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C3.ai Stock Is Just the Sort of Investment Vladimir Putin Wants You To Buy

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In the end, the hype over AI stock makes us weaker as a country

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A few years ago, Russian President Vladimir Putin stated that whoever becomes the leader in artificial intelligence “will be the ruler of the world.” Predictably, that sent shockwaves across the globe but particularly in western nations as this admission only incentivized companies like C3.ai (NYSE:AI), drawing investors excited about the prospects for AI stock.

Unfortunately, the hype over its initial public offering late last year has quickly faded. Since a Feb. 9 close of just shy of $169 a share, AI stock has drifted down to a level that is worryingly close to the equity unit’s initial offering price of $42 per share.

It makes you wonder, if Putin is so focused on AI as an industry, why isn’t C3.ai responding to this broader catalyst?

I think Putin is lying. He probably knows darn well the limits of AI — the technology — and that whatever myths swirl around it will eventually diminish the value of AI stock. But his myth-making fuel further U.S. and western investments into military AI functions, spending that will only weaken us.

I don’t have proof of the above assertion so it’s just that. My assertion, my opinion. But here’s an interesting point. Winston Churchill once stated that Russia is “a riddle, wrapped in a mystery, inside an enigma.”

Personally, I find this comment uninformed though forgivable because Churchill spoke as one of Anglo-American background and rearing. Russia is a Slavic nation. While Russians are observationally similar to their western neighbors, they also incorporate an eastern mentality. As someone of eastern upbringing, I don’t find the Russian or Slavic mindset difficult to understand at all.

That’s why I think Putin is playing the west (as he loves to do). He pulled the classic maneuver of telling a lie by telling the truth.

AI Stock Is Part of a Bigger Problem

On the surface, what Putin stated is absolutely spot on. Whoever produces a Hollywood-esque AI system — think Skynet from the Terminator franchise — will absolutely rule the world. It also echoes concerns by former Secretary of Defense Mark Esper, who stated, “Those who are first to harness once-in-a-generation technologies often have a decisive advantage on the battlefield for years to come.”

The question is, will artificial intelligence be that decisive advantage? Of course, that’s one of the key narratives behind AI stock. C3.ai is an enterprise artificial intelligence company. It provides smart solutions for both military branches and defense contractors, along with other critical industries. But AI itself may turn out to be an impossibility to the degree we envision its potential, which serves Putin’s longer-term ambitions.

First, AI offers useful functionality within narrowly defined and tightly controlled environments, such as a chess game. But as Scientific American expertly detailed, AI systems historically floundered in dynamic and variable environments, a problem referred to as “nonrecurrent engineering.”

Second, AI imposes tremendous costs to society because of its ineffectiveness. Even the journal Foreign Affairs warned about the “perils” of overhyping AI. In my view, we should focus our limited resources on educating our population to harness AI machinery, not on developing such machinery to replace human labor.

Third, and this directly relates to Putin and the military exposure of AI stock, war is incredibly dynamic. As such, we need our fighting forces to accrue real experiences, not fiddle around with AI technology that have so far proven incapable of adjusting to dynamism.

But that’s exactly where Putin wants us — fiddling around with and wasting money on technologies that won’t work. He wants our military to perform the civilian equivalent of yelling “representative!” on our phone while he surreptitiously invests money on technologies that do work.

Humans are Irreplaceable

John Horgan, the author of the Scientific American article I cited above, made a comically critical indictment of our society. “Here’s the paradox: machines are becoming undeniably smarter — and humans, it seems lately, more stupid, and yet machines will never equal, let alone surpass, our intelligence. They will always remain mere machines. That’s my guess, and my hope.”

I think Horgan is spot on. I’ve met some dumb people in my life, and you’ve met me. As multiple social media posts have decried, people don’t understand how InvestorPlace could work with someone as stupid as me.

But there’s the thing — I challenge any AI platform to write this article. Sure, investment platforms incorporate AI to pull in the latest share price of a particular stock. But I guarantee you that they can’t harness the historical, social, cultural, financial, economic and technological elements into a cohesive argument.

And that brings me to why AI stock has suffered so badly from its IPO. It’s the same narrative now with Palantir Technologies (NYSE:PLTR). AI sounds impressive but the actual applications are rather mundane. Likely, investors are starting to recognize this and acting accordingly. At least, it seems, Putin won’t fool the invisible hand of capitalism.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

Article by Josh Enomoto, Investor Place

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