German investors and their risky fascination with new technologies

Like a déjà vu, a similar pattern is emerging in the field of artificial intelligence, although the scope of AI is far more diverse than blockchain. The fascination with AI is not new; it has its roots in the 1950s, when the term was first coined by John McCarthy.

Research and development, for example in Large Language Models (LLMs) such as ChatGPT, take time. These models, based on the Transformer architecture, have made significant progress in recent years. Nevertheless, the generated texts are often not directly usable. As the Pareto principle teaches us: only 20% of the implementation effort leads to 80% of the result quality.

The challenges of AI are many, ranging from technical hurdles to ethical issues. Nevertheless, the potential of AI remains enormous and investment continues to grow. According to a study by PwC, AI could increase global GDP by up to 14% by 2030.

It is important that we learn from history and look at the development of AI with a realistic and informed view. Fascination with new technologies can be risky if not accompanied by a deep understanding and its potential impact.

In the dynamic world of technology investing, the challenge for investors is to decode the hype and identify the real opportunities. There are basically two strategies they can pursue: Either critically examine and invest in solid, less-hyped business models, or dive deep into a topic, recognize the benefits, and make targeted investments.

• The first strategy requires critical analysis and a deep understanding of the technology. Investors who follow this strategy are often less sensitive to market volatility and can achieve stable returns. They invest in companies that have proven business models and whose technologies are already established. Examples of this are companies such as Microsoft or Amazon, which have grown steadily despite technological changes and the hype surrounding new technologies.
• The second strategy is riskier, but can also lead to higher returns. It requires a deep dive into new technologies and trends, often before they make headlines. Investors pursuing this strategy must be able to identify and evaluate the potential benefits and risks of a new technology. They must also be willing to take the risk that the technology will not have the success they expect. An example of such an investment could be the early entry into Bitcoin before it became a mainstream phenomenon.

Regardless of the strategy chosen, it is important for investors to stay informed and base their investment decisions on solid research and analysis. Savvy investors should also be prepared to adjust their strategy as market conditions change. Especially in a world that is constantly changing, flexibility is a key to success.

Artificial intelligence (AI) will undoubtedly change the world of work and has the potential to impact a wide range of professions.

• Designers could benefit from AI-driven design tools that enable them to work faster and more efficiently. Tools like Adobe Sensei use AI to help designers create content.
• Writers and copywriters are already benefiting from AI-powered writing tools that help them write more efficiently and check their work. Tools like Grammarly use AI to check grammar, spelling, and style.
• Software developers use AI-driven programming tools to help them write code more efficiently and find bugs. Tools like DeepCode use AI to review code and suggest improvements. But even elder care could be revolutionized by technologies such as caregiver robots or by new approaches to talk therapy. Japan is an example of a country that is already using caregiver robots to combat a shortage of nurses. AI tools, however, should not be viewed as human-replacement tools, but as productivity-enhancing tools. They can help automate repetitive tasks and allow humans to focus on more complex and creative tasks. Those who resist the use of these technologies will almost certainly be left behind in the competition.

Many believe that tech giants like Microsoft and Google will be the biggest beneficiaries of AI development. But that is not necessarily the case. Society is unlikely to allow these companies to monopolize AI technology.

The creation of OpenAI LP, an organization dedicated to promoting and developing friendly AI for the benefit of all people, is an example of how AI development is being democratized. OpenAI has developed and published a number of AI models, including GPT-4, one of the most advanced language models available today.

The release of numerous models such as Whisper AI for speech recognition underscores this trend toward democratizing AI. Whisper is an automatic speech recognition (ASR) system trained on 680,000 hours of multilingual and multitasker data from the web.

There are also a growing number of startups and smaller companies operating in the AI industry that are developing innovative solutions. These companies could play an important role in shaping the future of AI and helping to ensure that its benefits are widely shared.

Democratizing AI is not only a matter of fairness, but also helps improve the quality and diversity of AI development. By including diverse perspectives and experiences, we can ensure that AI technology is developed in a way that meets the needs and interests of all people.

Instead of making risky investments in pure AI companies, investors should focus on solid companies that offer an innovative product, have a strong market position and integrate AI into their processes. Companies like Apple and Amazon are examples of solid companies that have successfully integrated AI into their processes. Apple uses AI in products like Siri and the facial recognition technology in their iPhones, while Amazon uses AI for recommendation systems, fraud detection, and in their Alexa devices. Another example is Tesla, which uses AI for its autonomous vehicle systems. Tesla has a strong market position and offers an innovative product that is continuously improved through the use of AI.

Through the strategic use of AI, these companies can increase their efficiency, improve their margins and profits, and thus increase the expected returns for investors. It is important to emphasize that the key to success lies not only in the application of AI, but also in the ability to effectively integrate AI into existing processes and create value for customers.

In conclusion, it remains to say that investments in companies that can benefit greatly from AI have significant potential. The companies that will be most successful will be those that manage to successfully link the new technology with human needs and implement it in their products. Companies like Apple and Amazon have already proven this by using AI to develop products and services that meet the needs of their customers.

It is also important that companies use AI in an ethical and responsible manner. Organizations such as OpenAI have developed ethical guidelines for the use of AI that can help companies ensure that their AI applications respect people's rights and interests.

Finally, companies that invest in AI should also invest in training and educating their employees to ensure they have the skills and knowledge to use the new technologies effectively.

After all, in the end, it is people who determine the success or failure of products, services and therefore companies. Companies that successfully use AI to meet people's needs will almost certainly have a competitive advantage and be successful.