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Frontier Tech Performance: April 2023

Performance Update:

Frontier technology is off to a strong start in 2023. You can read more about our approach to curated disruption here.

This is the first in a series of monthly posts providing an update on performance and sharing what’s on our mind in frontier technology.

What is On Our Mind?

Generative AI has captured the attention of investors, analysts, media, and consumers. The most well-known example of this is ChatGPT, which became the fastest consumer product in history to reach 100 million users. ChatGPT hit the milestone in only 2 months, beating both TikTok and Instagram.

This has set off an arms race of product integrations with GPT and other LLMs. Many companies are looking for ways to improve their products with generative AI. Microsoft has introduced LLMs into its Microsoft 365 suite to move toward automation, Salesforce has added LLMs to its cloud to help reps generate personalized content, and Adobe has integrated a similar deep learning model for image generation.

Why is this happening now? LLMs have crossed an initial threshold of usefulness. In part, OpenAI’s rapid release of its models GPT-3, GPT-3.5, and GPT-4 have shown the world how quickly LLMs are evolving. In addition, the rapid rise in ChatGPT users has shown companies that their end customers are willing to engage with LLMs to solve their own problems. This is underpinned by exponential growth in the number of parameters of significant machine learning systems. There are now 50+ LLMs that are trained on 1B+ parameters. These are often updated weekly, which allows for fast adoption and integration into products.

Despite the recent explosion of interest, we are still in the early stages of what is possible. Models have grown in recent years, but there remains a gap between what is technically feasible today and what makes economic sense for customers to adopt at scale.

Source: Open AI

Models will continue to improve over the next decade, making broader AI implementations more feasible. As this technology evolves, we expect that many of the most impactful use cases will be in areas not currently imagined by the market.

Alongside other emerging technologies, the Deepwater Frontier Tech Index aims to offer investors exposure to generative AI and LLMs as we assess the publicly-traded companies best-positioned to benefit from what we expect to be a major wave of innovation.

What’s On the Frontier?

Highlighted Addition – Adobe (ADBE)

We’ve added Adobe to the index this month as the company continues to execute on its generative AI strategy. Adobe recently released the beta version of Firefly, which allows users to generate images using everyday language. This begins with image generation and expands to allow users to edit the scene in videos, build templates for social media, and create 3D models. The company has a built-in lead over its competitors with its Adobe Stock content assets and an estimated 25m+ Creative Cloud subscribers.

How Can I Invest in the Index?

Deepwater partners with Innovator ETFs to offer the NYSE-listed Innovator Deepwater Frontier Tech ETF. The ticker is LOUP.

To learn more about how to invest, visit the Innovator website.

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