Artificial intelligence (AI) has been enjoying a renaissance in recent months, spurred by the launch of viral chatbot ChatGPT, developed by start-up OpenAI. The next-generation generative AI system signed up more than 100 million users within just two months of its debut, setting a record for the fastest-growing consumer app ever.
The chatbot is not only able to provide human-like responses to questions, but has also been able to write poetry and generate essays. In fact, ChatGPT was even able to pass graduate-level business management and law school exams, sparking concerns about the ability of students to cheat on assignments using the AI system.
On Thursday, some of the biggest names in AI -- including the CEOs of Microsoft (MSFT -0.39%), Alphabet (GOOGL 0.14%) (GOOG 0.07%), OpenAI, and AI safety and research company Anthropic -- were summoned to the White House to discuss the future of AI research.
Let's take a look at what's happening and what it means for investors.
Image source: Getty Images.
The benefits and challenges of AI
The chief executives from these companies were invited to the U.S. capital at the request of President Joe Biden. The meeting was attended by Vice President Kamala Harris, as well as Microsoft CEO Satya Nadella, Alphabet CEO Sundar Pichai, OpenAI CEO Sam Altman, Anthropic CEO Dario Amodei, and several senior administration officials. The topics under discussion included the "risks and safeguards as [artificial intelligence] catches the attention of governments and lawmakers globally," according to a report by Reuters.
The summit was also attended by National Security Adviser Jake Sullivan; Biden's chief of staff, Jeff Zients; Deputy Chief of Staff Bruce Reed; Secretary of Commerce Gina Raimondo; and Director of the National Economic Council Lael Brainard; among others, according to the report.
This isn't the first time the Biden administration has expressed an interest in AI. A White House blog post touting the "Blueprint for an AI Bill of Rights" notes, "Among the great challenges posed to democracy today is the use of technology, data, and automated systems in ways that threaten the rights of the American public."
The evolution of Skynet?
The above reference to science fiction movie classic The Terminator, in which an advanced and self-aware AI launches a devastating attack on humanity, may be a bit over the top, but some fear we may be barreling along toward a not-too-distant future where life imitates art.
The recent enthusiastic adoption of AI has some recommending that companies take a step back and take time to consider the implications of these surprisingly advanced systems. An open letter signed by more than 1,000 of the biggest and most notable names in technology called for restraint, saying that recent advances in AI represent "profound risks to society and humanity."
"Advanced AI could represent a profound change in the history of life on Earth, and should be planned for and managed with commensurate care and resources," the letter states. "Unfortunately, this level of planning and management is not happening, even though recent months have seen AI labs locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one -- not even their creators -- can understand, predict, or reliably control."
The list of those signing this missive is notable. They include Tesla CEO Elon Musk, Apple co-founder Steve Wozniak, and a host of top AI researchers and academics who believe further advancements in AI should come at a more moderate pace.
On the other hand, the evidence suggests we're a long way off from having to worry about these "powerful digital minds." Numerous tests have shown chatbots are still in their infancy, and the answers they provide are often flawed or downright wrong.
What investors need to know
It isn't unusual for government officials to take an interest in technological advances, though there likely won't be any immediate regulatory steps -- at least in the near term. There's always the chance that after a number of lengthy congressional hearings, some sort of government regulations or legislation could follow, but that day is likely far down the road.
For now, those interested in investing in the potential advances from AI could do far worse than taking -- or increasing -- positions in Microsoft or Alphabet. Each company has a long history with AI, integrating these advanced algorithms into business processes to make them more efficient. Furthermore, these tech titans have offered enterprise businesses the opportunity to benefit from AI via their cloud infrastructure offerings, Microsoft Azure and Google Cloud.
There's an added bonus. Microsoft and Alphabet are currently trading at a significant discount to their historical averages, selling for 10 times and 4 times next year's sales, respectively. While most experts agree that a reasonable price-to-sales ratio is between 1 and 2, investors frequently reward a premium valuation to companies with a strong history of growth and developing state-of-the-art technologies -- and AI certainly applies.
