It's Time to Invest in Open AI — No, Not That One
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| By Michael A. Robinson |
Today’s tech investing talk has a fun twist to it.
You see, “open AI” is all the rage in Silicon Valley. And in case you're wondering, that’s not a typo.
I’m not talking about OpenAI, the $80 billion giant behind the viral AI tool ChatGPT.
I'm talking about something entirely different.
It's a movement led by developers to build powerful AI models using open-source code.
These are models that anyone can use, change and put to work.
Open AI is a fast-growing trend. And it's become the base of a parallel AI world …
One that's faster, cheaper and a whole lot cheaper.
That's where today's opportunity lies.
While headlines keep chasing the Magnificent Seven, a different kind of savvy tech leader is quietly making its mark in the open AI movement.
This company just posted amazing results that beat expectations. It raised its forecasts too.
Now it's perfectly set up to ride this new AI wave with huge returns …
Software for Everyone!
To set the stage, let's talk about open-source software.
Open source means software tools and models that are free for anyone to use, change and share. Projects are shared under open-source licenses.
This collaborative way of creating new things is crucial to the software world.
- First, it speeds up new ideas.
- Second, it makes it easier for people or smaller, new startups to get started.
- Finally, it makes sure we can see and trust how smart systems are built.
Open-source software started in the early 1980s.
A software programmer named Richard Stallman launched the GNU Project.
This was a computer operating system made entirely of free software.
Soon after, the free software movement began.
You might not know Stallman. But you'd probably know the most successful open-source company in history.
It's called Red Hat.
Red Hat was founded in 1993. It offered open-source software with paid business support and services.
In 2019, IBM bought the company for $34 billion. This was one of the largest tech deals ever.
Pretty soon, we could see similar huge deals in this area. Only they may not be just about open-source software.
They might deal specifically with …
Open-Source AI
Open-source AI means AI tools and models that are free for everyone to use. Not just a few big tech players.
You might know a few of these tools.
Some of the most widely used include neural networks. These are computer models based on how the human brain works.
There are also large language models. These are AI models trained on huge amounts of text and code to understand, create and work with human language.
AI seems like such a modern breakthrough. But the history of open-source AI goes back to the 1950s.
That's when AI research began in universities. Most code was shared freely as part of science work in labs at MIT and Stanford.
It wasn't until 2020 that open-source AI went mainstream.
Large language models became more open.
Today, it's a major trend. It's an area we want to invest in to beat the market.
Meet Nvidia’s Top Competitor
All of which brings us around to Advanced Micro Devices (AMD).
The Silicon Valley leader designs, develops and sells computer and graphics processors.
In recent years, it's expanded into up-and-coming markets like data-center storage, gaming and high-performance computing.
It's also focused on the red-hot market for AI chips.
In this area, it trails only Nvidia as the market leader.
AMD focuses on providing raw computer power with its graphics processing units (GPUs).
It didn't have a product to rival Nvidia in the AI market until last year.
That's when it launched a family of GPUs for data center uses.
This competition with Nvidia extends to open-source AI, too.
You see, Nvidia dominates the AI hardware sector thanks to its closed software stack.
AMD wants to create an open ecosystem.
In this world, AI software runs well on non-Nvidia chips.
Developers aren't locked into one vendor. More players can join in building and using AI.
To make this vision real, AMD is partnering with open-source AI projects.
It's building open software libraries.
It's promoting open model training.
See AMD Crush the Market
There's been a lot of buzz about OpenAI.
But I'm focused on open AI, the ecosystem.
This is a fast-growing trend that opens the door for everyone to access and develop AI tools.
As this field grows, AMD is in a great spot to benefit.
And looking at the numbers, the benefits have already started rolling in.
To be honest, earnings growth took a bit of a dip over the past couple of years. This happened as AMD spent heavily on the AI arms race.
However, it seems to have turned a corner.
Last quarter, AMD recorded 55% per-share profit growth.
No wonder the stock is crushing the overall market.
Since its stock hit bottom on April 8, AMD shares are up 105%.
That's nearly four times the return of the S&P 500 over that period!
We’ll get a sense of how the trend is unfolding when the firm reports earnings early next month.
Even if earnings growth slows a bit in a single quarter, this is a great way to invest in open-source AI for the long haul.
Best,
Michael A. Robinson
P.S. Along with AMD, this open AI will benefit startups that don’t have the budgets of Microsoft, Google, etc.
And investing in startups is Chris Graebe’s expertise. In fact, he is going to share the name of his latest find AND how early investors can buy shares BEFORE it ever IPOs.
To join those investors, watch until the end of this video.
