Global investment giant BlackRock, which manages some $10 trillion in assets, has declared that artificial intelligence is a “huge force” that could generate impressive returns for investors in today’s “unusual” markets.
mid-year outlook ReportThe BlackRock Investment Institute detailed their paper on increasing investment in AI, identifying multiple “disruptive” themes that could lead to rapid growth for the industry in the coming years.
The report focused in particular on the fact that gains in the S&P 500 , an index that tracks the 500 largest U.S. companies, have become increasingly concentrated in a handful of technology stocks. Investing in artificial intelligence is a great way to take advantage of this concentration, the company said.
“In our view, this unusual stock market shows that a massive force like artificial intelligence can be a significant driver of returns, even if the macro environment is not in your favor.”
For BlackRock’s investment team, the most obvious “benefit” of AI is automation. While they acknowledged the “increasing risk” of white-collar jobs being automated, they said the resulting cost savings could significantly boost profit margins, especially for companies with high labor costs and a large number of easily automated tasks .
The emerging technology could be a boon for companies that currently sit on “gold mines” of proprietary data — AI-powered tools that allow companies to develop “innovative” new models using dormant information, the team added.
The report also identified the global push for a low-carbon economy, population aging and a rapidly developing financial system as key drivers of growth over the next decade.
BlackRock isn’t the only company offering AI more attention time. Matt Huang, CEO of cryptocurrency investment firm Paradigm, said in a June 28 tweet that the rapid and fluid developments in artificial intelligence are “too interesting to ignore.”
Paradigm has never been more focused on cryptocurrencies.
Five years ago, when Fred and I started Paradigm, there was no master plan. What we share is a shared curiosity about the future, a deep belief in cryptocurrency, and a desire to push the frontier of possibility.
Our best decision…
— Matt Huang (@matthuang) June 27, 2023
Still, not all commentators are convinced of the bullish AI investment thesis.
related: Google says its next-gen AI ‘Gemini’ will be more powerful than ChatGPT
Macro-finance commentator @Financelot told his 90,000 followers on Twitter that the AI boom — with shares of GPU maker Nvidia soaring more than 180% in six months — is actually driven largely by interest in specific AI computing chips driven by demand.
The AI narrative is being used to obscure the real source of chip demand, namely China ahead of U.S. export curbs. That’s why chips are hot, but memory (DRAM and NAND) continues to decline.
Once the U.S. passes these restrictions, the entire “artificial intelligence” narrative collapses overnight. https://t.co/cSvHVTinRC
— Financelot (@FinanceLancelot) June 29, 2023
He believes that once the United States imposes export restrictions on these chips, the stock prices of artificial intelligence-related companies will fall.
Despite the bullishness on artificial intelligence, the investment giant has turned its attention to bitcoin in recent weeks. On June 15, the firm filed with the U.S. Securities and Exchange Commission (SEC) for a spot bitcoin exchange-traded fund (ETF).
If the application is successful, it will be the first spot bitcoin trust product to receive regulatory approval. Bloomberg’s senior investment analyst puts BlackRock’s chances of approval at 50 percent.
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