Wall Street investment banks and economists have been warning of an impending economic downturn for almost two years, but the economy has managed to remain resilient despite factors like stubborn inflation and the Federal Reserve's aggressive interest rate hikes.
Now, with the rapid advancement of artificial intelligence (AI) technology, particularly after the release of OpenAI's ChatGPT, some of the world's top investors believe it's time to reenter the markets, even if the economic outlook remains uncertain.
Steve Cohen, owner of the New York Mets and founder of hedge fund Point72 Asset Management, recently stated that investors should focus on the "big wave" of opportunity presented by AI instead of worrying about a potential recession. Speaking at a private conference, Cohen expressed bullishness and predicted upward market trends. "I'm making a prognostication - we're going up," the billionaire investor said.
While Point72 Asset Management declined to comment on the matter, the company did not dispute the account provided by Bloomberg.
AI continues to be a focal point in many stocks, with many of the world's tech giants leading the S&P 500 by quickly adopting the groundbreaking technology. For example, Microsoft Corp. (NASDAQ: MSFT) invested $10 billion into OpenAI in January, and their stock has climbed roughly 50% since the investment. This comes after a $1 billion investment in the AI startup in 2019. Alphabet Inc.'s (NASDAQ: GOOGL) stock dipped in February following concerns about ChatGPT threatening their search dominance. But following the release of Bard in March their stock is up about 35%.
The retail startup investment market has seen similar success. AtomBeam is an AI data compaction startup that can compact data by up to 75% using AI. The software enables machines to communicate at an accelerated pace and with enhanced security through a simple firmware upgrade, eliminating the need for costly hardware investments. The startup launched on StartEngine, which means anyone can invest in AtomBeam, and consistently raised millions from retail investors.
With established partnerships with industry leaders like Intel Corp. (NASDAQ: INTC) and Lockheed Martin Corp. (NYSE: LMT), AtomBeam's Compaction software holds tremendous potential to optimize speed and efficiency in various sectors, such as aviation, automotive and mobile devices.
Cohen believes that AI advancements will create new jobs and drive corporate profits, which, in turn, will elevate stock prices. This perspective aligns with his investment strategy, as revealed in Securities and Exchange Commission (SEC) filings for the first quarter of this year. Cohen purchased significant stakes in chip giant Nvidia Corp. and tech giant Intel, both of which are associated with AI innovations.
His fund held substantial investments in Alphabet Inc., the parent company of Google, and Meta Platforms Inc. (NASDAQ: META), a company that recently unveiled custom computer chips for its AI technology.
Cohen's positive outlook on AI is shared by other influential figures in the investment community. At the recent Fortune Most Powerful Women Next Gen conference in San Diego, Cathie Wood, CEO of Ark Invest, expressed her belief that AI will enhance worker productivity and reduce company costs over the next decade. Goldman Sachs Senior Economist Ben Snider also voiced his confidence in AI's potential to boost U.S. corporate profits by 30% or more in the coming years.
The transformative power of AI is evident in various sectors. Research indicates that AI tools, such as language models, can significantly improve productivity in occupations like software engineering and economics. For example, previous versions of large language models, like GPT-3, have enabled software engineers to code up to twice as fast. Studies have found that many writing tasks can be completed twice as quickly with the assistance of AI.