Primer on How Investors can build an AI Portfolio to capture the $13T Opportunity from Artificial Intelligence by 2030.
Mega Thread //
• A Framework for evaluating AI Companies
• Top Companies that will continue to dominate
• First Principles basics on AI
Let's Review⬇️🧵
* Disclaimer: Not advice
1/Some context - This is a follow-up to a Twitter spaces with some brilliant folks:
Thread Outline:
• Foundational elements
• Debunking AI
• My framework for structuring an AI portfolio
• My Top Companies to watch
• Market Opportunity
• Summary
🔽
2/ What's AI?
Debunking it - AI simply involves training a complex system with huge amounts of data using algorithms (instructions), then using that trained system to make predictions about new data it has never seen.
Below is a break-down of the types (ML & NLP are common)
3/ Types of AI:
a) Weak AI: For tasks such as automation of repetitive tasks such as Virtual assistants, auto check-outs at McDonalds etc
b) General AI: For more complex brain-like tasks such as advanced robots, Adv deep-learning.
ML is still the common form in organizations.
4/ Basics of building an AI machine learning model
Stages broken down into:
• Gathering Data
• Clean + Process Data
• Preparation + Formatting of data
• Train + Deploy model
• Visualize through Graphs to drive decisions.
This is a very 'basic' process whenever you hear AI
5/ Why would almost all company benefit from AI?
or improve them? The key ways are:
• Improve decision-making within an organization
• Personalization and customized consumers products
• Automate tasks and drive down costs
The list below are more benefits based on a survey:
6/ So as an Investor - I use this foundational conceptual framework for building an AI Investing Strategy.
Why? -
Every organization in the world that will adopt an AI strategy by 2030 will have to undergo this maturity model by 'paying' these tech companies along the curve.
7/ How do I build my portfolio to capture this opportunity? [my structural framework]
i) Horizontal AI Companies: They provide the back-bone & Infrastructure
ii) Cloud Enablers Companies: They are the SaaS enablers
iii) Vertical AI Companies: Provide consumer product with AI
8/ Horizontal AI Companies (Slightly levered toward Hardware)
You've also got companies like $UBER $ABNB that embed, but not directly.
11/
5⃣ - My Top Picks: Companies that I believe could play a big role in the next decade:
My Criteria:
✅They provide the foundation (sticky)
✅Technological Optionality
✅Platform cuts across multiple verticals
✅Platform's ability to scale
✅TAM
🛑 Not looking at valuation
1⃣ Databricks (Yet to IPO):
• They support most of the data pipeline.
• They have a Unified data Platform (foundation)
• They provide data exploration, data processing, model management and cloud storage
• They enable data processing from their combined Data lake + Warehouse
2⃣ Snowflake $SNOW
They provide:
• Cloud Storage,
• Database services
• Computational abilities
• Cloud Services through Data Marketplace- fosters data sharing & collaboration
• Snowflake gives everything an AI company needs in one package/solution (ridiculous!, I'll stop)
3⃣ Palantir: $PLTR
• Provide Gotham + Foundry
• Data Integration, AI modelling + Visualization
• They have all-in-one, full-stack analytics product (moat)
4⃣C3 AI $AI
• Ex Machina enables easy application of data science/AI to everyday business problems.
• Easy integration and allows developers to build enterprise AI without having to write lengthy code.
• UX data visualization
• Industry agnostic/ addresses multiple use-cases
5⃣ UI Path (vertical AI) - $PATH (IPO Soon)
• Enables robotics process automation
• Their software and AI monitors user activity to automate repetitive front and back-office tasks across an organization
• Leads to big cost savings
[I will be sharing a thread by end of April]
17/ Future Investing opportunities to watch out for:
1. Advanced deep-learning to write software; GPT-3 AI understands language and can write emails, perform human tasks. 2. Deep-mind and Open AI's research 3. Advanced Robotics capabilities 4. Quantum computing
And many more!
18/ Why should all this matter? -Market Opportunity.
Over the last decade, due to the digitization, the volume of Data has grown to 59ZT grown over 100x! The average teen has 800+ digital interactions
Data is the new gas that fuels AI-based product to make them better products!
19/ Market Opportunity (2): We're in early innings:
+ Over $13 - $15.7 Trillion will be contributed to the global economy by AI by 2030, according to PwC. Today, US Economy is $20T.
Ark forecast (c:@summerlinARK) over $30 Trillion will be added to MC's!
Think about the impact!
20/ Best Resources to growing/learning:
First, on Horizonal-like AI Companies Resources:
Chris puts great research on the Semi-conductor and hardware players leading $AI Race
• He has a four part series into breaking down Artificial Intelligence.
23/ Occasionally, I put together in-depth research on a mix of both companies (cloud or mostly vertical companies like $UPST or recently $PLTR Foundry on my newsletter.
However, the guys listed above⬆️ and people like @publiccomps do a better job!
✅AI/Analytics will make a big impact on society by 2030
✅Structure your portfolio strategically based on the technology's optionality and scalability.
✅This was only a primer, we could have discussed much more!
I hope this thread helps you develop a frame.
25/ If you have questions, I'll be happy to answer sharing my experience, but the guys I listed above are experts.
Thanks for reading.
I'll like to hear from you -what industry group of companies are you excited about & believe has the biggest potential?
Why $ETSY could be $100B company by 2025 and a valuable lesson for New Investors.
Here is a Thread 🧵 //
2/ $ETSY Product:
Etsy operates a marketplace offering a largest selection of locally made gifts. Everything from jewelry, clothing, pottery, bath, body, now home furnishing and 10-more areas!
They operate a two-sided marketplace between buyers (82M) & sellers (4.4M) as at 2020
The Moat:
3/ Brand Recognition:
• Over 80%+ of purchases on $ETSY are made by organic buyers compared to 20% paid by marketing
• This level of word of mouth helps to lower CAC and drives scale.
• $ETSY has become a household name and this is likely to stick post-pandemic.
Why I've been bullish on this leader in AI disrupting the Trillion-dollar Consumer Lending Market!
✅What is so special?
✅What are the Competitive advantages?
✅ $LMND of Lending?
Let's explore in this deep thread👇👇
1/ Thread Overview:
2- Company Overview
4-Competitive advantages & Emerging Moats
5 -Financials & Customer Growth
7 - Market Opportunity
8 - Management Team 9- The bear thesis & Risks
2/ $UPST Overview:
A lending platform that applies AI & machine learning to improve the consumer lending and underwriting process for making effective credit assessments.
They help their bank partners by referring loans, creating a seamless and simple consumer facing app.
• What are the differences vs similarities btw both companies?
• 🚨Revenue Growth rates over 281% & 152% respectively
• What are the risks of Investing? Can we trust both?
• $FUTU Earnings Recap
• Are they worth it?
Biz Thread below👇
0/ Thread Overview [Skim to your sections]
1: Financials Overview
2-3: $FUTU vs $TIGR Competitive advantages
4-5: Financial Analysis Summary
5-6: Management Teams
8: The Risks to Weigh
10: Industry and market Opportunity
1/ Company Overview: Super easy, nothing much.
$FUTU & $TIGR - Platforms that enables buying & selling of equities.
Key Highlights:
✔️Q4-2020 Revenue: Actual $139M vs. Est. $130M (53% YoY Growth) (7% Surprise)
✔️EPS: Act. $0.10 vs Est. $0.12
✔️Q4- GAAP Ops. Income Margin of 21% and Adjusted Margin of 45%
✔️FY 2020: 63% YoY Growth
This is a Top-class company-✅🔥
Part 2 - $ZI
- Cash flow from operations of $169.6 million, and Unlevered Free Cash Flow of $243.7 million.
- $ZI closed the year w. >20,000 customers, including more than 850 customers with $100,000 in annual contract value
- FY 2021 Guidance below
Part -3: - $ZI
* I may start another position again as I sold my position a few weeks ago.
- Top-line Revs growing >50% consistent
- High gross and ops margin
- Founder-Led with three awards for 2020 culture & placed No. 15 on for Best Company Culture
- Moat within sales teams