Ark Invest is one of the finance industry’s most interesting money managers.
Led by Cathie Wood — who predicted that Tesla would be a trillion-dollar company when it was valued at only ~$40B (it’s worth ~$796B today) — the firm is known for its unique investing approach.
Instead of hiring traditional MBAs, Wood staffs her firm with scientists and researchers, who help to construct exchange traded funds (ETFs) for next-generation investing ideas including fintech, genomics, and space.
Ark just released its closely watched Big Ideas 2021 report…
… and the top prediction this year is that deep learning (DL) — an “AI function that mimics the workings of the human brain in processing data” — will create $30T in market value in the next 15-20 years.
We know that’s a comically huge number (equal to ~15 Apples), but here’s the case:
- The transition from humans writing code: DL algorithms already power social media and recommendation engines. Soon, they will be able to write code for extremely complex and large addressable markets like self-driving cars and drug discovery (and every industry in between).
- From vision to language: 2020 was the first year that deep learning algorithms demonstrated truly good conversational AI (OpenAI’s GPT-3). Further development in language understanding will unlock huge value in every industry.
- The democratization of AI: The world’s biggest tech firms (Amazon, Facebook, Google) are spending billions of dollars on specialized deep learning processors and data centers. Once all of this technology is deployed, the full power of AI will be available to industry players of all sizes (not just Big Tech).
Taken together, the Ark team believes that the market cap creation from DL will hit $30T by 2037, more value than the internet will create.
We should all take these projections with a grain of salt… but it wouldn’t be the first outlandish prediction Wood made that came true.
Disclosure: The author has taken a long position in an ARK ETF ($ARKF) after the publication of this article.