The battle for open source artificial intelligence has a new champion. Surprise, the companies leading the charge are unexpected.
Meta PlatformsFB (META) and IBMIBM Corp. (IBM) announced in December the formation of AI Alliance, an international consortium of developers, researchers, and tech companies to build a safer, open AI platform.
Investors should buy Sony Corp. (SONY). Let me explain.
Elon Musk claims that he came up with the name and concept for OpenAI. The outspoken chief executive officer at TeslaTSLA (TSLA) told a CNBC interviewer in May that he was uneasy about the development of AI. Specifically, he worried that too much of the foundation of this important new technology was being concentrated in Alphabet (GOOGL) subsidiaries. GoogleGOOG was hiring all of the best people and building technologies that were largely walled off from the development community. OpenAI was supposed to be an open source alternative.
It has not turned out that way.
MicrosoftMSFT (MSFT) invested in 2019 in OpenAI, and everything changed. The company stopped sharing its data with the open source community. OpenAI is now on track for an initial public offering. According to Crunchbase, the private company is currently valued at least $80 billion.
Enter AI Alliance, a company championed by Mark Zuckerberg, the founder of Meta Platforms. AI Alliance is a curious consortium. The alliance was launched in December with 50 founding members, including Advanced Micro DevicesAMD (AMD), Anyscale, CERN, Cerebras, Cleveland Clinic, Cornell University, Dartmouth, Dell TechnologiesDELL (DELL), EPFL, ETHETH, Hugging Face, Imperial College London, IntelINTC (INTC), INSAIT, Linux Foundation, MLCommons, MOC Alliance operated by Boston University and Harvard University, NASA, NSF, OracleORCL Corp. (ORCL), Partnership on AI, Red HatRHT, Roadzen, ServiceNowNOW (NOW), Sony Group, Stability AI, University of California Berkeley, University of Illinois, University of Notre Dame, The University of Tokyo, and Yale University.
It is a collection of Ivy league academics, rocket scientists at NASA and Linux developers, and big companies that are not named Nvidia (NVDA), Microsoft, Amazon.com (AMZN), and Alphabet.
Getting this many varying interests in the same room is no small feat. However, the cooperation is much more important because it is the foundation for a framework that could eventually compete with Nvidia’s software/hardware ecosystem.
A statement from founding members posted at Meta claims that the alliance will bring together leading developers, scientists, academic institutions, companies, and other innovators to pool resources and knowledge to build a better platform for sharing and developing AI solutions.
It is no accident that this seems vaguely familiar to the vision Musk planned when he became an early investor in OpenAI. It is an alliance that claims to decentralize the development of AI, removing it from the firm grasp of Alphabet, Nvidia, and Microsoft.
This is ambitious. Given the firepower of its members, the AI consortium might become a viable alternative to walled garden AI ecosystems at OpenAI, Microsoft, Google, and even Tesla.
Sony Corp. often flies under the AI radar. The Japanese company makes the world’s best camera sensors. Long before the current AI goldrush, Sony executives began to build out a strategy to make AI as a major revenue stream. The investment started with the acquisition of Cogitai, a tiny California start-up that made software to help real world machines learn continually and autonomously using AI. Bringing Sony AI enabled sensors to the physical world would be a big new business. Ensuring that tech is plug-and-play with other AI tech would be a homerun.
That’s why the Sony involvement in the AI Alliance is important.
At a share price of $94.79 Sony stock trades at 17 times forward earnings and 3.2 times sales. This is extremely cheap given the firm’s dominant position in optical sensors. With the rollout of AI, these sensors will ultimately help vehicles, traffic infrastructure, and other machines to see the world.
Investors should buy Sony shares.
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This article can also be found on Forbes.com.