The quick emergence of ChatGPT and the recent turmoil at OpenAI underscore the dynamic nature of the artificial intelligence landscape. They also highlight the risk to investors.
The Morningstar Global Next Generation Artificial Intelligence Index offers diversified thematic exposure to the booming Generative AI theme. The index has risen nearly 9% since its August inception compared to a 1% rise for the Morningstar Global Markets Index for the same period.
Brian Colello, Equity Strategist, Morningstar, said:
“An old adage suggests that the best way to profit from the gold rush across the western United States in the mid-1800s would have been to sell picks and shovels to miners rather than betting on the miners themselves. OpenAI was perhaps the first large language model (LLM) firm to ‘strike gold’ in the AI gold rush, but others will likely win, and still others will fail. Meanwhile, Nvidia has reached a trillion-dollar valuation and has profited the most from the early investment in generative AI, having emerged as the dominant ‘picks and shovels’ maker for AI model developers.”
Andrew Lane, Director of Equity Research Index Strategies, Morningstar, said:
“With about 50 constituents, our Global Next Generation Artificial Intelligence Index delivers thematically pure exposure to leading-edge artificial intelligence technologies, drawing on the in-depth knowledge and forward-looking insights of Morningstar’s equity research team. Since its inception earlier this year, the index has benefitted from a broad cross section of AI players, from mega-caps like Microsoft, Nvidia, Meta Platforms and Alphabet, smaller tech firms aiding in AI development, AI data and infrastructure companies, software vendors and AI service companies such as consulting firms. Major contributors to the outperformance of the index have been Intel, AMD and Palantir.”
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