(edited) I just saw your link above about growth vs value investing. I don’t think that’s a helpful distinction in this case, and when people talk about a company being undervalued I think that typically includes both unrecognised growth potential and unrecognised current value. (Maybe that’s less true for startups, but we’re talking about already-listed companies here).
I do think the core claim of “if AGI will be as big a deal as we think it’ll be, then the markets are systematically undervaluing AI companies” is a reasonable one, but the arguments you’ve given here aren’t precise enough to justify confidence, especially given the aforementioned need for caution. For example, premise 4 doesn’t actually follow directly from premise 3 because the returns could be large but not outsized compared with other investments. I think you can shore that link up, but not without contradicting your other point:
I’m not claiming that investing in AI companies will generate higher-than-average returns in the long run.
Which means (under the definition I’ve been using) that you’re not claiming that they’re undervalued.
...when people talk about a company being undervalued I think that typically includes both unrecognised growth potential and unrecognised current value.
I think it’s a spectrum:
Value stocks are where most of the case for investment is from the market is mis-pricing the firm’s current operations
Growth stocks are where most of the case for investment is from the future (expected) growth of the firm
For example, premise 4 doesn’t actually follow directly from premise 3 because the returns could be large but not outsized compared with other investments.
Agreed; I clarified my position after Aidan pointed this out: (1, 2)
(edited) I just saw your link above about growth vs value investing. I don’t think that’s a helpful distinction in this case, and when people talk about a company being undervalued I think that typically includes both unrecognised growth potential and unrecognised current value. (Maybe that’s less true for startups, but we’re talking about already-listed companies here).
I do think the core claim of “if AGI will be as big a deal as we think it’ll be, then the markets are systematically undervaluing AI companies” is a reasonable one, but the arguments you’ve given here aren’t precise enough to justify confidence, especially given the aforementioned need for caution. For example, premise 4 doesn’t actually follow directly from premise 3 because the returns could be large but not outsized compared with other investments. I think you can shore that link up, but not without contradicting your other point:
Which means (under the definition I’ve been using) that you’re not claiming that they’re undervalued.
I think it’s a spectrum:
Value stocks are where most of the case for investment is from the market is mis-pricing the firm’s current operations
Growth stocks are where most of the case for investment is from the future (expected) growth of the firm
Agreed; I clarified my position after Aidan pointed this out: (1, 2)