Buckle up! AI boom’s just getting started, says Munro Partners fund manager Nick Griffin

Artificial intelligence is just at the start of generating an entire ecosystem of innovative platforms and investors need to be ready to jump on the bandwagon, one fund manager says.

Nick Griffin, founding partner and chief investment officer of Melbourne-based investment manager Munro Partners, said the AI thematic had generated strong returns for Munro’s funds in the past 12 months and he expected that to continue.

“We’re effectively having an iPhone moment - that’s what AI is, and that’s the best way to think about this,” he told Nabtrade clients at an event at the ASX on Thursday.

Mr Griffin recalled how he first time he saw an iPhone, when a friend pulled his out and used the Shazam app to identify what song was playing at a bar.

“I told him, that’s the coolest thing I’ve ever seen - I have to buy one of these,” Mr Griffin said.

Apple created an app ecosystem that led to just about every company in the world creating an app for something, he said.

Some became huge companies, such as Uber, Spotify, Google and Facebook, and nearly everyone used apps to make their life easier, performing tasks such as online banking and checking in to airline flights, Mr Griffin said.

“Generative AI is exactly the same thing - what’s going to happen is that you’re going to see thousands of applications built on these large language models that are effectively going to make your life easier, and they’re going to be across every industry on the planet,” he said.

Mr Munro highlighted Adobe’s Firefly app, which lets users easily transform photos, and Google’s Gemini, which among other things can watch and summarise YouTube videos.

Other applications were coming in everything from weather prediction to full self-driving cars to creating digital twins of physical objects for engineering purposes, he said.

Mr Munro suggested that investors trying to ride this thematic look at the “pick and shovel” companies of the AI boom, such as cloud computing providers and semiconductor companies.

He said Munro firmly believed that AI chip maker Nvidia would become the most valuable company in the world.

It’s No.2, behind Apple and ahead of Microsoft, with a market capitalisation of $A7 trillion.