Tech trends can become obsolete pretty quickly, replaced by updated versions of themselves. Remember the “Magnificent Seven” tech giants? I hear they’re down to the “Fab Five” now, with Tesla and Apple being kicked to the curb. That leaves four AI plays (Nvidia, Microsoft, Alphabet, and Amazon) and one metaverse play (Meta) still in the club.
Now, as you can see from this chart, Nvidia and Meta have been driving a lot of the gains for the MSCI World benchmark global stock index this year. And while there’s no telling whether they can keep this up, one thing does seem certain: AI looks like it’s going to stick around longer than the metaverse.
Here are four reasons why:
It’s everywhere. From the smart assistants in our phones to the way Netflix recommends movies, AI is already everywhere. It’s changing all kinds of industries, like healthcare (where it’s helping diagnose diseases), transportation (self-driving vehicles), and customer service (chatbots). The metaverse, while promising, is still focused on just a few applications like gaming and virtual meetings. And it generally requires special gear like headsets.
It’s way ahead. AI has been around for decades and has had the time and money invested to help it mature. In medical imaging, AI can now detect certain conditions more accurately than human experts. The metaverse, on the other hand, is only just emerging and still relies on other developing technologies like virtual reality (VR) and augmented reality (AR) to function.
It’s got influence. When it’s not helping students with homework and suggesting relevant movies to watch, AI is significantly boosting economic growth by streamlining business processes, improving productivity, and creating new job opportunities. And, no disrespect, the metaverse has economic potential too, but it’s currently confined totrapped in the realm of digital entertainment and virtual commerce.
It’s got answers. AI is solving real-world problems – for example, tackling climate change by optimizing energy use in buildings and predicting weather patterns. The metaverse offers innovative solutions in digital interaction and entertainment but hasn’t yet shown the same level of impact across major global challenges.
In the reinterpreted words of Peter Parker, with great returns come great risks. AI stocks may have the potential for great gains, but they also come with greater volatility, compared to the rest of the market. And though AI is a credible technology, its stock prices may not always be fairly valued. So you’d be wise not to put all your eggs in one basket. Instead, think about spreading your investments across different stocks and different places, potentially including the more budget-friendly, high-quality stocks in Europe.