A lively debate about artificial intelligence (AI) is heating up again. The reason, of course, was the release of his ChatGPT last November. With ChatGPT, I had a dream that I could generate any text I wanted. Investors are right to question whether such a revolution will generate controversy and new investment opportunities in China.
In the midst of a new storm, I think it’s important to remember how pervasive AI is already, but a very big factor right now is the “generative It is a profound development of AI.
ChatGPT is not directly available in China, but of course there are Chinese competitors coming. And when something booms in China, it goes fast. This is the so-called transition from AI 1.0 to AI 2.0, with four “AI dragons” (SenseTime, Megvii, CloudWalk, Yitu) completely dominating the former, but with independent platforms. I was.
AI 2.0 is considered as a common platform and everyone wants to join the new trend. Wang Huiwen, one of Meituan’s co-founders, hastily founded the company to join the AI 2.0 battle. He believes he’s worth $200 million to the newly formed company, even before the first team of employees is hired. If this valuation can attract investors, it will be at this price.
The reason AI 2.0 is being promoted differently than before is the vision that open AI platforms will become as dominant as, say, the Windows and Android operating systems. This development is interesting for several reasons, including that China was far behind in advancing AI. A government-backed think tank, the China Academy of Information and Communications Technology, he estimates there are currently 4,227 companies developing AI software in China.
In absolute terms, this number is large, but only 16% of the number of companies in the world that belong to this business sector, the same as China’s share of the world’s GDP. I see this as an indication that there is still a lot of room for growth in this sector in China. And it is the world’s largest in terms of absolute market size, such as the number of smartphone users. For now, the challenge is more general in nature, with AI companies starting to feel a shortage of programmers and developers.
As I said earlier, AI is very pervasive, so where are the opportunities for investors in the various directions of AI? Good question. Some investors consistently choose to invest in areas that have proven their worth and are generating returns. Here, the profit potential is smaller, but investors can expect a positive return. This investor may choose to look in the direction of industrial robotics, language AI, HR, and AI in design.
A field that seems almost old is self-driving trucks, and then auto-mobility. But even here you can feel how complicated the real world is. Many expected it to be aimed solely at developing self-driving cars that let passengers sit inside and watch streaming movies on their iPads. It turned out to be a more difficult process than it sounds. But I’m still focused on mobility AI. Because if it succeeds, it will be a positive quantum leap that could change the daily lives of billions of people. This usually means that even a small investment can grow very large if it is successful.
When it comes to potential new megatrends, I still believe the biggest opportunity lies within the metaverse. A common simplification is that in the Metaverse world, you can, for example, create an avatar of yourself and interact with others on social media.
The hype in China right now is, as mentioned above, generative AI, with software like ChatGPT being seen as the new gold. My reservation is that the challenge is partly similar to AI for mobility, where software needs to replicate some complex functions of the human brain. For example, predicting previously unknown combinations and using intuition, abstract thinking, and common sense. After all, it seems like a challenge, but it can be very good to know as a human being. My suspicions are there, which is why I don’t sympathize with the current hype, but the kind of gold-mining mood that China is currently experiencing is always fascinating. Because it leads to something: either you get the money or you fail.
Peter Lundgreen is the founding CEO of Lundgreen’s Capital. He is a professional investment advisor with over 30 years of experience and a strong entrepreneur in investment and finance. Lundgreen is an international columnist and speaker on topics related to the global financial markets.