It’s like we all WANT to get bitten again… any small stock that seems like it has something to do with Artificial Intelligence has been booming lately, as the release of ChatGPT has everyone swooning. I don’t know how this ends, and certainly AI is an important technology trend, but rushing back into profitless little companies who are making bold AI claims probably isn’t going to work out well for investors. And rushing into the even more wildly speculative “AI Cryptocurrencies” as the year goes on is probably 1,000X more likely to lead to disaster.

There’s a high probability that the giant companies who have been investing in these areas for a decade, like Alphabet and Microsoft and NVIDIA, are going to end up being the artificial intelligence leaders. They have the financial wherewithal to build something and not worry about profit for a long time… and they don’t trade as R&D ideas, so they are not nearly as volatile.

There isn’t one right way to be an investor, trader or speculator, though, and there will probably be a lot of hugely profitable trades if this AI stuff turns into a real bubble — I won’t spend a lot of my time trying to bet on which hot AI story stock is most likely to have legs and go up 50% in a month, because that has more to do with what will excite the Reddit and Twitter crowd than it does with what those companies can do as businesses. I can see plenty of temptation in making bets on those ideas, but I wouldn’t think of them as investments, we’re a long way from the point where I could guess at which smaller company might turn into a leader in this area, I’d just be making “greater fool” bets on guessing which stocks will get popular as a result of the rising tide of AI mania.

For me, those kinds of bets are typically options trades — I don’t want to invest a lot in reading their financials, because they don’t mean anything, and I don’t want to commit to being a long-term investor in these hot ideas, but I do have an inner gambler, and I need to feed him a little bit every now and then. I might be willing to put a few chips on red or black.