Gunn Capital Management LLC

The Coming AI Super Cycle

Ready or not, Artificial Intelligence is here to stay. Invest accordingly.
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” The great scientist and architect Buckminster Fuller may not have lived to see the Artificial Intelligence revolution, but he might as well have when he wrote that.
For the first time in history, AI exited the world of fringe, sci-fi speculation and entered mainstream conversation and use. Just as the first 12-second flight on a rickety wooden airplane in 1903 could not have hinted at the idea that humans would walk on the moon six decades later, we are approaching the mere genesis of understanding what AI will do to enhance human productivity, prosperity, and happiness.
Prior to 2023, most of the world’s computing concerned data retrieval. Search engines would scan the internet, catalog websites, and retrieve an appropriate set of options for a specific user query. The systems are shifting from retrieving answers to generating them. This is a complete reinvention of how computing is done and a tectonic shift in the entire computing industry.
AI systems are teaching themselves skills they were not expected to have. It is not well- understood how this happens—surprising even the engineers and programmers who created them. But unlike nearly every dystopic sci-fi story ever written about AI, the technology is not about replacing humans, but augmenting them.
AI will generate productivity gains that will impact nearly every sector of the world’s economy. Bank of America estimates that over the coming decade, productivity gains from AI alone will boost US GDP growth by 1.5% per year. From science to computer programming, transportation to medicine, education to architecture—you’ll be hard-pressed to identify an industry that won’t be transformed.
Driven by massive AI tailwinds, the “Magnificent 7” technology stocks buoyed 2023 stock market performance. Excluding their large gains, most of the year the overall market would have been negative. Although still early, the demand for equipment to perform AI-related tasks is astonishing. CEO of chipmaker AMD Lisa Su announced on their third quarter earnings call that their new AI GPU would experience $400 million in sales in the fourth quarter alone, surpassing $2 billion in 2024. If this forecast holds, it will be the fastest product to $1 billion in sales in AMD’s history.
The groundwork for such advances has been decades in the making. AI and supercomputers started making their rounds in the late 1960s as an idea, but only recently breached a threshold of calculations per second—one quintillion (a billion billions)—that will usher in life-changing discoveries in everything from mathematics to medicine. Soon medicine will be synthetically tested by computers to predict how it will react in the body.
AI is also augmenting self-driving cars—a development that will ultimately make our streets safer. Google currently has self-driving taxis in San Francisco, Austin, Phoenix, and Los Angeles. Tesla’s self-driving software has logged over 300 million miles of autonomous driving. Rather than be serviced, the Tesla software improves by downloading directly to each car. Imagine how different the driving experience will be when your car is continuously updated in real time about congestion, obstacles, or construction, and effortlessly rerouted while you enjoy a quick nap in the back seat on your commute home from work.
AI holds broad ramifications for the investment world. New industries will be born, and current companies will need to implement AI into their tech stack to keep up with competitors. If even a fraction of predicted productivity gains occurs, corporate profit margins will rise and so will the value that investors are willing to pay for their future cash flow.
2024 will be a year of explosion in AI software. New applications will be introduced to the public and enterprise customers from the ground level work with large language models and neural networks. On the heels of software will come new hardware. Wearable technology and personal AI assistants will enhance everything from movie and restaurant choices to travel destinations. Instead of devoting hours of research to planning a family vacation to find the best flights, hotels, and restaurants, your personal AI assistant will learn your preferences and book everything for you.
Beyond mere economic productivity, AI will transform the way we think about and measure human capacity and potential. Surgeons will be guided by AI precision; artists and writers will collaborate with AI creativity; education will be personalized and tailored to match the needs of unique humans in all stages of development.
Like most technology, we are probably over-estimating AI’s impact in the short term and underestimating it in the long term. The invention of the internet changed the world, but the most prescient analysts of the mid 1990s could not have foreseen cloud computing and the worldwide explosion of personal mobile devices.
Ready or not, AI is here to stay. Invest accordingly.

Cody Gunn is a Chartered Financial Analyst and Principal of Gunn Capital Management, an investment advisory firm based in Washington state.