Up 7%! Here’s 1 AI growth stock that had a surprisingly good week!

As the world of AI has been rocked by a small startup in China, one former growth stock might have a very positive view of the developments.

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What a crazy week for artificial intelligence! I doubt what’s happened was on many folks’ bingo cards, but it’s safe to say the world of AI has been turned upside down – and many AI growth stocks are looking like a much worse bet. 

My own view of the situation is that a stock I have owned for some time may have been put into a supremely good position. I’d even buy more of the shares if I had the funds to do so today. 

Sputnik moment

Firstly, a little background. With the exception of a few folks living under rocks somewhere, we all know AI has become a major battleground. 

ChatGPT sparked the craze, showing a glimpse of what might be the greatest economic miracle since telephones or railroads. 

Crazy predictions got thrown around, like the first person to make a sole trader billion-dollar company has already been born. 

The arms race was centred mostly around the US tech sector where vast sums were being invested. OpenAI earned a $350bn valuation on negligible revenue. New President Donald Trump earmarked $500bn for AI. Google was ordering nuclear power plants to keep up with the energy demand!

Then on Sunday, along came what some are calling a ‘Sputnik moment’ in reference to when Russia stunned the US with an orbiting satellite in the 1950s. 

This time, the rival is China, where a Hangzhou startup released a large language model (LLM) with performance close to that of ChatGPT. They claim it cost only $6m. That’s million, by the way, with an ‘m’.

Biding time

So they slashed the perceived cost of making LLMs with some clever efficiency tweaks. They also revealed a path to LLMs being able to run off something as small as a smartphone. 

Who might benefit from such a development? The maker of the best-in-class smartphones, Apple (NASDAQ: APPL), is the name I have in mind. 

It reminds me of when the first smartphones were released. Apple took its time, waiting for the technology to mature just enough. When it did, the previous contenders were left in the dust – anyone remember Blackberry?

Could Apple do the same thing with AI? Well, the markets are bullish. Apple shares are up 7% this week, gaining a quarter of a trillion dollars in market cap. All this while AI stocks are floundering. Nvidia is down 15%, losing over half a trillion!

Created with Highcharts 11.4.3Apple PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I’m not banking on anything, though. AI has a long way to go to prove it can be as useful as the claims, and Apple has a long way before it becomes a leader in the field. 

But I think this is an avenue that could provide a lot of growth for a stock that some have said has already reached its mature phase. I’d look at increasing my position if I had the spare cash to do so.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Fieldsend has positions in Apple. The Motley Fool UK has recommended Apple and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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