Data.
So much for creating suspense. The absolute top thing to look for when investing in artificial intelligence (AI) is data. I'd go so far as stating that data will be one of the most precious commodities -- probably the most precious commodity -- impacting practically every industry under the sun throughout the rest of the 21st century and beyond.
But why is data so important for investing in AI? And how can investors assess which companies will be the kings of data in the future?
Fuel for the revolution
Every business revolution has its fuel. For the computing revolution, that fuel was silicon chips. For the AI revolution, the fuel is data.
Artificial intelligence simply can't do anything without data. Lots of data. Unlike traditional computer programming, AI doesn't require smart people to think through every step that the computer should follow. Instead, AI demands that those smart people develop algorithms and feed a lot of data into those algorithms.
Two terms that you hear much about with respect to AI are machine learning and deep learning. Machine learning is an application of AI that enables computer systems to learn from experience, in a similar way that humans learn. Deep learning is machine learning on steroids.
The use of the word "deep" in the name refers to multiple layers in an artificial neural network. The important thing to know is that learning, whether it's done by a computer or a person, requires a tremendous amount of data.
One of the most publicized uses of AI in learning today is in self-driving cars. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Tesla (NASDAQ: TSLA) train their autonomous car systems by running huge amounts of data through their machine-learning networks. Tesla reportedly had accumulated 1.3 billion miles of Autopilot data to use in feeding its AI systems as of November 2016. The company no doubt has much more data now.
Both Alphabet and Tesla use data captured from human and autonomous driving to help their systems learn when to turn, when to slow down, when to speed up, and when to return control to the human driver. With enough data, over time, the AI systems will rarely, if ever, have to relinquish control of the steering wheel.
The best kind of data of all
Nearly every kind of data is valuable to AI systems. The best kind of data of all, though, is the data that no one else has. Companies with this kind of data will be able to develop AI systems that are best in class.
Alphabet, for example, has more data about what individuals across the world search for online than any other company. The more people use the Google search engine, the more powerful Alphabet's AI systems will become. That's true for other Alphabet products such as Google Pixel Buds, which translate 40 spoken languages in close to real time. As the Google Pixel Buds become more widely used, Alphabet will have more data to make its translation AI systems even better.