Thursday, March 10, 2016

Artificial Intelligence

There is a great article over at IBD highlighting some of the advancements in AI and the big companies behind it. Two of the companies in our portfolio are mentioned; IBM & FB.

I'm a big believer in the Watson platform developed by IBM. They are finally starting to realize the benefits of their big investment into the technology. In my opinion what's more impressive is how the company funded dividends and buybacks while shedding old companies, buying new ones, and still investing in R&D. Not an easy feat by any means.  I think it showcases the true strength of the company which is not reflected in the stock price right now. No worries as we will patiently wait.

FB was a bit more of a surprise. I knew they were into AI, but not to use it for the reasons stated in the article. I guess shame on me for not knowing. Either way a lot of people think FB is a one trick pony. That's absolutely not true and I highlighted some reasons why in my Does Facebook Have a Moat article. In due time this will be another barrier to entry for other players. You just don't build these systems overnight. Warren Buffet might be renowned for his barriers to entry as having a high cost hurdle and expertise for industrial companies. Well some technology companies are now mimicking the same exact kind of barriers to entry.

Alphabet(GOOGL) is a company in the article I wish I had in the portfolio.  The company is turning itself into a leader in the AI space even though most people know it simply for it's search, map, and YouTube capabilities. I remember about 9 years ago when the stock was trading around $200 share and people were proclaiming the end of the company for a variety of reasons as they struggled through a rough patch. Now if you combine the split company(GOOG) it goes for a combined $1450. I wonder who is laughing now? If only I had pulled the trigger myself all those years it would be me!

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