Warren Buffett vs Big Tech: Does AI have a place in your investment portfolio?

By George Prior 

Artificial Intelligence (AI) stocks should now be part of most investors’ portfolios as Big Tech prepare for an AI boom, suggests the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The comments from deVere Group’s Nigel Green follow last week’s earnings reports from tech titans including Microsoft, Alphabet (parent company of Google) Meta (parent company of Facebook, Instagram and Whatsapp) and Amazon.

It also comes after legendary investors Warren Buffett and Charlie Munger, the Chairman and CEO and Vice chairman respectively of Berkshire Hathaway, spent hours this weekend at a shareholders’ meeting in which they expressed skepticism about AI.

“I am personally skeptical of some of the hype that is going into artificial intelligence. I think old-fashioned intelligence works pretty well,” Munger noted.

However, Nigel Green says: “Despite Buffett and Munger’s scepticism, Big Tech last week posted robust financial performance reports for first-quarter earnings. The pace of growth has picked up noticeably.

“But the real story was the tech giants’ seemingly relentless mania for AI. Most of corporate America clearly think that this is the future.

“The importance of this cannot be overstated considering that just five tech companies have made up two-thirds of the S&P 500’s gains so far this year.

“Besides guidance, which suggests how companies are positioned to manage an economic downturn, and data on how effective cost-cutting measures have been, the Big Tech earnings season was dominated by AI detail.

“The tech titans are fully aware of the enormous returns that could be secured when AI starts to radically change the way businesses work and consumers live their lives.

“We fully expect that the volume of chat around AI will ramp up in future earnings seasons.”

His belief is backed up by recent events. The AI chatbot ChatGPT became wildly popular in just a matter of weeks – and took off faster than social media platforms like TikTok or Instagram. Only two months after its launch in late November, it had 100 million monthly active users in January, according to reports.

It is because of the potential way that AI is expected to impact society and global business that Nigel Green now says that “AI stocks should have a place in most investors’ portfolios.”

Including AI exposure into an investment portfolio offers several possible benefits for investors, such as “potential strong returns, risk management, diversification possibilities, and future-proofing advantages because as the use of AI continues to grow and become more pervasive, those companies that fail to adopt this tech may be at a competitive disadvantage.”

The deVere CEO concludes: “We expect that companies that have substantial AI interests are likely to benefit from the growth of the industry and this could have potentially significant rewards for early investors.

“But, of course, like any investment strategy, including AI in a portfolio carries risks and requires careful consideration. Investors should seek professional advice before making any investment decisions.

“We believe that AI is the future, and we know from the past that early investors in innovative technologies often reap enormous rewards.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.