Analysis of AI investments in the context of October 30: a model in four layers

Global Technology Equity Strategic Fund Manager Dominic Rizzo shared his vision of the structure of AI investments, presenting a detailed analysis on Medium, which covered this topic in the 422nd issue of Money Monday, published on October 30, 2023. According to Ming Pao, the expert proposed viewing AI architecture as a multi-layered system consisting of four interconnected layers, each playing a critical role in the development and deployment of artificial intelligence technologies.

Foundation: Chip Ecosystem as the Basis of All AI Investments

The lowest layer of the AI architecture is the chip ecosystem, which forms the foundation for any further investments in the field. Rizzo emphasized that without a powerful chip infrastructure, it is impossible to build other system components. That’s why stocks of companies manufacturing microchips and processors are considered one of the most promising sectors in American tech stocks.

Infrastructure and Basic Models: Connecting Links

The third layer includes infrastructure providers and activators, such as companies offering cloud computing services — Apple, Microsoft, Amazon, and Alphabet. The second layer consists of foundational models, including large language models developed by Microsoft (OpenAI), Meta (LLaMA), Google (PaLM2), and Amazon (Titan). These components form the technological framework upon which the entire ecosystem of applications is built.

Applications: The Visible Part of the Iceberg

The highest, fourth layer comprises application solutions already visible to users, such as chatbots and services. These include Microsoft’s ChatGPT, Google’s Bard, and Amazon’s CodeWhisperer. These applications are the most noticeable part of the AI revolution, but their success depends entirely on the three lower layers of the architecture.

Why Chips Remain at the Forefront of Investment

The analyst’s analysis confirms that the chip sector remains one of the strongest in American technology due to its fundamental role. Without innovations at the microchip level, AI development stagnates, so investors continue to actively consider this area as a key portfolio strategy. Thus, Rizzo’s four-layer model provides a clear understanding of how different components of the AI industry interact and why each link in the chain is crucial to overall success.