What does artificial intelligence (AI) have to do with ketchup or mac and cheese?
I had no idea at first. But Kraft Heinz (KHC) CEO Miguel Patricio made it a point to mention AI during the company’s recent earnings call.
KHC is now leveraging AI capabilities via Microsoft’s (MSFT) supply planning software, OMP, which claims to be “the best digitized supply chain planning solution in the market.”
That’s something enterprise resource planning (ERP) software has been able to do for decades. But now like many across the globe, KHC has its eyes on AI as a better solution.
Six months ago, AI was not a topic regularly heard on earnings calls but the launch of ChatGPT captured the world’s attention and imagination. Everybody can now easily access a powerful AI capable of creating content as good as – and sometimes even better than – what humans could produce.
Investors are pouring money into every company that seems like it might have a viable product that could be part of the AI revolution.
Microsoft quickly invested $13 billion into OpenAI, the company behind ChatGPT.
Nvidia (NVDA)’s stock has more than doubled since ChatGPT’s launch.
Is AI the next big thing? Or is it just another buzzword to hype up investors?
Here at the Intelligent Income Daily, we’re focused on finding the safest income investments on the market. And new technology will bring both challenges and opportunities for companies. So it pays to know which ones will leverage that tech toward greater profit and productivity – therefore, greater income in your pocket.
Today I’ll share what we can learn from previous efforts in AI development, and new research that points to which companies will most likely be affected by AI (and greatly benefit from it).
Is Now the Time for AI to Take Off?
What we think of as modern AI can be traced back to the 1950s. That was when scientists started researching neural networks. Early versions of AI were capable of challenging an amateur human player in checkers.
In the 1960s, the field expanded into natural language processing (such as communicating in English) and search algorithms.
Researchers were very optimistic about AI. One of the early AI pioneers, Herbert A. Simon, said in 1965 that “machines will be capable, within 20 years, of doing any work a man can do.”
Herbert A. Simon, an American political scientist and early AI proponent
Source: Carnegie Mellon University
But, in the 1970s, AI ran into a problem: there was just not enough data and not enough computing power to keep advancing the primitive programs. Government funding for AI research programs dried up as they were unable to produce the results they promised.
In the 1980s, a revival in AI research led to programs that were good at one specific task. A famous example is Deep Blue which defeated chess grandmaster Garry Kasparov.
But, the revival was short-lived. Companies couldn’t find a way to commercialize the technology. The market for specialized AI hardware collapsed in favor of general purpose desktop computers.
AI research stumbled along for a couple of decades until the 2010s. By then, large amounts of data had become easily accessible, along with enough computing power to tackle machine learning.
So is AI finally ready to do anything a human can? Not so fast. It’s still a long way from that. To get there will require a lot more processing power than we have today.
And companies that produce computer chips are already running into another problem. Up until the early 2000s, they were able to easily shrink the size of transistors, allowing chips to be produced at lower cost, run faster, and use less electricity. This led to an exponential increase in computing power.
But in the last two decades, the pace of advances in computing technology has slowed down. Transistors have gotten so small they’re only a few hundred atoms across. They physically can’t get much smaller. And it takes a lot of money just to make new chips that are just slightly better. AI development could run into the same problem it had in the 1970s: not enough computing power.
Plus, the sudden burst of AI development has scared many people. Even OpenAI’s CEO Sam Altman told Congress that there should be more regulations to ensure AI research stays safe and doesn’t get out of hand.
If the government passes new laws regulating AI, the rate of advances in the technology could slow down due to all the bureaucracy and red tape.
So if history is a guide, the sudden interest in AI we are seeing now is likely to lead not to a revolution, but an incremental advance that brings us new tools to use.
And the companies that could end up being winners might be not just the ones providing AI hardware and software, but also the ones that use it most effectively to improve their business over the long term.
Dividend Growers Set to Grow Further with AI
The National Bureau of Economic Research (NBER) recently published a research paper analyzing which companies had the most workers whose jobs could be affected by technologies like ChatGPT. Here are some of the top names:
International Business Machines (IBM) offers cloud services and software solutions. It has been increasing its dividend for 28 years and yields 5.2%.
Intuit (INTU) is the company behind TurboTax and Quickbooks. It has been growing its dividend for 12 years and yields 0.7%.
S&P Global (SPGI) is the company managing the S&P 500 index. It provides all sorts of financial data such as credit ratings and benchmarks. It has a 50-year dividend growth streak and yields 1%.
If these companies are able to harness the power of new AI technologies to increase their productivity, they could improve their earnings and continue rewarding shareholders with increasing dividends.
We also have three of the top 10 companies in NBER’s analysis in our Intelligent Income Investor service. This service is focused on finding safe and secure dividends to create a growing income stream that will passively support your lifestyle with stress-free investments.
To find out the names of these continually dividend-growing companies and receive a free pick, check out the Intelligent Income Investor here.
The age of AI seems to be upon us, make sure your portfolio doesn’t get left behind.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily