The industry that billionaire investor Stephen Schwarzman sees as having ‘Amazon-like’ growth potential
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Everyone wants to know which sector is going to be the next to boom and we’ve found one guy who reckons this one in particular will witness “Amazon-like” growth.
For those who don’t know, Nasdaq-listed Amazon is a nearly $US1 trillion company. To buy just one share would cost you just shy of $2,000 right now.
And billionaire investor Stephen Schwarzman reckons artificial intelligence (AI) is the next big thing.
Schwarzman founded American private equity firm Blackstone, which now has $US545 billion in assets and 2,500 employees. And he personally is worth $US18.4 billion.
So he probably has a little bit of an idea of what sectors are worth backing.
Schwarzman is now writing a book about his experiences – What It Takes: Lessons in the Pursuit of Excellence. In recent days, he has been on a speaking tour to promote his book.
In one interview, with Fortune, he revealed where he sees the biggest growth opportunities. He said AI will be the sector to experience “Amazon-like growth”.
“AI is going to have a profound impact on our society,” he said, noting that even the healthcare industry wouldn’t escape.
“Artificial intelligence will affect the whole healthcare industry, from billing to admission, to diagnostics, to the development of drugs, to telemedicine, which will have enormous growth.”
But he says the key to AI avoiding making the same mistakes that happened with the emergence of the internet and social media is to stay ahead of the game.
“They [developers] said, ‘We just thought this would be really cool. Everyone in the world can connect, and it’ll be a positive sum game’.
“They weren’t aware that [the internet] would destroy the ability to govern. Everything is so short-term, there’s so much divisiveness, and social media is very destructive.
“They’ve looked at what they’ve created, and they’ve all said, ‘If I could have it back, I’d take it back’.
“I was shocked. So with AI, we have to get right on it so that the technology itself doesn’t overwhelm society.
“There’s enormous interest and good will to doing something important in terms of AI ethics. No matter what country you’re in, if you make a huge cut in your workforce, you’ll have social unrest of some type”.
Amazon has risen nearly 10,000 per cent since its IPO at $18, now sitting at $US1,822.55. Schwarzman likes Amazon because it has completely changed the industry, which never saw Amazon as a threat until it was too late.
“When I grew up, it was like: ‘What could go wrong with a shopping centre?’ And now that thing is called Amazon,” he said.
“Just that technological innovation has changed people’s shopping patterns, changed the delivery mechanism, and it’s led to shopping centres going bankrupt. It’s disrupted a whole chain of things people took for granted.
“We saw that in 2011 when we started buying warehouses.
“We’ve been the largest buyer of warehouses in the world for the last eight years, and we did that because that’s where Amazon and retailers needed to stage their goods before they get delivered.
“So that area has exploded with growth. If you’re investing now, you have to recognise that almost everything’s about to have its business model changed.”
There are around a dozen ASX small caps in the artificial intelligence field. One is Flamingo AI (ASX:FGO) which makes virtual assistants. It is focused on the financial services sector and its partners include AMP & HSBC.
Another company is LiveTiles (ASX:LVT), which targets workplaces with its AI solutions, including employee directories that update themselves.