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AI Revolution: Lessons from the Internet Boom

AI Revolution: Lessons from the Internet Boom
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Artificial Intelligence promises to be at least as disruptive as the internet boom. We think this is a high probability and that the AI revolution is still in the early stages. However, it is not so early that this new technology has not already begun to impact our lives.

Many people think that AI is still a novelty item when, in fact, it has already permeated our lives. 

AI powers Siri, Alexa, and Google Assistant, responding to our questions and commands.

Your favorite social media feed (Instagram, LinkedIn, etc.) is curated using AI algorithms based on your interactions, preferences, and behavior. 

Chatbots, Amazon-recommended products, and even Google Maps use AI. 

Artificial intelligence has become deeply integrated into our daily lives, and often, we don’t even recognize it. We think this trend will continue as we adopt this new technology. 

Productivity & New Jobs

From an economic viewpoint, AI will undoubtedly have a major impact on labor productivity and will create new jobs. 

According to Goldman Sachs, AI could drive a 7% increase in global GDP and lift productivity growth by 1.5% over 10 years.  

Of course, the downside to any new technology is the loss of jobs. However, it is important to note that this has always been the case. Goldman Sachs found that 60% of today’s workers are employed in occupations that didn’t exist in 1940. This implies that the technology-driven creation of new positions explains more than 85% of employment growth over the last 80 years. 

AI will become so ingrained in our everyday lives that we really won’t think of it as ‘artificial intelligence’ but merely another tool that we use. Nonetheless, it will still have a profound impact on us all. 

A Brave New World

It’s hard to predict what the world will look like as AI matures. Chances are, AI is still in the early innings, as we are just now beginning to see the mass adoption of this new technology. The possibilities are truly endless. 

In fact, I asked ChatGPT (why not!?) what the world could look like in a few decades as we begin to adopt AI in our society. Here is its answer:

“In the coming decades, AI integration into daily life is expected to enhance efficiency and personal convenience significantly but also raise privacy and security concerns. The workforce may need to adapt through upskilling as AI automates physical work and data processing. AI’s role in creativity and design will likely expand, offering new methods of innovation while also presenting challenges in maintaining genuine artistic expression. Healthcare and accessibility stand to benefit greatly from AI advancements, particularly for individuals with disabilities. However, cybersecurity risks will necessitate advanced AI defense mechanisms, and ethical considerations surrounding AI technology will require thoughtful regulation and oversight. The evolution of AI in education could transform learning methodologies, emphasizing the need for accurate and effective educational content.”

This is a pretty good answer. But in truth, we really don’t know what the future will look like. However, I think it is safe to say that AI will increase productivity. 

We can certainly learn from previous technological breakthroughs. I think those who compare the AI revolution to the internet boom of the 1990s is most applicable. 

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Financial advisors for successful professionals, executives, and business owners.

Lessons From the Internet Boom

Both the AI revolution and the internet boom mark technological advances and widespread implications for the economy and society. 

Innovation

Internet Boom

The internet transformed just about everything in our lives, from communication and commerce to information sharing. It led to the creation of entirely new industries and business models (e.g., e-commerce, online advertising, etc.). Some of the biggest companies today were created during this boom (Microsoft, Google, etc.).

AI Revolution

Similarly, AI is creating new sectors (e.g., autonomous vehicles, personalized medicine) and transforming existing ones by making operations more efficient and enabling new capabilities, such as real-time analytics and enhanced customer experiences.

Adoption

Internet Boom

The adoption of the internet was rapid, with the global number of users growing from millions to billions in a few decades. It became integral to personal, professional, and governmental functions.

AI Revolution

AI adoption is following a similar trajectory, quickly moving from niche applications to mainstream use across various sectors, including healthcare, finance, and entertainment. We think we are still in the early innings. 

Societal Impact

Internet Boom

The internet has changed how people communicate, access information, and consume entertainment. It has also raised issues like digital divide and privacy concerns. Not everything is better because of the internet (I have kids, and I sometimes have to force them to go outside).

AI Revolution

AI will probably create a deep societal impact by potentially altering employment landscapes, enhancing or challenging privacy and security, and raising ethical questions about machine autonomy and decision-making. Not to act as too much of a doomsday prepper, but I think there is merit behind the concern of diminishing critical thinking skills if people depend on them too heavily. As we have learned from the rise of social media, most people are pretty terrible when it comes to regulating technology. 

Economic Disruption

Internet Boom

The Internet era saw the rise and fall of numerous companies, notably during the dot-com bubble. It disrupted traditional industries by shifting the focus toward digital and online platforms.

Don’t forget that many companies failed during the burst of the dot-com bubble (Webvan, pets.com, boo.com, etc.); others survived (Yahoo, coupons.com) while others thrived (Google, Amazon).

AI Revolution

AI is similarly disrupting industries by automating tasks, enhancing data analysis, and creating efficiencies. This revolution is expected to generate significant economic shifts, including the creation of new jobs and the obsolescence of others.

There is a good chance that we will see another bubble inflate and burst, similar to the dot-com bubble. I discussed this in greater detail as I broke down the risks and rewards of the Magnificent 7 stocks and the outlook for tech stocks. Companies will fail, others will simply survive, and a small handful will thrive. The trick is knowing where each company will fall into each category. 

As We Step Forward

As we navigate the early stages of the AI revolution, parallels with the internet boom are unmistakable. AI’s influence stretches from enhancing everyday tools like Siri and Google Maps to reshaping entire industries with smarter, more efficient operations. This isn’t just about convenience; it’s about a significant shift in how we live and work, underpinned by technology that’s rapidly becoming indispensable.

Looking back at the internet’s trajectory offers insights into what we might expect from AI: swift adoption, profound societal and economic impacts, and the inevitable challenges of integrating such pervasive technology into our lives. As with the internet, AI promises to revolutionize communication, entertainment, and the job market, but it also raises concerns about privacy, security, and the potential for economic disruption.

The road ahead will likely see AI become as ingrained in our lives as the internet is today, subtly but significantly altering the fabric of society. While it’s impossible to predict every turn this journey will take, history suggests that the benefits of embracing AI could be monumental, provided we navigate its challenges wisely.

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