Investors miss the point with artificial intelligence (AI), according to Blue Whale Growth FE fundinfo Alpha Manager Steven Yiu, who said that the debate around whether it is a bubble or not only makes sense if you misunderstand what the technology is all about.
The first thing people need to realise is that AI is not about “Star Trek-like robots firing guns” or “aliens who are going to rule the world” – a framing of the issue that is sometimes found in the media.
AI has not changed – or taken over – our lives yet, with Yiu expecting it to follow the same journey as the smartphone, rather than that of a scary overlord.
When the iPhone was launched back in 2009, there were just a handful of apps to download from the App Store, now we have millions. He declared: “We are going to have millions of AI applications that we would want to be part of.”
“Today, we are at the early innings of AI and nothing remarkable has come about yet. But the signs are there together with the first few applications,” he said.
To better understand what these applications might be and do, the manager gave an example of what is being developed right now.
One AI-powered technology that could be somewhat familiar today is language translation. AI will allow us to break the language barrier and communicate across different languages through an AI application. The manager predicted that this will be available by the end of the year.
Another “gamechanger” will be applications to improve travel (for example streamlining airport software) and customer service.
Today, the British Airways website has a chat box that uses AI but it can often only ask the user a couple of questions and point them to the right person to talk to – admittedly, “very primitive and not very useful”.
But with the new AI technologies in development, there will be AI agents connected to the back end of the British Airways systems. The flight scheduling system, the booking system, customer service, and the accounting system – they will all have one AI agent.
“All these AI agents will be able to liaise between themselves, check your booking, payments, flight delays, reimbursements, everything. That is very powerful,” Yiu said.
This is already happening and quite straightforward – “purely software development with a bit of AI overlay; quite similar to Chat GPT but in a more enterprise-software domain”.
Another, perhaps more exciting application, would be personalised AI agents. To remain in the travel realm, my AI agent will know my itinerary, if my flights got cancelled, my British Airways membership number, and it can deal with the BA agent instead of me.
“Just look at what ChatGPT can answer based on all the data being generated on the internet – just imagine if that technology applies to single people, if we could build a person-specific GPT.”
“It is also not difficult to do – people give up so much data about themselves voluntarily on the internet.”
Yiu agreed with one thing, however, that the media usually says to characterise AI – that it is “very bad for the economy”.
“Especially, AI is very bad for the workforce. We are going to have a universal basic income in place, because there are going to be significantly fewer jobs available for people who want to work,” the manager said.
“That’s not a productivity issue, there will just be a lot of value generated by AI platforms, and that spending will come from us consumers.”
All of this will require a lot of money, Yiu admitted.
In the first trimester of 2025, big tech was spending $300bn towards AI – money that could have been spent elsewhere, for example, to fund buybacks, shareholder dividends or acquisitions, but they decided to spend it on AI instead.
From April onwards, Yiu became increasingly worried that US president Donald Trump’s tariffs could cause a global slowdown and sold out of Meta, picking up Nvidia shares instead at deflated prices.
“In today's context, in AI, there's only two companies – one is Nvidia, the other one is Broadcom,” he concluded.