In a conversation at FII Priority Miami 2024, Gavin Baker, Managing Partner and CIO of Atreides Capital, LP, and Antonio J Gracias, Founder, CEO, & CIO of Valor Equity Partners, delved into the intricacies of investing in the field of artificial intelligence (AI), one of the main topics of the conference. Their discourse provided a panoramic view of the AI landscape, offering insights into the future of technology and investment strategies.
Gavin Baker illuminated the evolution from mini computers to PCs, then to mobile and cloud computing, positioning AI as the current fundamental platform shift. He emphasized the strategic importance of focusing on the infrastructure layer for initial investments in AI, highlighting the significant role of GPUs in this new era.
Gracias’ analogy of GPUs as “psychotropics for nerds” resonates with the hype in the investment industry toward AI. Gavin Baker, who ran Fidelity’s OTC portfolio with US$17 billion under management before founding Atreides in 2019, compared the current situation to a high-end restaurant where the star chef is powered by AI provided by an Nvidia’s GPU which makes him 50 times faster than four years ago, while the rest of the staff is working at yesterdays speed. “So the food needs to be delivered, the sous chef needs to prepare it. And because the GPU has gotten so much faster, it is doing nothing most of the time. 70% of the time, it’s doing nothing. It’s just drawing power”, explained Gavin, “so our kind of shared core infrastructure level thesis is we’re investing in things that increase the GPU utilization. Because if you can take that GPU from being utilized 30% of the time to 60% of time you can double the output of that restaurant, or that AI factor.”
Antonio J Gracias pointed to the real value in data and reinforcement learning, signifying a pivot towards investing in companies excelling in these areas. This perspective aligns with the broader vision of harnessing AI’s capabilities for transformative purposes across various sectors.
The conversation also touched on the valuation dynamics of foundational model companies within the AI sphere. Baker suggested that companies integrated with major internet platforms and possessing proprietary data stand to be immensely valuable, predicting that entities like Google, Meta, Microsoft, and OpenAI, along with emerging players like xAI (Grok), could dominate the landscape.
How to avoid P doom
Furthermore, the dialogue addressed the critical topic of regulation within the AI domain, advocating for a multipolar AI ecosystem to prevent the consolidation of power and ensure a diversity of AI entities. “We want a multi polarity of AIs, we don’t want to live in a world where there’s one AI superpower or two AI superpowers,” argued Gavin. He pointed out that any survey of the top thousand people working on AI for the probability that AI is an extinction level event for humanity (P doom), consistently agrees on a 15% chance. “So that’s pretty high”, he said. “The most important thing is to lower the odds of that 15% and improve the odds of the 85% being awesome. I think if we have many AIs, it increases the odds that at least some of them are friendly to us as humans.”
White-Collar vs Blue-Collar Effect of AI
Lastly, the potential impact of AI on both white-collar and blue-collar jobs was discussed, with predictions of significant disruptions and opportunities arising from the integration of AI into various labor sectors.
Gavin argued that there has been a lot of focus on the impact of AI on knowledge work and white collar workers, “but I think when we see AI dropped into a very functional humanoid robot, there may be an immense impact on blue collar work, and this may seem very funny to historians, that anyone was worried about inflation in front of this kind of deflationary tidal wave.”
FII Priority Miami is organized by FII Institute, is a global nonprofit reflecting on ideas and real-world solutions and actions in four critical areas: Artificial Intelligence (AI) and Robotics, Education, Healthcare and Sustainability. It is backed by Saudi Arabia’s Public Investment Fund (PIF), and counts with numerous strategic partners including some of the most relevant names in the asset management industry (Franklin Templeton and State Street, among others).