Artificial intelligence (AI) has gained popularity, particularly after the release of ChatGPT. However, according to Barry Glassman, founder and president of Glassman Wealth Services and a member of CNBC’s Advisor Council, early leaders in AI may not be the best long-term investments.
Glassman believes that the biggest winners will likely be companies that use and benefit from AI products and services, rather than technology firms themselves. He compares the AI industry to the early days of the internet, where niche players such as AOL and Cisco initially performed well but were eventually surpassed by other major players.
Glassman sees AI as a transformative and disruptive technology that has the potential to impact every industry. He predicts a similar pattern to what was observed during the pandemic, where companies like Zoom and DocuSign initially saw their stocks surge but eventually dropped. Glassman expects the same to happen in the AI industry.
Currently, there aren’t many niche AI companies available for public investment, mostly because they are private. Glassman suggests that investors looking to participate in the AI theme should consider investing in strong, wide-moat companies like Alphabet, Amazon, Microsoft, or Nvidia, which have AI as one of their business lines.
Glassman also believes that the largest beneficiaries of AI may not be technology firms but rather companies in other sectors that can leverage AI to innovate in unprecedented ways. He mentions biotech, pharmaceutical, and logistics-management companies as examples.
In conclusion, Glassman advises investors to be cautious when investing in AI firms and consider companies that can benefit from AI technology in different industries. He believes that the AI landscape will evolve rapidly, and what may be a prominent AI company today may not necessarily remain so in the future.