Onward Opportunities has a core position in AIM listed Windward which was co-founded by CEO Ami Daniel. Recently we had the chance to interview Ami for a podcast.
Ami is a high energy entrepreneur with a fascinating back story. He is also a champion of generative AI (GAI) and its adoption to solve real world problems for his growing roster of customers. He sets himself apart from the debate among investors in the US tech titans collectively known as the Magnificent Seven and specifically the chip developer, Nvidia.
Aged 18, Ami joined the Israeli Navy. He became a deck officer responsible for landing helicopters on Corvette class ships. In 2006 his ship was hit by a Hezbollah missile. Four of the sixty-four crew members were killed and following this near-death experience, Ami vowed to start a company. His mission was to solve what he calls the small ships and big ocean problem.
Fourteen years later, Windward is valued at £120m in the London AIM market. While still an immature business, Ami believes it can one day become a highly rated multiple £100m’s revenue company.
Windward helps Governments and businesses track, manage, and protect their maritime assets worldwide using its expanding range of data products, which increasingly feature AI enhancements. It has an impressive list of some 250 customers, two thirds of which are government organisations.
Ami is adamant that generative AI will permanently and positively drive faster growth for Windward and more broadly change lives one problem at a time.
He said that
I know some people are a bit cynical about Generative AI. In my view, they’re cynical from a macro perspective. They’re not cynical from a practical product perspective, which is very different. They’re cynical in terms of, “Oh my God, how will Microsoft and the Magnificent Seven make $400 billion more to make up for their valuations?” I don’t know, I don’t care. I don’t need to make $400 billion.. the question is, will it help me triple my company faster? And the answer is absolutely yes.
For him
When the world changes, you either change with it or you die; Nokia died. I almost died once. I have no intention of doing it again. Not from a business perspective or personal perspective…Generative AI is a revolution… and benefit the people with proprietary data.
Ami’s optimism is echoed by the privately held “buy-now-pay-later” pioneer Klarna. It has adapted an Open AI based chatbot they call Kiki which it claims can do the job of 700 full time customer service representatives, handling 2000 customer enquiries daily and more quickly and accurately than conventional employees. Klarna’s workforce has shrunk from 5,000 last year to 3,800, with a further reduction to around 2,000 expected in the coming years.
Klarna and Windward are just two examples of how GAI tools are being adopted across thousands of companies and boosting labour productivity and profit margins for the successful adopters. Windward sees GAI boosting revenue growth from its current c.30% to over 50%. For Klarna its GAI adoption could make the critical difference enabling it to IPO in the near future and funding its future growth.
Picking the winners and losers in a paradigm shift like GAI is not easy. As with the adoption of the internet thirty years ago there will be a digital divide. But this this is the job of stock pickers.
This approach contrasts with the more conventional way of playing the future of AI via the mega-cap tech titans and in particular, Nvidia. Investors fortunate enough to own Nvidia shares (and anyone who owns an S&P 500 or MSCI Global ETF already does) will have done well. It is an extraordinary business and one that probably has several years of strong growth ahead of it. However, as tech investor Gavin Baker pointed out last week the underlying investment boom driving Nvidia’s extraordinary success is highly unusual.
Mark Zuckerberg (Meta), Satya (Microsoft) , and Sundar (Alphabet) just told you in different ways that they are not even thinking about ROI. And the reason they said that is because the people who actually control these companies … believe they’re in a race to create a Digital God.
And if you create that first Digital God, we could debate whether it’s tens of trillions or hundreds of trillions of value. We can debate whether or not that’s ridiculous, but that is what they believe, and they believe that if they lose that race, losing the race is an existential threat to their company. Larry Page has evidently said internally at Google, “I am willing to go bankrupt rather than lose this race.”
The buyers of Nvidia GPUs are engaged in a real-life version of the prisoners’ dilemma. They have huge balance sheets and see it as a life-or-death battle to be the first to achieve Artificial General Intelligence (AGI) and its winner takes all prize. As a result, the Nvidia stock market party is in full swing and may well continue for some time yet. However, we would caution that investors should enjoy themselves, but dance near the door.
The case for creating AGI remains unknown whereas the successes of GAI are already apparent. In the original 1960s movie only three of the Magnificent Seven survived the gun fight. Nvidia and the rest of the Magnificent Seven are well known, widely followed and well owned. A diversified portfolio of unknown, and under owned GAI winners looks like a better place to hide while others engage in this particular shoot-out.
Written by Jeremy McKeown
Jackson’s Chart: NVIDIA WEEKLY (An Analysis by Jackson Wray)
Explanation
NVIDIA (Weekly) – NVDA has experienced an incredible move since its low on September 22, with a massive 1200% gain in less than two years. Since the start of this move and the change in trend, retracements (pullbacks) have been minimal, with main moves lower coming recently on March 24 (-21%) and June 24 (-35%). Notably, the most recent was a healthy one, with a pullback to multiple support levels, including the 78.6% Fibonacci and horizontal and diagonal trendlines. Strong support was found here, with price action now sitting in between higher highs and higher lows. With the current economic climate, the US election and the demand for chips all coming to a crossroads, any confirmations of support/resistance levels will need to be watched closely as breaches will bring higher and lower extensions in play.
Further Reading & Listening:
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