Artificial Intelligence (AI) is a term that’s now ubiquitous in everyday conversations, but exactly what is it, how does it work, and importantly, what’s it worth?
AI is a branch of computer science concerned with developing machines which can think and work like humans. AI systems learn, solve problems, and perform tasks which normally require human intelligence.
AI, along with robotics, automation, the cloud, and the internet, is forecast to re-write the global technology landscape.
AI is currently present in activities such as Google searches, product recommendations from Amazon, and online travel bookings. Netflix uses predictive AI technology to make viewing recommendations based on customers’ choices, interests and behaviour. Google Maps uses data feeds to predict the time for your daily commute, often before you even ask for it.
AI technology is being used extensively within the following sectors:
- Healthcare – personalised medicine, medical image analysis, and robotic surgery
- Business and finance – fraud prevention, credit assessments, and stock trading
- Education – plagiarism checks, essay grading, and delivery of personalised, adaptive learning
- Law – legal research, automation of documents, and forecasting of litigation outcomes
- Manufacturing – automation of assembly lines, quality control, and predictive maintenance.
As an early stage industry, AI raises several areas of concern. To date, there are few regulations governing its use, leading to potential for abuse. For example, hackers can use sophisticated AI to gain access to sensitive networks and security systems.
Ethical and legal questions may also arise. For example, should the AI in autonomous vehicles be forced to make an instant decision about minimising damage or loss of life in an accident scenario?
Concerns have also been raised about the threat AI poses to jobs, although some commentators suggest the exponential growth of the industry means more jobs will be created than eliminated.
In terms of investment, exposure to the AI theme is currently possible via shares in technology giants including Apple, Alphabet, Facebook, Netflix, and Microsoft. Suppliers of inputs such as semiconductors and other hardware also stand to benefit from the industry’s growth.
Access to this market sector is available through managed funds, which may have an allocation to technology or disruption, exchange traded funds (ETFs) which focus on themes such as robotics, fintech, or cybersecurity, and technology start-ups. As more companies embrace AI, the investment universe will become even larger.