I have been thinking about the likely strong investment signals for 2025 as events shape the volatility of the markets. Putting my thoughts to paper will give me further clarity on where to put my limited resources. Identifying clear megatrends would be the first step in this top-down approach to drill down into stocks and instruments to invest in.
I see three strong themes emerging: 1. Artificial Intelligence (AI), 2. Quantum Computing (QC), and 3. Rapid Nuclear Energy adoption. I will elaborate on each point below as I lay out my thought process.
AI has been a fascinating topic since I decided to learn more about it after watching the AlphaGo documentary. Subsequently, I took a six-month full-time AI course from IBM in 2021, which opened my eyes to the possibilities where the sky was the limit. Then ChatGPT happened in November 2022 and the AI dam was breached. With the recent launch of DeepSeek, we will likely see another quantum leap in AI in terms of what can be done.
I have been reading about the DeepSeek breakthrough to determine how it happened. Other than the dubious lowball cost estimates, their think-out-of-the-box solution with restricted access to Nvidia chips has amazed everyone. Perhaps America’s groupthink had confined them to only using Nvidia’s CUDA parallel process even as they became worried about running out of raw data to train their LLMs.
The term “distillation” is also a keynote to highlight. Deepseek seems to have leveraged other established LLMs to formulate better answers. By using the DeepThink mode, it was able to deconstruct the initial prompt into many more parts to query other LLMs for a more in-depth answer. The process took longer but provided superior results at a lower cost.
No matter what happens, the AI race has just accelerated to a higher level as all countries are prioritizing the new methods of re-enforced learning and smaller specialised LLMs as the number one goal to stay ahead of the global tech competition. Nvidia chips will remain in high demand as we still need the best supercar to drive these innovations.
Quantum Computing advances have also recently picked up. There have been breakthroughs to ensure that QC can be developed much quicker than expected. QC speed is measured in Qubits and current unstable models are around 100+ with a target of 1,000 within the next few years. But Microsoft just announced their new Majorana 1 QC chip and talking about 1 million Qubits soon!!
Can you imagine how QC will turbocharge computing and lead to even greater AI development? Moore’s law of doubling transistors in chips every 2 years has come true for many years and it was starting to hit a plateau. But QC is likely to speed up computing advancement to new levels.
The final trend I see is rapid Nuclear Energy adoption. Although Climate Change is a real threat to the planet, recent political moves have sidelined the global initiative towards carbon neutrality. However, a huge increase in energy demand is still very likely because of the expected continued demand from AI, cryptos and data centres. So how can the world solve this dilemma?
The Nuclear Renewable energy solution fits the needs perfectly. It provides a win-win end game that encourages a greater adoption of nuclear energy. It is one of the cleanest renewable energy sources and has a high-efficiency rate of 89%. 4th generation reactors like the SMR (Small Modular Reactors) are now much safer and do not require refuelling for at least 7 years. They are small and can produce up to 300 MW each while being stackable to provide economies of scale. Without other viable options, the resistance to nuclear energy will be lessened. People will be educated about recent breakthroughs in safe nuclear energy production.
AI, QC and Nuclear will be strong investment themes to follow this year. I have reconstructed my investment portfolio towards the success of these trends. Stocks that benefit the most from the success of these 3 megatrends are my target for investment.
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