It’s big but not surprising. As much as 96% of wealth gained on the Bloomberg Billionaires Index this year is in AI-related stocks. Giant waves of innovation have spawned giant wealth-creation since the first industrial revolution. True, some tech-inspired wealth-creationis short-lived. Like crypto. But AI is different. Because there is no credible scenario in which its use value across business and society will plummet. AI is a substantive game-changer.
American advantage: US’s first billionaire John D Rockefeller controlled 80% of global oil supply at one point. That’s how much of the search engine market Google enjoys today. And AI tomorrow may follow this trend. A big gainer of this year’s blistering rally in AI-related stocks and a company whose m-cap has overtaken Alphabet’s, is Nvidia. It holds around 80% of the high-end AI chip market. Like in the case of Silicon Valley sultans before them, network effects will help AI titans achieve super dominance.
Chinese competition: Of course it’s not like everyone else slept as the starter pistol went off. Chinese billionaires have also joined the AI race. Their science and money do lag significantly. US export controls are another major challenge. But these very controls are also spurring indigenous technological development, with govt spurs. China’s biggest chip manufacturer SMIC is trying to catch up with the Taiwanese giant TSMC. US companies like Nvidia themselves keep devising one workaround after another to frustrate US controls. It’s possible that Nvidia’s own dominance will be undermined by this one day. For now, though, experts say US is eating everybody’s lunch.
Indian lag: India was behind the curve with earlier platform shifts represented by personal computers, internet, mobile devices and cloud computing. With today’s seismic AI shift, Microsoft CEO Satya Nadella says “there is no impedance, there is no gap.” What does he mean? This is a very, very capital-intensive game. While India might not fall behind in adoption this time, that’s not the same as collecting a goodish part of AI IPRs and profits. Tech stocks have not even been particular stars in Indian equity market’s star performance. If AI drives a new industrial revolution, alongside new concentrations of wealth and power, the only way for India to be at the high table will be to be an AI-maker. Not just an AI-taker.