Is 2025 the best year in history to start building a passive income? Some might think so. The CEO of Google-owner Alphabet (NASDAQ: GOOG) has called the potential impact of artificial intelligence more revolutionary than electricity or fire.
I saw one source estimating potential economic growth from AI (measured in GDP) as being 5.4% a year. For context, the best economic decades of the 20th century averaged around 2% a year. If an economic golden age is on the way, then the stock markets might be set for the bull run to end all bull runs. A shrewd investor might look at even small sums invested today as being worth huge amounts a few years down the line.
Hold the horses
Before diving into where might benefit most from such a bullish trajectory, the bear case needs some attention. While the claims of what AI might achieve are grandiose, the reality of what AI has achieved is minimal.
Sure, the humanlike chat interface of LLMs is mind-blowing, but we’re after economic growth here. How is this technology helping companies?
A recent study found 95% of efforts to implement AI found no return on investment. In other words, not much is happening as of yet. And, crucially, there is no guarantee that amazing technology is useful technology.
To borrow a recent example, virtual reality headsets were amazing bits of kit. But who uses them now? Like those whose promised VR might change the world, the AI bulls might be all mouth and no trousers.
Revolutions?
If the AI hype does have legs, though, the aforementioned Alphabet might be at the beating heart of the revolution. The tech titan has already taken a substantial stake in ChatGPT-creator OpenAI, a private company recently valued at $500bn. That’s nearly twice as big as the largest FTSE 100 firms.
There are more strings to the Alphabet bow too, including exciting self-driving car startup Waymo already running in San Francisco. The latest data reports a third of all taxi rides in ‘Frisco’ are self-driving now. Accidents are down 91% according to one report. That’s another revolution waiting to happen, in my book.
One glaring downside to Alphabet is that folks switching to AI for their questions may hurt Google search engine revenue. The ads and such that appear on the world’s leading internet search engine account for over half of all earnings. Large language models from other firms like ChatGPT or Grok fulfil a very similar function.
While the dotcom crash tells us it’s never easy to say who will emerge victorious in any technological revolution, I think it’s hard to look past the dominant tech giants of today. I’d say Alphabet is one to consider.
