The Astonishing Projection: A.I. Software Market to Reach $14 Trillion by 2030

Table of Contents

1. Introduction
2. Elon Musk's Praise for Kathy Wood's Bet on Tesla
3. Tesla as ARK's Top Holding
4. Understanding First Principles in Investing and Research
5. The Evolution of Artificial Intelligence
6. Cost Declines in AI Technology
7. Confidence in Tesla's Thesis
8. Impact of AI on Deflation
9. AI Outperforming Humans in Self-Driving Cars
10. AI's Role in Knowledge Work
11. Automating Tasks in the Context of Knowledge Work
12. Devaluation of Human Tasks due to AI Automation
13. AI's Disruption in Various Industries
14. Value Accrual in AI Applications
15. The Future Market Size for AI Software
16. Conclusion

1️⃣ Introduction

In a recent interview, Elon Musk praised Kathy Wood's bet on Tesla, highlighting the company's significant growth since Wood's initial investment in 2016. Tesla continues to be the top holding for ARK, comprising more than 7% of all of ARK's ETF buy rate. In this article, we will explore the implications of Musk's comments and delve deeper into the role of artificial intelligence (AI) in Tesla's success.

2️⃣ Elon Musk's Praise for Kathy Wood's Bet on Tesla

Elon Musk's positive remarks about Kathy Wood's investment in Tesla have raised Curiosity about the level of confidence in Wood's Tesla thesis. As the co-lead of ARK's venture, Will Summerland acknowledges Musk's comments as reinforcing their conviction in Tesla. By approaching investments and research through first principles, ARK focuses on understanding the evolution of new technologies and developing strong conviction based on that understanding.

3️⃣ Tesla as ARK's Top Holding

As Tesla remains the top holding for ARK, it signifies the immense trust and belief ARK has in the company's growth trajectory. Tesla's significant presence in ARK's portfolio demonstrates the potential ARK sees in the electric vehicle and clean energy market. This conviction is further bolstered by Musk's directional remarks about Tesla's future.

4️⃣ Understanding First Principles in Investing and Research

First principles thinking is at the core of ARK's approach to investing and research. This method involves breaking down complex problems and analyzing them from fundamental truths or principles. By adopting this approach, ARK aims to gain a deep understanding of how a technology, such as artificial intelligence, is evolving and uses this understanding to develop conviction in their investment theses.

5️⃣ The Evolution of Artificial Intelligence

ARK has devoted significant time to studying the evolution of artificial intelligence. One crucial aspect of this analysis is the examination of cost declines over time. The cost to deliver AI capabilities has witnessed a remarkable decline. In fact, from 2012 to 2020, AI costs declined by 65%, exceeding the rate of Moore's Law. This trend has further accelerated from 2020 to 2023, with AI costs declining by 70%.

6️⃣ Confidence in Tesla's Thesis

With their thorough analysis of AI technology and understanding of its capabilities, ARK has developed confidence in Tesla and its vision. The directional remarks from Elon Musk regarding the company's future endeavors only add to this confidence. By being at the forefront of AI innovation, Tesla has been able to solidify its position as a leader in self-driving cars and other AI-powered applications.

7️⃣ Impact of AI on Deflation

When analyzing the potential impact of AI, particularly in the context of Tesla and other industries, the concept of deflation becomes significant. ARK believes that as AI capabilities continue to advance, the technology will eventually lead to deflation. For example, autonomous vehicles powered by AI are already proving to be five times safer than human-operated vehicles. This safety improvement alone showcases how AI can contribute to increased efficiency and productivity while reducing costs.

8️⃣ AI Outperforming Humans in Self-Driving Cars

The progress made in self-driving car technology exemplifies how AI is outperforming humans. Tesla's Full Self-Driving (FSD) feature, which is currently running about a million miles a day in autonomous mode, demonstrates the capability of AI to perform tasks better than humans. As AI technology continues to improve, the difference in performance between AI and human operators in various industries will become even more pronounced.

9️⃣ AI's Role in Knowledge Work

AI's impact is not limited to self-driving cars; it extends to the realm of knowledge work as well. Knowledge workers, who are responsible for tasks such as coding and reviewing legal agreements, currently account for approximately $32 trillion in annual wages. ARK has observed that AI assistants can double or even triple the productivity of knowledge workers. This is evident in various sectors, including software engineering, where the use of AI assistants has shown to make software engineers more than twice as productive as their counterparts without AI assistance.

1️⃣0️⃣ Automating Tasks in the Context of Knowledge Work

The advancements in AI have paved the way for automating tasks traditionally performed by humans in the realm of knowledge work. Companies like GitHub have shown that software engineers using AI assistants are significantly more productive, with productivity gains of over 100%. Similarly, ARK's investment in Replet, a company that enables developers to generate useful code using AI, has witnessed developers generating up to 80% of their code with AI assistance.

1️⃣1️⃣ Devaluation of Human Tasks due to AI Automation

The increasing capabilities of AI, particularly in automating tasks within knowledge work, have led to the devaluation of human tasks. As AI becomes more proficient, it can potentially automate most of the tasks currently performed by humans in various industries. While this automation brings efficiency and cost savings, it also poses challenges for individuals whose livelihoods depend on these tasks. Balancing the benefits and potential disruptions caused by AI automation remains a crucial consideration.

1️⃣2️⃣ AI's Disruption in Various Industries

AI's disruption is not limited to a single industry. Its potential to optimize workflows and increase productivity makes it Relevant across sectors. ARK recognizes that AI applications will be the key to capturing value in this disruption. Companies that are at the forefront of developing AI applications have the potential to transform multiple industries and create substantial value.

1️⃣3️⃣ Value Accrual in AI Applications

By focusing on the development of AI applications, companies have the opportunity to accrue significant value. With knowledge workers already generating trillions of dollars annually, the integration of AI assistants and domain-specific models can substantially increase productivity and efficiency. ARK estimates that by 2030, the market for AI software will reach approximately $14 trillion annually, further emphasizing the potential value in AI applications.

1️⃣4️⃣ The Future Market Size for AI Software

The projected market size for AI software showcases the immense growth potential in the AI industry. By 2030, ARK forecasts the market to reach $14 trillion annually. This projection highlights the transformative nature of AI and its significance in shaping the future of various industries.

1️⃣5️⃣ Conclusion

Elon Musk's praise for Kathy Wood's bet on Tesla reaffirms ARK's confidence in their investment thesis. With a focus on first principles and a deep understanding of AI's evolution, ARK believes that AI has the potential to disrupt multiple industries and automate tasks traditionally performed by humans. This automation, while deflationary, also brings opportunities for increased productivity and efficiency. By investing in companies at the forefront of AI applications, ARK aims to capture the value created by this disruptive technology.

Highlights

• Elon Musk's praise for Kathy Wood's investment in Tesla highlights the company's growth potential.
• AI is rapidly evolving and experiencing significant cost declines.
• Tesla is at the forefront of AI innovation, particularly in self-driving cars.
• AI has the potential to automate tasks in knowledge work, increasing productivity.
• The automation of tasks through AI can lead to deflation but also create opportunities for increased efficiency.
• Companies that focus on developing AI applications have the potential to capture substantial value.
• The future market size for AI software is projected to reach $14 trillion annually by 2030.

FAQ

Q: What is ARK's top holding? A: Tesla remains ARK's top holding, comprising over 7% of all its ETF buy rate.

Q: Why does ARK have confidence in Tesla's thesis? A: ARK approaches investing and research through first principles and has thoroughly analyzed the evolution and capabilities of AI, which reinforces their confidence in Tesla's future.

Q: How is AI impacting various industries? A: AI has the potential to disrupt multiple industries by optimizing workflows, increasing productivity, and automating tasks traditionally performed by humans.

Q: What is the projected market size for AI software? A: ARK forecasts the market for AI software to reach approximately $14 trillion annually by 2030.