At a time when everything that talks about AI is going up, do you think it is still a good time to invest in this topic?
At WisomTree, we consider that the moment is or would be defined by the relevance of the topic itself. In the end we are talking about artificial intelligence, one of the main themes or mega trends that exists in the market, the capacity that artificial intelligence has to penetrate different sectors of the economy, in different industries, in different companies, is tremendously high. It is a very transversal theme and therefore at WisomTree we consider that it continues to be a theme to consider in the portfolio.
On what pillars will its future growth be based?
We understand that the future of artificial intelligence will depend a lot on the pace or speed at which companies are able to adapt to all the solutions that come to us through artificial intelligence. We all know that artificial intelligence is going to generate changes, we still do not have all the answers but we know that these changes are going to occur. We have all already seen what the benefits or impact of generative artificial intelligence are, that is, we have already felt to a greater or lesser extent the benefits, impact and scope of ChatGPT and the next step will be that users will demand artificial intelligence solutions not only in our computer, but in our smartphone, in our refrigerator, in our car, in the office where we work, etc., therefore the pace at which the companies that manufacture and produce all of these devices being able to incorporate artificial intelligence will impact how we assimilate said technology.
There are voices that talk that there could be a certain bubble in this technology, what do you think?
The approach that WisdomTree proposes for the topic of artificial intelligence is one that tries to capture the entire value chain within artificial intelligence, and we could decompose this value chain into three different blocks. Firstly, a group of companies are those that are dedicated to manufacturing or providing artificial intelligence solutions; The second block of companies would be those that allow artificial intelligence to occur – microchip companies or the semiconductor sector -; and the third block of companies would be those that precisely promote the growth of the artificial intelligence ecosystem. It is true that we can talk about overvaluations or a bubble, but a bubble implies irrationality in prices, that is, prices or quotes are very high or very different compared to the intrinsic value of the companies, but we are talking about a theme whose expected growth is very high, therefore we can see high multiples in some segments of artificial intelligence but those multiples could be supported precisely by such high growth. Therefore, WisomTree’s approach is to capture the entire value chain and diversification. If we manage to build a sufficiently diversified career we are minimizing the risk of being exposed to companies that temporarily have higher variations.
In which stocks/sectors do you think there may be more potential?
We believe that artificial intelligence is going to reach most parts or industries of our society and economy. To give an example, biotechnology. The average time it has taken to discover a drug has been between 10 and 12 years, the investment required for the discovery of that drug has been between 1 and 2 billion US dollars and, most importantly, the failure rate in drug discovery has been higher than 95%. Thanks to artificial intelligence, we can reduce the drug discovery time drastically from 12 years to months, we are also reducing the investment in monetary terms and we are improving the failure rate. Another example would be cybersecurity; We have always thought of cybersecurity as something reactive or defensive, but we also have to take into account that with artificial intelligence, these cyberattacks are going to be increasingly more sophisticated and it is going to be more difficult to detect phishing or fake news, it is going to be increasingly increasingly difficult to distinguish what is real and what is not. Therefore, cybersecurity can also make use of artificial intelligence and provide more effective or efficient solutions.
What does a theme like this contribute to a portfolio with a medium risk profile?
The first thing it provides is to gain exposure to a number of well-diversified companies or industries. It also provides diversification because we are investing in companies that may not be as well or as highly represented in traditional indices. It provides purity, WisdomTree’s approach is to collaborate with experts in each topic and it is these experts who are in charge of detecting which companies represent each of those topics well or in a pure way. And, finally, it provides high growth, because it is a theme that has very high tailwinds and therefore the expected growth of these companies is also higher than the market average.
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