Like it or not, artificial intelligence is the next big thing and it will have significant impact on every part of our lives. As investors it's important to understand where A.I. will have these impacts and how as investors we can profit from. We believe there are three significant areas where AI will be a game changer.

 

Machine Learning

 

Machine learning is computer systems learning on their own without human instructions. Basically, the systems uses data to find patterns to figure out how to optimize supply chains, drive down expenses, improve quality all while making better decisions using massive amounts of data. This has the potential to drive down costs and increase profitability.

 

One of the sectors that should benefit from this are the companies that process all the data. Typically graphic cards are used to do the calculations. Companies such as NVIDIA and Advanced Micro Devices are obvious benefactors. However, companies that can drive down their own costs using the software will also benefit from it and that list could be enormous.

 

Automation

 

A.I. powered automation can help companies and organizations streamline their operations and reduce costs. A.I. will use sensors to allow for a constant feedback loop in manufacturing, supply chains and logistic companies. The data provided from the sensors will be used to improve production processes by automating routine and repetitive tasks.

 

The biggest benefactors of this will be manufacturing companies and logistic companies.

 

 

Generative A.I.

 

Generative A.I. is capable of generating text, images or other media in response to prompts. This technology is capable of humanlike conversations as well and humanlike decision-making. The areas of disruption are endless. A.I. powered chat bots and virtual assistants can provide 24/7 customer support and personalized recommendations. Generative A.I. is already around us but in many cases we don't even know it.

 

As language models continue to improve and become more sophisticated they have the potential to revolutionize sectors such as education, law and journalism. Language models could be used automatically grade essays and provides personalized feedback to students. It could also be used to analyze documents and assist with research. Language models could also be used to automatically generate news articles or assist fact checking and verification.

 

The early stages of artificial intelligence reminds me of the tech bubble in 2000. It's hard to say which companies will be the winners and losers. For those that were around during the tech bubble in 2000 it's easy to talk about Amazon, Facebook and Google as massive technology wins. But for every one of those names there were a thousand that failed. Does anyone remember Yahoo, Broadcast.com, Global Crossing or Blackberry? The point is artificial intelligence will be with us for a long time and the opportunities to invest be plentiful but like the 2000 tech market some of the winners will be companies that we haven't even heard of yet.

 

I've also included a piece from our CIBC Economics Team entitled " Can you solve the neutral rate challenge?".

 

As always, if you have any questions please feel free to give us a call at any time.

 

Have a great weekend.

 

Milan