Massive Fortunes in AI… And the Life-and-Death Questions We’re Asking

David Fessler By David Fessler, Energy and Infrastructure Strategist, The Oxford Club

Market Trends

Artificial intelligence (AI) is one of the fastest-moving technologies these days. Its applications are limitless… as are the gains that investors can reap from it.

AI is one of the major themes of the “Fourth Industrial Revolution,” which is already delivering major gains to folks who subscribe to Oxford Resource Explorer

But there’s another side to AI: This technology is so profound that it has the potential to completely reshape life and society as we know it.

Questions abound. For example: How will AI be regulated?

Investors should be asking questions like this one, but I should warn you: AI raises questions that run much deeper than just investing.

Profits Brought to You by AI… Already

Before we get into the regulation question, we need to acknowledge the incredible strides that have been made in AI technology… and the profits that have followed.

This past March at The Oxford Club’s annual Investment U Conference, I recommended nine AI stocks. Here are the price increases and percentage gains that the stocks have earned since I recommended them on March 16…

One of my favorite AI stocks is No. 7, Netflix (Nasdaq: NFLX). Turns out that the streaming media giant is a big user of AI.

Netflix users get content choices served to them based on previous selections. Big fan of Westerns? Netflix will start sending them your way.

Like sci-fi? Watch a few, and you’ll get plenty more to choose from.

But Netflix is using AI for a lot more than just figuring out what users like to watch. It uses AI for specialized video compression.

That provides better quality video to users who have low-bandwidth internet (as I do). It’s amazing how the process works.

Specialized AI algorithms look at every frame of video. The video stream is compressed only as much as is necessary, without degrading the video quality.

Netflix calls its system the Dynamic Optimizer, developed to address low-bandwidth problems in emerging markets.

Though Netflix is the dominant content provider in the market today, it’s far from the only company leveraging AI. In fact, I wrote an article just last week on how Amazon is using AI. (If you missed it, you can read it here.)

As AI continues to evolve and get even smarter, more and more companies will be tapping into the technology… and the possibilities are endless.

How AI Is Solving the Most Ancient Riddles… And Creating New Ones

Here’s another example: The Chinese developed a game called “Go” more than a thousand years ago. Up until recently, experts considered it unsolvable by AI or a computer.

But DeepMind, the AI arm of Alphabet (Nasdaq: GOOGL), Google’s parent company, accomplished that feat about 18 months ago.

According to sources familiar with DeepMind, it now has more than 200 researchers. It has an edict from Google’s management to “solve intelligence.”

In fact, that’s what AI is designed to do in the first place. Scientists are putting it to work in various industries, doing everything from flipping burgers to sequencing genes to curing cancer.

AI systems retain everything they learn. They constantly gain intelligence, and it’s just a matter of time before they become smarter than we are…

And therein lies the potential problem: Industry experts like Elon Musk are warning the world’s governments that AI needs to be understood before it gets out of hand.

Just think: Researchers believe AI could have the intelligence of a human brain by 2025.

Once that barrier is broken… what comes next?

The End of Humanity?

This seems dramatic, but I encourage you to consider this simple scenario…

There is an AI system out there that’s already more intelligent than humans are. It’s programmed to rid the world of all known viruses.

But because it’s smarter than we are, it recognizes humans as a vulnerable species – one that’s not needed in a machine-dominated world. So instead of creating solutions to eradicate viruses… it creates a virus to eradicate us.

This is the kind of doomsday scenario that experts worry about with the proliferation of AI. Some say, “Well, just turn it off.”

But what if the doomsday AI code has replicated itself on virus-producing computers around the world? Then what happens?

Or the Dawn of a New Age?

Used responsibly and programmed with limits, AI could indeed launch society into a golden age of learning.

Disease could disappear… The aging process could slow down or reverse completely…

It’s easy to understand how possibilities like these would make people see AI only through rose-colored glasses… and without even considering AI’s limitless investment potential…

But again, there’s a flip side. And it all gets back to the basic AI algorithms that programmers start with: They need to be sensible, compassionate and humane.

Designers need to think about the ramifications of the algorithms they create. As Spiderman’s Uncle Ben famously said, “With great power comes great responsibility.”

I want to hear from you: Does the investment potential of AI excite you? How do you think it will affect society?

I’d be thrilled to hear your thoughts in the comments section below.

Good investing,