In this segment from Motley Fool Answers, Alison Southwick and Robert Brokamp are joined by senior Motley Fool analyst Simon Erickson to talk about the disruptive trends of artificial intelligence, robotics, and automation. How is the market pricing the anticipated growth of these new technologies into the stocks of the companies involved? Are things frothy, conservative, or fairly on point for current conditions? Where are we in the hype cycle?
A full transcript follows the video.
This video was recorded on June 13, 2017.
Robot Brokamp: Whenever you have this type of emerging technology and an emerging trend, people want to invest in it and sometimes it works out and sometimes it doesn't. Like 3D printing or the internet. For all that stuff, stocks went up very high. Some of them turned out, like Amazon, to be very great investments. Some of them didn't. So based on what's now going on and these types of investments, have they gotten ahead of themselves or is this now still a decent time to get in?
Simon Erickson: I think that's a very good question to ask, because you have to respect the hype cycle, which basically tells you when you're starting to see a zillion media headlines, that typically means companies could be overvalued. We could be getting ahead of ourselves. We're not actually going to see this as soon as everybody thinks we're going to, but then again, you see a lot of stuff catch on really quickly. NVIDIA tripled their data-center revenue year over year.
The question that I always go back to -- is X Company making it very easy for their customers to use whatever it is they're trying to sell? Is this applicable? Why do I care if I'm buying something from this company, and can I easily ease it into the workflow that I've already got, or do I have to screw up my entire business to do that?
And so for robotics companies, that's a return-on-investment question that has to be integratable into what you're already doing. For self-driving cars it's, "Can I have a model that's a self-driving car that people still want to buy?" I think that's the way around the hype cycle. It's like is this actually useful to the people that want to buy it?
Alison Southwick: Where should people go if they want to learn more about investing, or just in general about automation and AI? What's a good place for them to go to learn more?
Erickson: To Motley Fool Explorer, of course! That's a great way. You know, there's a lot of stuff. We mentioned the McKinsey studies. There's a lot of robotics studies that are out there right now. Maybe peruse some of those and see if there's anything that's interesting.
Southwick: Just keep an eye on the headlines.
Brokamp: Even in my study, there wasn't like one place you go to, although McKinsey has sort of taken the lead on it.
Erickson: Yes, Carnegie Mellon is coming out with a lot of cool stuff from an academic perspective. It goes into the industry itself, and then companies' annual reports. We read through what they're working on. That gives us a bunch of ideas.
Alison Southwick has no position in any stocks mentioned. Robert Brokamp, CFP has no position in any stocks mentioned. Simon Erickson owns shares of Amazon and Nvidia. The Motley Fool owns shares of and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.