Investing in A.I. - What You Need to Know

AI is poised to reshape entire sectors of the global economy. Investing in AI means investing in the future. As AI systems become more sophisticated, reliable, and integrated into our lives, those who understand and capitalize on its potential stand to benefit.

Tech visionary and Microsoft founder Bill Gates wrote an article called "The Age of AI Has Begun" where he described artificial intelligence (AI) “as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone.

It will change the way people work, learn, travel, get health care, and communicate with each other.” Take a look at any of the top AI programs plastered across the media from the New York Times to Tiktok, and it is easy to see how Gates came to this conclusion.

While 2023 was a rollercoaster for markets, the tech advancements were on a rocket trajectory thanks to the latest AI breakthrough: ChatGPT. This eerily intelligent chatbot can answer your questions, write poetry, and even brainstorm creative marketing ideas. But while everyone marvels at its abilities, another name is quietly gaining attention in tech circles: Anthropic.

The AI Chatbot Arms Race

While it's not exactly a winner-take-all situation, lots of marquee tech companies have launched a chatbot in the race to stay relevant. This fierce competition has accelerated advancements in AI language models, pushing the boundaries of chatbot capabilities. However, comparing these chatbots directly can be tricky due to their different architectures and training data. Here, we'll explore some key metrics that offer insights into their performance:

• Speed: Measured in response time or tokens generated per second. Faster chatbots provide a smoother user experience.
• Token Memory: This refers to how much past conversation a chatbot can "remember." A larger memory allows for more contextually relevant responses and data analysis. Claude 3 can retrieve around 200,000 tokens, or around 150,000 words, making it far and away the leader when compared to Google Gemini’s 32,000. 
• Cost: The price range spans from free, open-source models to enterprise-level solutions with significant fees. Cost often correlates with complexity and customization options. Many of the top consumer-facing chatbot subscriptions start around $20 a month. However, lesser models are often free.
• Reasoning Scores: This is where things get complex. Currently, there's no universally accepted "reasoning" score for chatbots. Some benchmarks assess logical consistency and the ability to follow instructions, but this is an ongoing field of research. Often, researchers will give a chatbot a test like a standardized test and compare the results. ChatGPT 4 tends to lead the pack, though Anthropic’s latest version of Claude may edge out ChatGPT by some metrics.

It’s worth pointing out that companies jockey for position with each iteration of their flagship chatbots, and the developments happen fast.

The Chatbot Boom: Reshaping Industries

The success of ChatGPT has cast a spotlight on AI chatbots, a market projected to grow around 24% each year over the next five years. These conversational AI tools have the potential to revolutionize various industries. Here are some of the most groundbreaking use cases:

• Customer Service: AI chatbots can handle routine inquiries, freeing up human agents for more complex issues. They can offer 24/7 support, personalize interactions, and even upsell products or services.
• Content Creation: Chatbots can create engaging content, from product descriptions to social media posts. They can analyze vast amounts of data to generate targeted materials, saving human writers time and resources.
• Education and Training: AI chatbots can act as personalized tutors, tailoring learning experiences to individual needs. They can provide immediate feedback and answer questions, making education more accessible and interactive.
• Healthcare: Chatbots can assist with scheduling appointments, answering medical FAQs, and even offering basic symptom analysis.
• Market Research: Chatbots can conduct surveys and gather customer insights at scale, providing valuable data for companies to understand their target audience.

Companies jockey for position with each iteration of their flagship chatbots, and the developments happen fast.

However, despite this immense potential, the AI chatbot industry faces critical challenges:

• Trustworthiness: Some AI chatbots learn from unfiltered datasets, sometimes resulting in inaccurate or biased responses. This undermines trust, especially in high-stakes industries like healthcare or finance.
• Unpredictability: AI models can occasionally produce strange, nonsensical or even harmful content. This lack of reliability poses risks.
• Scalability: As AI chatbot usage grows, human moderation becomes increasingly costly and difficult. Companies need scalable solutions to ensure their AI tools remain safe and aligned with their goals.
• Regulation: The rapidly evolving AI landscape creates a need for clear ethical guidelines and regulations. Companies must navigate this complex terrain to ensure compliance and responsible AI use.

Why Invest in Artificial Intelligence

No longer is the quest for outsized gains about finding the next big tech stock. It's about identifying those companies that are shaping the tools that will change how we live and work. Anthropic, with its unique Constitutional AI design, could be one of those companies. While its ultimate impact is still unfolding, Anthropic is a name to watch at the forefront of a revolution that could transform the investment landscape itself.

Gates continued his prognostication about AI that “entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”

Now is the time if you're seeking an investment that offers:

• Explosive Growth Potential: The AI market is projected to grow at breakneck speed in the coming years. Early investors in groundbreaking AI companies could potentially see significant returns as this technology transforms industries.
• Transformative Impact: AI isn't limited to one sector. Health care can see improved diagnoses, manufacturing processes can become more efficient, and customer service can be revolutionized — the applications are vast.
• Early Mover Advantage: Investing in AI now, whether in startups or established companies embracing the technology, could offer an edge in an increasingly AI-driven world.

The Problem Anthropic Is Solving

Anthropic isn't your average AI startup. Its team includes former OpenAI (the company behind ChatGPT) and Google developers. Now, they've set their sights on a grand challenge: building AI that's not only incredibly smart but also safe, reliable, and trustworthy. They're not just out to change the game — they want to rewrite the rules entirely.

Think of it like this: AI chatbots have the potential to be the most powerful tool humanity has ever created, a tireless brain that can help us solve complex problems and unlock incredible possibilities. Yet, rather than the masses breaking down the doors to access this incredible technology, Americans are leery. 

According to a Pew Research study on Americans' views on artificial intelligence, 52% are more concerned than excited. And that number has actually increased since chatbots came on the scene. 

In short, AI has a trust problem.

Anthropic has a novel approach to gaining user trust. It created the chatbot "Claude" according to the principles of Constitutional AI. This is a groundbreaking method for developing artificial intelligence, where AI's decisions and interactions are shaped by a predefined set of ethical guidelines and principles, akin to a "constitution." 

By grounding AI development in Constitutional AI, Anthropic positions itself at the forefront of ethical AI development, offering a compelling solution to the trust issues many have with AI chatbot technology. This structured, principled approach signifies a promising direction for creating AI systems that are not only technically advanced but also morally conscious and socially responsible.

The Spaventa Group: Investing in The Future

At The Spaventa Group, we understand the transformative power of AI. With decades of experience and a strong track record, we're well-positioned to navigate this exciting investment landscape. Our focus on alternative assets, including venture capital, allows us to identify and capitalize on emerging AI-driven opportunities. We combine a forward-thinking approach with a human touch, providing our clients with tailored investment strategies.

AI is poised to reshape entire sectors of the global economy. Investing in AI means investing in the future. As AI systems become more sophisticated, reliable, and integrated into our lives, those who understand and capitalize on its potential stand to benefit.

The Spaventa Group invites you to explore how we can help you leverage the power of AI in your investment strategy. 

Contact us today to learn more about our AI-focused investment opportunities.