Just days after Nvidia's May 2023 earnings, we launched our AI-Innovation Portfolio.
Since then, we've been positioned for the phases of this AI revolution: with exposure to the chipmakers, the tools that design the chips, the equipment and hardware that make the AI "factories," the platforms that turn it into revenue, early autonomy/robotics, and the energy that powers it all.
I said in my first AI-Innovation Portfolio note, "prepare for the era of (more) multi-trillion dollar companies … the generative AI impact will mean bigger companies, in a bigger economy."
At the "ChatGPT moment," Nvidia was worth about $400 billion.
Today it's worth 10 times more — $4.6 trillion.
And OpenAI was said to be valued at $20 billion just after ChatGPT launched. Today it's worth 25 times more — $500 billion .
Jensen said last week, he thinks OpenAI will be the next multi-trillion company.
As we also discussed back in the summer of 2023: "this technological revolution is productivity enhancing for the economy. And it will grow the economic pie (and the size of the stock market). It should fuel a boom-time period in economic growth."
The U.S. stock market is $26 trillion larger today, than it was the day before ChatGPT launched (>50% larger).
However, real U.S. GDP is only $1.5 trillion larger (below trend growth).
What's missing? The productivity boom.
It's coming.
The automobile is to mobility, as AI is to productivity.
And high productivity growth is a driver of a higher long-term potential growth rate of the economy.
We averaged just 1% productivity growth for the decade prior to the pandemic, and just 0.9% since the fourth quarter of 2020.
If we look back to the 90s boom-time economy, driven by the early stages of internet adoption, productivity ran 2.7% over the second half of that decade. Economic growth averaged 4.5% a year, stocks averaged 26% a year over a five-year period, and inflation averaged just 1.6%.
If you want to own the stocks of the companies building the infrastructure to power AI, the companies delivering the capabilities of AI to hundreds of thousands of businesses, and the companies that will best leverage the productivity enhancements from AI, you can find them in our carefully curated AI-Innovation Portfolio.