With earnings expectations for Q4 compressing a little and spooking the market throughout October, we're once again looking to long-term narratives to find upside.
With chip makers and big tech players losing market cap to missed expectations, the AI revolution is taking a pretty significant back seat to other market narratives.
However, generative AI is causing massive disruptions all across the market right now, even with most of the market opportunity relegated to speculation. Alphabet's DeepMind continues to disrupt Pharma R&D with more robust releases of their AlphaFold protein AI model.
As the Generative AI industry takes shape, there's one constant that's going to be a clear and consistent determiner of real value. That constant is going to be data.
Data sources and data quality are going to separate the winners from losers in the AI space. Therefore, we're looking at unique players who have developed quality data reserves.
Big tech firms obviously have a huge advantage in the generative AI space thanks to the sheer volume of data they hold.
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Alphabet basically crawled the entire internet.
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Meta's servers are storing massive amounts of private data as well as basically every thought had by 2 billion people going all the way back to the 2000s.
Other AI players can't come close to this without partnering with big tech if they want to win the generalized AI game.
However, there are so many specific use cases for AI that require specialized data. This creates "an in" for companies who have been collecting, categorizing, and cleaning niche datasets that could prove useful to model builders.
That's exactly why we're excited to initiate a long-term position in Relx PLC ($RELX), a centuries-old publication titan turned niche analytics powerhouse.
Relx sits at the crossroads of a lot of different industries, as their Elsevier service is basically the infrastructure that publishes the most cutting-edge scientific research. They've been collecting effectively the cutting edge of all human knowledge for decades now and have reorganized their business into a compelling data shop.
Their services are invaluable for insurance and other areas of the risk industry, and their data makes them the second half of a de-facto duopoly in the legal space.
All of that data expertise culminated this year when Relx's legal shop released the Lexis+ AI, an LLM geared toward making law firms much more efficient in their very expensive work.
Relx has set itself up to be a defensive, consistent, stock that performs well in an ever-changing AI landscape thanks to the massive moats they've built in the data business.
While the details here can get a little over-technical, let's check out the highest-impact facets of Relx's compelling growth case for the next few years.👇