Artificial intelligence (AI) has been the predominant investing theme ever since Nvidia (NVDA) released that monstrous beat in its fiscal first-quarter 2024 earnings report in May 2023. Since then, the market, particularly tech companies, has been divided into two halves. The first are companies that are seen as net AI winners and saw their valuations soar. Nvidia was the flagbearer of this trade until a few months back, and its market cap soared to over $5 trillion. The Jensen Huang-led company became the world’s most valuable company in the process, something not many envisioned — at least not so soon — before AI really took off.
At the other end are companies perceived to be net losers from AI. These include software companies and IT services firms relying on “man-hour” models. Basically, these are companies whose very business model is at risk as AI models automate many tasks.
