- Metaverse became the buzzword among investors for a brief and explosive time.
- Macroeconomic conditions in 2022 made investors prioritize defending their capital and move away from risky investments.
- Now, Artificial Intelligence (AI) becomes the surrogate channeling the investment craze.
Many analysts are blunt and dismissive against investments in the Artificial Intelligence (AI) sector, which is the reason for the current fever. Some label this investor outpost as the new “meme trend,” while others point out that comparisons to that bubble are misplaced.
Whether it is a meme bubble or not, investments in the sector seem to be displacing the newest of these frenzied trends. Metaverse became one of the most explosive words in the investment world in late 2021. Billions of dollars flowed into the companies developing them. However, most of that capital turned to salt and water.
The high interest rate economy wreaked havoc among the technology companies working in the metaverse. Most of them continue their crusade, but with less support from big capital. Now the turn seems to be coming for the world of Artificial Intelligence, which until recently was included among the investments in the metaverse. However, the launch of ChatGPT has radically changed the rules of the game.
ChatGPT and the AI fever
OpenIA’s launch of the ChatGPT tool became the start of investor AI fever. The fact that new products threaten to revolutionize the world of technology and search engines generated excitement. Google’s own parent company Alphabet launched its own ChatGPT competition and other initiatives are already looming.
Investors are among the first to react and, although it looks like a stock meme situation, there are also distinctive elements. Among them, the prospectus of the companies behind them stands out. In the case of technology, some have the weight of Microsoft and Alphabet, while the meme stocks were backed by declining firms. As a result, the AI sector has an engine that has so far not quite taken off.
It is important to take into consideration that, so far, there are no stocks to invest directly in AI. At most, investors are limited to gaining exposure to this technology by putting capital into companies that develop it. This paper reviews some ideal companies in which investments can be placed to take advantage of the boom.
Investor capital is now flowing in large amounts into companies such as the aforementioned Microsoft and Alphabet. But AI fever is not limited to these, but also encompasses other firms such as Amazon, Salesforce, Workday and Tesla. The list is already long and will grow longer as the months go by.
The downfall of the metaverse betting
As briefly recounted above, the rise of interest in AI was preceded by a similar push for investments in the metaverse. This is a technology in which people will be able to socialize through avatars. The latter are digital representations of people, which interact on virtual reality platforms.
In any case, this technology is fuzzy into the future and few people are clear enough to explain it in simple terms. Consequently, after the first push, many investors realized that they were betting on something highly abstract.
The rise of the metaverse idea peaked in late 2021, when Mark Zuckerberg, CEO of Facebook, stepped forward. The entrepreneur went so far that he completely changed the company’s corporate image and its name became Meta in allusion to its new development. At first, investors were desperate to buy space in the new promised land of technology. Almost every major company announced its presence in the metaverse in one way or another.
In order not to fall by the wayside, some settled for making land lot purchases on platforms like Decentraland or The Sandbox. Everyone wanted to set aside their place in the technology that would replace the Internet as we know it today. But the bubble burst in 2022 and interest in the sector went into a tailspin. Meta workers want nothing to do with their own platform, Horizon. Likewise, some initiatives crashed with people’s apathy. Soon after, metaverse fever was replaced by AI fever.
The rapid rise of AI
Most people who are familiar with AI are thanks to services like Apple’s Siri or Amazon’s Alexa. These are tools that have been perfecting for years and still remain unknown in many places. But, as ChatGPT’s turn has come, it’s been a completely different story due to its meteoric rise.
So strong has been the growth in popularity of this tool that some educational institutions are looking for alternatives to prevent students from taking advantage of it. Chat is capable of generating texts and papers in a matter of minutes and many professions could be compromised in the future by the irruption of this technology. Since its launch at the end of 2022, the popularity of these tools has not stopped growing.
As interest grows, investors are also turning their eyes and capital to the companies behind these developments. Although a correction is likely in the short term, in the long term, investments in AI could be of great returns for early adopters. Unlike traditional search engines, AI applications are capable of delivering fast results without the need to enter links.
On the other hand, one should not overlook the fact that as AI fever grows, so do the scammers. We should expect the appearance of fake projects and all kinds of tricks for fraud and appropriation of investors’ money. The recommendation among analysts and experts to investors is to place capital only in those recognized firms that carry out developments in the area.
Will the bet on the metaverse be reborn?
At the other extreme, it is crucially important to keep in mind that the metaverse is not a meme-style investment either. Its potential remains one of the brightest for the coming decades. Thus, as its underlying technologies advance, the sharper the overall picture will be of the digital worlds that will complement the real world.
In other words, the metaverse and its projection did not die out with investor disinterest. This means that investing in this technology at the present time could be one of the wisest decisions. However, it is not possible to put capital into the companies in the sector expecting short-term profits.
Apart from Meta, there are companies of great caliber that are in the process of directly or indirectly building tools related to the metaverse. Among them are companies such as NVIDIA, Sony, Microsoft and others. As can be noted, some of these companies are the same ones developing AI work.
In that sense, investing in some of the most important ones is like having a portfolio that encompasses several areas of future technology. Although AI fever has displaced metaverse fever, the truth of the matter is that the two are closely linked. Although overall investor interest in the metaverse has declined dramatically, the future of both forms of technology can hardly be separated when it comes to measuring success or failure.
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