence and consider various financial and non-financial factors before making any investment decision. "
Or as Warren Buffett once joked:
“The price is what you pay. The value is what you get.”
I've been here before
"Maybe this time it will be different. During the recent frenzy of much-anticipated IPOs, those words are arguably the most dangerous to say when investing.–Randall Forsyth,"Shadows of 1999."
For everyone who has experienced two"real"Bear market, image of people tryingHandel"Your path to wealth is well known.recent influxeverything that has to do with AINot new.
Companies that make progress regardless of actual sales, profits, or ratings are at the forefront of the internet revolution. have been thinking a lot“Trees can grow to the sky“There are endless ways the internet will transform our lives, our jobs and our future. While the internet has certainly changed our world, eventually the realities of valuation and earnings growth will change as well.”"The meaning is reversed."
It is important to remember that while valuation is crucial to the end result of the speculative market phase, it is only a poor indicator of market timing.Awards measure current “psychology”"Group"and is the most accurateRRepresents the behavioral dynamics of an organism we call "market".
We are currently on it"arrive"and its impact on the world as we know it. Unsurprisingly I've been looking"arrive"They've exploded as retail investors look for performance.
The spectrum of winners and losers in the market is very narrow.
“The AI boom and hype is strong. So much so that the S&P 500 would have fallen 2% this year without popular AI stocks. Not by +8%.”–general society
The difference this time is that we're not starting from a low-rated site. As mentioned above, valuations across the market are sky high right now, with stocks like Microsoft, Nvidia, Adobe, and Apple at astronomical valuations.
Although we're in the booming phase of the "artificial intelligence" market, reviews suggest this journey will eventually come to an end.Chasing the market is the purest form of speculation. It is simply betting on a higher price rather than determining whether the price paid for those assets is below fair value.
A lot of money is made from it"arrive"before the end of this phase. But like all past market phases, the end of this era is simply the result of that realization"Reviews are important."
Lance Roberts is Chief Portfolio Strategist/EconomistRIA consultant.He is still "Podcast von Lance Robertsand editor-in-chiefreal investment advice"Pages and Authors"Real investments every dayBlog and Real Investing Report. Keep following LanceFacebook,on twitter,shortcutexistYoutube
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FAQs
What history has repeated itself? ›
What are some examples of history repeating itself? Some examples of history repeating itself are Napoleon and Hitler invading Russia, The Great Recession and The Great Depression, extinction events and the sinking of great ships like the Tek Sing, the Vasa and the Titanic.
Who said history repeats itself? ›The Spanish-American philosopher George Santayana observed that "Those who cannot remember the past are condemned to repeat it." Karl Marx, having in mind the respective coups d'état of Napoleon I (1799) and his nephew Napoleon III (1851), wrote acerbically in 1852: "Hegel remarks somewhere that all facts and ...
Does history always repeat itself? ›“History Doesn't Repeat Itself, but It Often Rhymes” – Mark Twain.
Why is the AI revolution different? ›The AI revolution has fundamentally changed the ways people collect and process data as well as transformed business operations across different industries. In general, AI systems are supported by three major aspects which are: domain knowledge, data generation, and machine learning.
What is a great quote about history repeating itself? ›George Santayana is credited with the famous quote, “Those who do not remember the past are condemned to repeat it.” This has been repeated by countless history teachers in their efforts to ensure they keep their jobs.
What did Mark Twain say about history repeating itself? ›Mark Twain once said that “History never repeats itself, but it does often rhyme.” As heads of state gather in Paris this week to mark 100 years since the end of World War I, they should listen closely to the echoes of history and avoid replaying the discordant notes of the past.
Who said history never repeats itself but man always does? ›Quote by Voltaire: “History never repeats itself. Man always does.”
When history tends to repeat itself first as a tragedy? ›The opening lines of the book are the source of one of Marx's most quoted and misquoted statements, that historical entities appear two times, "the first as tragedy, then as farce" (das eine Mal als Tragödie, das andere Mal als Farce), referring respectively to Napoleon I and to his nephew Louis Napoleon (Napoleon III ...
Do we really learn anything from history? ›Studying history helps us understand how events in the past made things the way they are today. With lessons from the past, we not only learn about ourselves and how we came to be, but also develop the ability to avoid mistakes and create better paths for our societies.
Did Winston Churchill say those who fail to learn from history are doomed to repeat it? ›And in a 1948 speech to the British House of Commons, Winston Churchill said, “Those that fail to learn from history are doomed to repeat it.”
When did Mark Twain say history doesn't repeat itself? ›
In conclusion, the earliest match for this popular quotation appeared in an essay by Theodor Reik in 1965. Currently, he is the leading candidate for coiner of the saying. The earliest attribution to Mark Twain appeared in 1970, but that date is many decades after his death.
Why can't AI replace humans? ›AI can't replace human talent
Artificial intelligence is superlative at certain tasks, but it can only "think" in terms of its training data. An AI tool can't innovate or create, so businesses will still rely on humans for fresh ideas. Another thing that humans do best is communication.
One of the main reasons why AI cannot replace human beings is the lack of creativity. Humans possess a unique ability to think creatively and come up with new and original ideas. Creativity is a complex human trait that is influenced by various factors such as emotions, culture, and experiences.
How has AI revolutionized the world? ›The creation of new job opportunities
AI has become increasingly important in today's world as it has the potential to revolutionize many industries, including healthcare, finance, education, and more. The use of AI has already improved efficiency, reduced costs, and increased accuracy in various fields.
“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered.
What did Winston Churchill say about history? ›“Those that fail to learn from history are doomed to repeat it.” Winston Churchill. History never repeats itself. Every single historical moment is distinct from those past. However, we must learn from our mistakes so that we do not run the risk of repeating them.
What is Mark Twain most famous quote? ›Never put off till tomorrow what you can do the day after tomorrow.
Did George Eliot say history repeats itself? ›History, we know, is apt to repeat herself, and to foist very old incidents upon us with only a slight change of costume.
Which quote is often falsely attributed to Mark Twain? ›1. “A lie can travel halfway around the world while the truth is putting its shoes on.” This quotation and versions like it have been attributed to Mark Twain, Thomas Jefferson, Winston Churchill, and many others. Perhaps the most commonly cited candidate for authorship is Twain (pictured above).
What is a famous quote about history and who said it? ›George Santayana, American philosopher (1863-1952)
“If you don't know history, it's as if you were born yesterday. If you were born yesterday then any leader can tell you anything.”
What is the quote about history from Aristotle? ›
“History describes what has happened, poetry what might. Hence poetry is something more philosophic and serious than history; for poetry speaks of what is universal, history of what is particular.”
What does the famous phrase history repeats itself mean 4? ›History has a tendency to repeat itself. As memory fades, events from the past can become events of the present. Some, like author William Strauss and historian Neil Howe, argue that this is due to the cyclical nature of history — history repeats itself and flows based on the generations.
What are the 4 stages of history repeating itself? ›The four historical turnings are: High (First Turning), Awakening (Second Turning), Unraveling (Third Turning), and Crisis (Fourth Turning). Historical turnings and generational archetypes work together to power the generational cycles.
What does Karl Marx mean by history repeats itself first as tragedy second as farce? ›Through this statement, Marx was pointing out the tendencies of human beings to not learn from one's own mistakes and allowing them to occur again leading to tragic consequences.
What does history is meant to repeat itself mean? ›Proverb. history repeats itself. Things that have happened in the past will or tend to happen again in one way or another.
What no one learn from history? ›What we learn from history is that no one learns from history. — Otto von Bismarck.
What is the only thing learned from history? ›The German philosopher Georg Hegel famously said, “The only thing that we learn from history is that we learn nothing from history.” This is a worrying thought because there is so much that went wrong when we look at world history.
What percentage of history do we know? ›Modern humans (Homo sapiens) have existed on Earth for approximately 300,000 years. Human history began to be recorded approximately 5,000 years ago. Using these numbers, we can estimate that only about 1.6% of human history is recorded!
What was Winston Churchill's most famous quote? ›“Never, never, never give up.”
What did Stalin say to Churchill? ›Stalin on Churchill's 'Iron Curtain' speech (1946)
In March 1946 Soviet leader Joseph Stalin responded to Winston Churchill's 'Iron Curtain' speech, through the pages of the communist newspaper Pravda: “Mr Churchill now stands in the position of a firebrand of war. And Mr Churchill is not alone here.
What were Winston Churchill's most famous sayings? ›
- “No One Would Do Such Things” ...
- “The King's Ships Were at Sea” ...
- “I'd Drink [Poison]” (Apocryphal) ...
- “Total and Unmitigated Defeat” ...
- “Blood, Toil, Tears and Sweat” ...
- “Be Ye Men of Valour” ...
- “Never Surrender” ...
- “Their Finest Hour”
It shows how real courage is to face the issues, knowing that you are the losing side, but keep your dignity and moral.
Which human will not replaced by AI? ›Because by our nature, we all want a human touch and people will always be the most critical resource any organisation has. The key is to empower them with intelligent technology to achieve more. This is why data, AI and automation will never replace humans.
What are two things AI can do that humans cant? ›AI can filter email spam, categorize and classify documents based on tags or keywords, launch or defend against missile attacks, and assist in complex medical procedures. However, if people feel that AI is unpredictable and unreliable, collaboration with this technology can be undermined by an inherent distrust of it.
Will AI ever be smarter than humans? ›AI will achieve human-level intelligence, but perhaps not anytime soon. Human-level intelligence allows us to reason, solve problems and make decisions. It requires many cognitive abilities including adaptability, social intelligence and learning from experience. AI already ticks many of these boxes.
Is AI a danger to humanity? ›The spread of Artificial Intelligence is frequently applauded for making things a lot easier and a lot less time-consuming. However, AI poses great ethical, social and legal challenges and threats to our societies as some people claim that it will wipe out jobs for humans.
Will AI destroy humans in future? ›While it is always possible that unforeseen events or developments could lead to the destruction of humans by AI, it is unlikely to happen in the near future.
Will coders be replaced by AI? ›While AI is currently being used to improve software engineering, many people fear that it could eventually replace human developers altogether. But is this really the case? The truth is that AI is unlikely to replace high-value software engineers who build complex and innovative software.
Will AI become self aware? ›The CEO of Alphabet's DeepMind said there's a possibility that AI could become self-aware one day. This means that AI would have feelings and emotions that mimic those of humans. DeepMind is an AI research lab that was co-founded in 2010 by Demis Hassabis.
Will AI take over the world eventually? ›It's unlikely that a single AI system or application could become so powerful as to take over the world. While the potential risks of AI may seem distant and theoretical, the reality is that we are already experiencing the impact of intelligent machines in our daily lives.
What is the most advanced AI in the world? ›
GPT-3 was released in 2020 and is the largest and most powerful AI model to date. It has 175 billion parameters, which is more than ten times larger than its predecessor, GPT-2.
What is something that repeats itself? ›Something that is repetitive involves doing the same thing over and over again. If you get bored running on a treadmill daily, you might try something less repetitive, like playing soccer outdoors. Anything you do repeatedly, especially when it's boring, can be described using the adjective repetitive.
What does history almost repeated itself mean? ›: the same thing happens again.
What does history repeat itself the first time as? ›History Repeats Itself, First as a Tragedy, Second as a Farce.
Can people repeat the past? ›Repeating past trauma might occur because you subconsciously want to fix what happened. You may, without even realizing it, hope that by recreating your trauma, you can find closure and fix what happened in the past. Some experts indicate that repetition compulsion might not have a purpose.
What is it called when something repeats itself forever? ›Eternal return (or eternal recurrence) is a philosophical concept which states that time repeats itself in an infinite loop, and that exactly the same events will continue to occur in exactly the same way, over and over again, for eternity.
What is it called when something repeats infinitely? ›infinite loop (endless loop)
What is it called when you say the same thing over and over? ›This repetition or imitation of sounds, phrases, or words is called echolalia. The term comes from the Greek words “echo” and “lalia,” which mean “to repeat speech”.
What is the French saying history repeats itself? ›L'histoire se répète.
Did Churchill say those who fail to learn from history are doomed to repeat it? ›And in a 1948 speech to the British House of Commons, Winston Churchill said, “Those that fail to learn from history are doomed to repeat it.”
Why was George Eliot controversial? ›
George Eliot's love affairs led to public scandal.
Although he left Jervis in 1852, Lewes could not sue for divorce; under the terms of the law, he had condoned his wife's adultery by registering the births of her children by another man in his own name.
There seems to be some confusion as to who exactly said that history is “simply one damned thing after another.” The quote has been variously attributed to Winston Churchill, Edna St. Vincent Milay, Arnold Toynbee, or any one of a half-dozen other candidates.