AI revolution is no bubble, insists CIO

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People are massively underestimating what's happening with high performance computing and the artificial intelligence (AI) revolution that's driving the stock market, says Nick Griffin, founding partner and chief investment officer of Munro Partners.

“It’s not a bubble, it is a profound structural change,” he said at a Toronto, ON, luncheon for clients.

There were two events that have turned the economy around, in his view.

“The first one was that China reopened from COVID very quickly and completely unexpectedly,” he said.

More significant perhaps “is this tiny little app called ChatGPT arrived that everyone thought was just good for writing a rap song about your parents, which is what my kids did with it,” said Griffin. ChatGPT is an artificial intelligence chatbot developed by OpenAI and released in November 2022. The name combines chat, referring to its chatbot functionality, and GPT, which stands for generative pre-trained transformer, a type of large language model.

It actually became the next big growth in computing because Microsoft basically doubled down on it. They upgraded Bing to use it to take on Google and they've integrated open AI into all of their products. That forced Google to respond and forced every other software company to do so as well.

Unlike recent digital trends like the Metaverse, a hypothetical iteration of the Internet as a single, universal, and immersive virtual world that is facilitated by the use of virtual reality (VR) and augmented reality (AR) headsets, or cryptocurrencies where few can be found who have actually bought something with it, high performance computing is “a real thing that's going to grow very quickly.”

The simple way to think about AI is the semiconductors which are the best way to play it. “We think the semiconductor band market is about to go from $500 billion to $1 trillion very, very quickly” because “we're now in the artificial intelligence era.” Like iPhones which basically opened up a whole ecosystem of growth that sits on a device, AI effectively does the same thing. It will connect all of that data that goes to the cloud to create predictive outcomes. “So the next killer app or killer opportunity” is going to generated by AI and generative AI is going to be “really big.” ChatGPT is a case in point. It took five days to get to 1 million users and four months to get to 100 million users. “That makes it the fastest growing app in history by a long way.”

For investors, the real opportunity is not the end products, but the infrastructure behind AI, such as the semi-conductors, the high lithography machines that print the semi-conductor components, and the cloud hosts. Worldwide there are only a handful of companies in these spaces which makes them attractive investment opportunities, he said.

Munro established operations in Canada in November 2018 through a partnership with CI Global Asset Management. To further support its growing footprint in North America, Akilan Karuna joined it as head of North America in July 2020 and in April 2021 Kabi Thaya was added as an institutional sales associate. Both Akilan and Kabi are based in Toronto, ON.

Munro was founded in 2016 and has approximately $4 billion in assets under management. It is headquartered in Melbourne, Australia.