Artificial Intelligence (AI) is evolving rapidly, with innovations in technology, products, and models driving the transformation. In the midst of the AI revolution, what opportunities can be seized?
On June 6th, at the 9th China Golden Yangtze Private Equity Fund Development Summit, Dan Bin, Chairman of Orient Harbor, shared insights on investment strategies amid the AI revolution. He believes that humanity is at a pivotal moment similar to the invention of the steam engine, and AI will bring about profound changes, warranting full-fledged investment.
Key points from the investment briefing are summarized as follows:
1. We are fully committed to investing in the AI sector, and we have bought in at full capacity. Currently, our position in NVIDIA accounts for approximately 45%-50% of our portfolio, as it has performed exceptionally well. I haven’t sold a single share, and I plan to continue buying more.
2. Those who made significant profits from Tencent are now, once again, investing in companies like NVIDIA and Bitcoin in the era of AI.
3. In the ultimate outcome of the AI era, around 2034 and 2044, there may emerge the first company with a market capitalization of $10 trillion. The high likelihood is that this $10 trillion market cap company will still be one of the tech giants in the United States.
4. Current investments are focused on the foundational layer of AI, allowing for both offensive and defensive strategies. Observing the seven major companies in the U.S., they are all concentrated in the foundational layer of AI.
5. NVIDIA is likely to surpass Microsoft in market capitalization next week, becoming the largest company in history with a market value of possibly $5 trillion or even higher. This is actually a prelude or indication of a revolutionary change.
Here are the highlights of the insights shared by Dan Bin:
AI is not a bubble; the clarion call of the era has just sounded.
Dan Bin: In fact, Orient Harbor made a strategic decision two years ago. We believe that humanity may have entered the fourth era. The first three eras were the era of electronic hardware, the era of the internet, and the era of mobile internet.
We believe that starting from two years ago, humanity may have entered the era of artificial intelligence. Therefore, I told my colleagues that we need to embark on a new journey. That is to say, if we clearly knew 20 years ago that we were going to face the era of mobile internet, we probably shouldn’t have invested in Maotai [a Chinese liquor company], but instead in companies like Tencent.
If we believe that the era of artificial intelligence is more revolutionary than the previous three technologies, then at this moment, we should fully invest in the field of artificial intelligence. That’s what Orient Harbor thinks and what we’ve done.
I believe investment is an industry of accumulated experience. When I was younger, to be honest, we also invested in companies like Tencent, but made money somewhat blindly. Now, after 20 years, I think we should be even more determined and fully committed.
Since two years ago, Orient Harbor has fully embraced this era in our U.S. stock investment products. We see that the market capitalization of NVIDIA has already surpassed that of Apple, and it probably increased by 1% in pre-market trading today. It will most likely surpass Microsoft in the future and become the largest company in the world.
We can see the progress of each era. Some say this is a bubble, or the clarion call of the era, or the sound of war drums. Personally, I think this is actually the clarion call of the era, and it has just begun.
Eight fund managers, only I am fully committed, and NVIDIA’s position is close to half.
Q: Why are you so determined in AI investment? Especially from the second quarter to the third quarter last year, there was a significant correction in AI overall.
Dan Bin: That’s a very good question. I’ve been writing something lately about how the thunder of the era is rolling in, and why most people miss an era.
Orient Harbor has eight fund managers, and honestly, including our main AI researcher, he hasn’t bought a single share of NVIDIA. It’s interesting that I forced him to buy some, and then he sold them. Recently, I saw him buying them back, which I find strange. Honestly, I can’t understand this phenomenon.
In theory, our company is fully committed, and we have bought in at full capacity. Currently, our position in NVIDIA accounts for approximately 45%-50% of our portfolio, as it has performed exceptionally well. I haven’t sold a single share, and I plan to continue buying more.
But I found that our researcher is indeed experiencing this situation.
Two years ago, we mobilized him to do a report, and I asked him to give presentations when some peers came to discuss with us last year, but he didn’t go. This is the situation in our company.
Out of eight people, only I am fully committed, and the others are buying and selling from time to time. This makes me feel very strange.
In my 32-year career, during the 20 years since Orient Harbor was founded, this situation is very common. As Wang Yangming said, knowledge and action are one; 90% of people cannot do it. If you can achieve this unity of knowledge and action, you have actually defeated 90% of people.
Those who made big money on Tencent are choosing NVIDIA again.
In my long career, for example, there are very few people who really made big money on Tencent.
But another interesting phenomenon is that those who made big money on Tencent, this time in the era of artificial intelligence, are choosing NVIDIA and Bitcoin for investment. This is the investment phenomenon: most people will miss an era, but there are always a few who can seize opportunities in every era.
I think investment requires having an eagle eye, being able to see what others can’t. So, where does the determination come from? I have said before that investment is not only about foresight and accuracy, but also about daring to hold a large position and sticking to it. These are indispensable.
If you can see the future, you will naturally be determined. Without this kind of thinking, it is difficult to achieve success.
In the next 10 to 20 years, there may be a $10 trillion market cap company among the tech giants in the U.S.
Taking the achievements in our industry as an example, real achievements mean achieving phenomenon-level returns. What is phenomenon-level return? That is to earn 100 times the return on investment in a company. That is true achievement.
So, how do you earn 100 times the return? You must hold a company from when it is a growth stock until it becomes a value stock. This process requires viewing time from the perspective of the industry because the first three eras—whether it’s the era of electronic hardware, the era of the internet, or the era of mobile internet—all lasted for over ten years.
If we assume that last year was the first year of artificial intelligence, then this era of artificial intelligence is likely to last until 2034 to 2044. During these years, we saw the era of mobile internet and the era of the internet, and the growth of these companies lasted for a decade or two. Therefore, I think this determination actually comes from thinking about long-term trends. Without this kind of thinking, it is difficult to achieve real investment success.
Q: Adding a bit, what are the differences between AI investment in A-shares [Chinese mainland stock market] and U.S. stocks? In fact, A-shares also have corresponding AI chains, but U.S. stocks are definitely the main event. How do you view the difference between the two?
Dan Bin: Actually, in April last year, I was very optimistic about artificial intelligence. But to be honest, if Huawei were listed on the A-share market, I would definitely buy its stock. But in the absence of Huawei’s listing, I think the success in the field of AI is likely to occur on several giants in the U.S.
There are several reasons. Firstly, I believe that in the competitive landscape of the era of artificial intelligence, it is highly probable that these U.S. companies will emerge victorious.
Why? Take last year as an example, Amazon’s investment in research and development was $85.3 billion, and it is expected to reach $100 billion this year. Google also invested $100 billion, and Microsoft and Amazon jointly announced an investment of $100 billion. These three companies have already invested $300 billion. Other companies like Apple are also investing heavily. We see that the competition in AI is actually a competition with a large amount of capital being poured in.
There is a scaling theory, which means that when your investment does not reach a certain level, it is difficult to achieve technological breakthroughs. But once a breakthrough occurs, before Moore’s Law reaches its ceiling, these giants will continue to force themselves to invest because not investing means being eliminated.
Therefore, we see that the capital expenditures and research and development expenditures shown in the recent financial reports of these companies are huge, and it will be the same next year.
Naturally, the result of the competition is likely to be that the giants that can afford huge amounts of capital will win.
Moreover, looking back at the previous three eras, such as in 2008, the total market value of Apple, Google, and Amazon, these big companies, was about $500 billion. By the end of the era of mobile internet, their market value had reached $12 trillion.
This means that in each transformation of the first three technological eras, the market value of these leading companies increased tenfold.
Therefore, we have reason to believe that in the ultimate outcome of the era of artificial intelligence, around 2034 and 2044, there may emerge the first company with a market capitalization of $10 trillion. And the high probability is that
