OpenAI leader Sam Altman made headlines earlier this month, touting a semiconductor project requiring trillions of dollars. Altman, whose OpenAI product helped usher in a new age of generative AI last year, is looking to boost the world’s chip-building capacity. Given how many industries, like AI, rely on chips, it may help investors to assess Altman’s read of the market landscape.
See more: AI and Semiconductors: A Virtuous Circle in the Making?
While, yes, follow-up coverage has rightly posed questions about the eye-watering $7 trillion number Altman wants to raise, the underlying message applies. Even with more computing power over time for chips, there is a clear market appetite for chips.
The geopolitical risk of Taiwan Semiconductor (TSM) already underlines the need for more sources of chips. What’s more, even if just $1 trillion arrives into new chip factories, AI would benefit significantly. The knock-on usage of AI in other industries, meanwhile, would create significant value.
That positive feedback loop would offer numerous opportunities for investment. Per VettaFi senior research analyst Zeno Mercer, part of the thinking behind expanding chip product relates to lessons about supply chains from the pandemic.
“Let’s say it were just another trillion in development,” said X. “You’ve got the Chips Act, the E.U. has their own version, Japan…everyone is trying to build their own thing and not rely on third parties anymore.”
“There are some really big drivers coming through,” Mercer added. “We haven’t even really scratched the surface. There’s a lot of runway to grow.”
Investors, then, may want to consider what options they have with which they can invest in chips and AI. Strategies like ROBO Global Artificial Intelligence ETF (THNQ ) may appeal.
Charging 68 basis points (bps), THNQ invests in areas from semiconductor production to factory automation. Its index ranks firms based on AI revenue, giving out scores from 1 to 100. Those firms that exceed 50 in that scoring merit inclusion if they meet other standards.
Is there market capacity for Altman to raise $7 trillion for semiconductor production? $7 trillion may stretch too far from what’s possible. Even $1 trillion in new semiconductor investment, however, could unlock a new era for AI.
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