How to Win the Great AI Race

Full disclosure, this article is not a list of companies with low Price to Earnings or Price to Book ratios that are undervalued and should be purchased. Instead, it’s a reminder of how to position yourself for long-term success. We’ll look at the Artificial Intelligence (AI) race through the lens of three perspectives: a consumer, a Financial Planner, and an investor. 

The race for the future continues as tech giants Apple and Meta Platforms have discussed the idea of joining forces to advance their AI capabilities. The two companies have engaged in conversations to catch up to competitors like Microsoft who was among the first to incorporate AI across its products. Microsoft has a standing partnership with chip maker, Nvidia, to build supercomputers. At the most recent Worldwide Developers Conference, Apple outlined its plan to partner with Open AI’s ChatGPT across several iPhone apps. Apple has also entertained potential partnerships with a handful of other AI startups to leverage generative AI capabilities. All of this to compete with the seemingly unstoppable forces of AI advancement, Nvidia and Microsoft.  

As a consumer, a race like the one we are seeing in the tech industry is exciting and scary all at the same time. While each new product enhancement is developed to make our day to day more efficient, sometimes it makes you wonder where all this is headed. But that’s a conversation for another day. And, in the meantime, we’ll reap the benefits of tech companies racing to design the best products.  

As a Financial Planner, a race like this makes for interesting conversations to say the least. People want to know which company will be the next to surge. Truth is, no one knows. While Nvidia stock has skyrocketed the last year or so to become the largest company by market capitalization in the US, over the last week the stock has dipped 10.82%. A slow in sales, weaker than expected earnings and rumors of new, low-cost competition could all attribute to the stock’s recent performance. 

As an investor, a race like this makes a disciplined approach that much more valuable. Instead of hopping on and off the train of the most recent hot stock, stay the course. Sift through the noise of financial market media and remember what your goals are—vacation, new home, retirement, college, etc.—and don’t adjust unless your goals change. If markets are efficient, which we believe they are, then stock prices are reflecting all available information. Tech giants dominate the US market today, but who knows who it’ll be tomorrow.  

So, how can the great AI race potentially benefit you? Owning a slice of all these companies through low-cost, tax-efficient Exchange Traded Funds spreads your risk exposure, potentially increases your upside potential, and provides a layer of protection against market corrections. Then, sleep easy at night knowing that your portfolio’s performance isn’t tied to any one company you want to do well, has done well or your neighbor heard is going to do well, but rather hundreds or thousands of companies who are all competing to be the best at what they do.  

Apple and Meta have held talks about AI partnership - WSJ | Seeking Alpha 
Why Nvidia Stock Is Still Falling Today | The Motley Fool 

Disclosure: 

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted.