Following a CNBC CEO conference in Santa Barbara, California, I came away with two thoughts. Firstly, artificial intelligence (AI) is by far the most important topic of conversation regardless of the forum or the party. And, secondly, no one has the faintest idea of how to make money with it. Oddly, even though everyone has been saying they have been using AI for years, this version – generative AI – is so novel that people were all shocked that Club holding Nvidia (NVDA) would have so much business, given that no one can figure out what it might mean, or how to use it in a practical setting. There were some moments that I actually found myself wondering: Could it actually be that much ado about so little? Given the significant AI-related gains we’ve seen from so many stocks, big and little, I sure hope not. But I pulled myself back from that level of skepticism — nihilism, almost — because there are just too many people trying to put it to work that there has to be something there. Every company’s CEO is ripping through the org chart, frantically trying to figure out how to use AI for creativity and profit. But only cybersecurity Club name Palo Alto Networks (PANW), a company not at the conference, seems to have a plan that’s working now. CEO Nikesh Aurora is using AI to find out who simply isn’t necessary, or who can’t do the job as well as the machines. He’s reviewing every department and is expanding his margins by having machines replace people – and it’s working. Everyone else seems to be wondering if they should be hooked up with Oracle (ORCL), Alphabet (GOOGL), Amazon (AMZN) or Microsoft (MSFT) – the big four of the tech giants filled with AI wisdom. The edge consistently went to Microsoft in the discussions, mostly because of its relationship with OpenAI and its ChatGPT offering. There’s lots of jockeying about who has the most to offer, though, and the one that kept surprising me was a faith in Oracle. It sure made me want to pull the file and dust it off. Though, I do think Club name Salesforce (CRM), perhaps through the dint of CEO Mark Benioffs’s friendship with OpenAI’s Sam Altman, does have something more additive than the analysts think. More broadly, why is there such a rush to spend real money with AI’s big four? I think it’s because every company is fearful that the other companies that they compete against might be using it to their advantage. They don’t know what “it” exactly is, but they aren’t going to let the other guy beat them at it. I was surprised that, at this moment, AI has meant that you still need new infrastructure and new applications – even more people to hire! – so you can build programs on top of AI. In other words, things are just as complicated as always. You have to be a great coder to use AI to its fullest advantage, not a great talker, which to me raises the query: How does that save money or time? Still, one thing is for certain, Jensen Huang holds the key to the AI kingdom . The reverence for the Nvidia CEO knows no bounds. Ultimately, my reflection when it comes to the Club is to continue to try to profit from the AI arms race. There’s just too much money chasing that holy grail. Stay long the stocks of companies that are offering their help, their clouds. Don’t be daunted, for now, by the lack of diversification. My bottom line for the week: Enjoy AI. You will make more money from it than all of the CEOs of Santa Barbara, until they figure out how to use it and then skedaddle. (Jim Cramer’s Charitable Trust is long NVDA, MSFT, AMZN, GOOGL, CRM, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Jakub Porzyck | Nurphoto | Getty Images
Following a CNBC CEO conference in Santa Barbara, California, I came away with two thoughts. Firstly, artificial intelligence (AI) is by far the most important topic of conversation regardless of the forum or the party. And, secondly, no one has the faintest idea of how to make money with it.
