AI is a sector that’s been growing faster than a teenager on a protein shake diet. The AI market, already flexing its muscles at a global value of US$428 billion in 2022, is projected to pump up to US$515.31 billion in 2023, and reach a Herculean US$2,025 billion by 2030, according to Fortune Business Insights.
The Covid-19 pandemic, while a disaster in many respects, was like a shot of adrenaline for AI technology. Companies, forced to operate remotely, turned to smart working solutions like a bodybuilder to a dumbbell. A Gartner survey in September 2020 found that 66% of organizations planned to increase or maintain their AI investments post-pandemic.
This surge in AI adoption has given rise to companies like OpenAI, the parent company of AI-powered conversation tool, ChatGPT. This chatbot is being hailed as the next big thing on the internet and big tech world for its potential to mimic human-level intelligence and perform human tasks. It’s like the Arnold Schwarzenegger of chatbots.
While we might still be years away from a complete disruption, the impact is already being felt in a major way on the trading front. Stocks and companies with exposure to and a big focus on AI outperformed the tech-heavy Nasdaq-100 index at the start of the year.
The Tech Titans: Unstoppable or Unhinged?
Let’s talk about the tech behemoths that are currently running the show. We’re looking at the magnificent seven – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. These guys have collectively added a staggering $3.9 trillion to their market cap since the dawn of this year. The Nasdaq 100? It’s shot up over 40% since January, outpacing the S&P 500’s nearly 16% climb.
Now, the rationale behind this tech frenzy is the AI opportunity, which is projected to be worth anywhere between $6 trillion and $14 trillion by 2030. The majority of this AI goldmine is currently nestled within these seven tech giants. It’s like a modern-day gold rush, only this time, it’s the blue chips leading the charge with their immaculate balance sheets. This could potentially usher in a new productivity frontier sooner than we think.
So, let’s take a look at some of these heavy hitters in the AI sector.
Microsoft
Microsoft embarked on an AI transformation in 2017 with the goal of designing, developing, and deploying AI in ‘safe, secure, and transparent ways’ across ‘every corner’ of the organisation. It’s like they’re building a gym and want every machine to be top-notch.
The tech giant has turned its own internal learnings into solutions for its customers, publishing research papers and creating programmes like the AI Assurance Program, all with the aim of helping other companies to implement their own AI systems responsibly and effectively. It’s like they’re not just lifting weights, they’re teaching others how to lift too.
Alphabet (Google)
Alphabet Inc, the parent company of Google, began pivoting away from its core search engine business towards AI research and AI-based innovations as early as 2018. It’s like they decided to switch from cardio to weightlifting.
Through its Google Cloud AI solution, Google has been disrupting healthcare, automobile, US government departments like the US Air Force, and more. Now, Alphabet is looking to take its AI ventures further, beginning with Google Quantum AI, which it claims to be ‘advancing’ quantum computing for it to ‘operate beyond classical capabilities’.
Tesla
Tesla first started using AI and big data in its cars in 2016 through the Autopilot feature. This is said to help drivers be more aware of their surroundings, which then helps them to steer, accelerate, and brake more quickly. It’s like having a personal trainer in the car with you, guiding you through every move.
Baidu
Baidu took its AI focus to the next level in May this year, when it launched a venture capital fund of 1 billion yuan (US$145 million) targeted at start-ups focused on content generated by AI applications. It’s like they’re sponsoring the next generation of bodybuilders.
Nvidia
Nvidia started to become more AI-centric, by developing a series of products – from deep learning training interventions to autonomous transport solutions – all leveraging AI. It’s like they’ve built a whole new workout routine based on AI.
C3.AI
C3.ai might be the smallest company on this list in terms of market cap, but its stock has experienced the biggest increase this year. It’s like the underdog in a weightlifting competition who surprises everyone with their strength.
AI: The Game Changer or Just Another Buzzword?
The tech leaders are all in agreement about the transformative potential of AI. However, the relentless investor enthusiasm has some of them scratching their heads. Elon Musk, the maverick at the helm of Tesla, summed it up in a tweet as ‘Crazy times,’ as Microsoft and Nvidia’s market cap ballooned by $127 billion in a single day.
But here’s the thing: investors need to cut through the AI hype and understand what’s really going on. Take ChatGPT, for instance. Its adoption among consumers has been off the charts. Even school kids, who wouldn’t know machine learning from a hole in the ground, are using it to ace their exams. Universities are throwing money at new courses and faculty hires.
However, let’s not forget that these AI algorithms are still in their infancy. Their performance in unpredictable environments is still up for debate, and they work best when guided by human intelligence. They excel at data-heavy microdecisions that are beyond human capability.
The Business of AI: A Double-Edged Sword?
As businesses jump on the AI bandwagon, they’ll need to revamp their processes to avoid potential ethical pitfalls. AI decisions need to align with business ethics, not just be the purview of tech creators. AI has the potential to manipulate consumer choice far beyond existing technology, and it’s up to business leaders to navigate issues of fairness and freedom. This means integrating AI into internal processes and controls.
To mitigate digital ethics risks, companies will need to rethink their workflows for human-machine interactions. Corporate strategy will play a crucial role in ensuring compliance. But most importantly, companies need to figure out how to prevent a large-scale technology ethics disaster.
