The rapid development of Artificial Intelligence (AI) in recent years has exceeded all expectations. We never imagined that we could one day have interactive and meaningful conversations with artificial technology. AI technology has now become an integral part of our daily lives and has led to widespread adoption across multiple industries. In fact, according to Grand View Research, the AI market size was valued at $US136.55 billion in 2022 and is predicted to expand at a compound growth rate of 37.3% between 2023 and 2030.
The Underestimated Power of Technology Adoption
The most notable AI software, known as OpenAI’s ChatGPT, recorded 1 million users within its first week of launch and most recently raked in over 100 million users just 2 months later. To put this into perspective, the popular social media apps of TikTok and Instagram only reached this staggering milestone following both 9 months and 2 years after their respective launch dates.
This indicates that there is a huge demand for such tools with people of all ages finding a way to utilise it in their everyday life. As a result, software giant Microsoft invested $US10 billion dollars ($14 billion AUD) into OpenAI, in hopes of rebirthing the Bing software engine. Could this be the catalyst that drives Bing to capture a significant proportion of the search engine market share? As seen in Statista’s graph below, Microsoft’s counterpart, Google, had a major share of 84.69% in comparison to Bing’s 8.85% share in 2022. However, with the increased usage of ChatGPT and the failed launch of Google’s BARD AI software, which led to a 7% decrease in its share price, we may see a potential rise in Bing usage. And as of recent, Bing is gradually gaining ground by using AI technology to provide users with more concise results. This has resulted in a more efficient search process for users who want to find specific information quickly. Bing’s AI technology can also predict what users are searching for and provide them with relevant suggestions before they even finish typing their query. This feature, which is called “Typeahead,” is a key advantage of Bing over other search engines (for now). As a result, users are more likely to find what they’re looking for on Bing, and this may lead to a potential rise in Bing’s market share in the future.
So, what exactly is ChatGPT? In essence, ChatGPT is a natural language processing algorithm (NLP), that is based on a type of AI called deep learning which enables it to interact in a more natural and human-like manner. Deep learning algorithms, function similarly to our brains as by being exposed to large amounts of data, it can train its neural networks and develop an understanding. Though it may appear confronting at first, these sorts of AI and technology can be most beneficial to society.
Currently, AI has been integrated into a large variety of industries varying from marketing to healthcare. It has assisted in completing the more mundane tasks of data entry and has even assisted the job application field in providing a more fair and objective opinion for applicants. The introduction of AI enables employers to focus on tasks that require more creativity and complex thinking. As a result, increasing the efficiency of the labour force.
The Future of AI and Its Impact on Investment Strategies
From an advisor/portfolio manager’s point of view, it is critical to begin/continue to take into consideration the likely effects that may arise and the likely industries that may benefit or lose from the continuous improvements in AI. AI development is still currently in its emerging phase, and thus, by having the ability to effectively predict and forecast growth in industries, you will be able to maximise growth across your portfolios.
An industry that should be monitored is the automobile industry as brands such as Tesla are working towards manufacturing fully automated cars that rely solely on AI technology. The industry alone has received over $200 billion in global investments and this number will only continue to grow. This is because, as rational beings, we want to be certain that our safety in these vehicles will not be compromised. And for this to occur, companies will throw huge sums of money into research and development in order to become the market leader. Furthermore, the growth in this industry is limitless, once automated cars are brought to life, automated planes and even boats may be researched upon. It may in fact be the case where automated vehicles become as ubiquitous as mobile phones.
On the other hand, many jobs will inevitably be lost to AI. For instance, Mckinsey Global Institute predicts that up to 800 million jobs will be lost by 2030 which is primarily driven by the economic benefits that follow an increase in labour efficiency. However, rather than looking at the destructive nature of AI progression, it would be beneficial to stay optimistic. For instance, though it may shut some doors in the future, it will also open doors to jobs that haven’t been brought to attention in this day and age. For instance, despite World Economic Forum predicting automation will have displaced 85 million jobs between 2020 and 2025, it also states this revolution would have also generated 97 million new jobs.
Conclusion:
Overall, AI is becoming an increasingly important piece of technology in the modern world. The rapid development of AI has far exceeded our expectations. OpenAI’s ChatGPT has demonstrated the vast demand for such tools, with over 1 million users in its first week of launch and over 100 million users just two months later. Companies that fail to integrate AI into their work will inevitably fall behind in efficiency compared to those who do. While AI may lead to job displacement in some industries, it will also create new opportunities and improve efficiency in others. As such, it is important for businesses, investors, and portfolio managers to monitor the likely effects of AI development and invest in companies that are likely to benefit from this growth. The future of AI is limitless, and it is up to us to embrace its potential and maximize its benefits for society.
