Will artificial intelligence add sparkle to your life and portfolio?

As we predicted earlier this year, artificial intelligence (AI) is proving its ability to reshape our lives. And as in so many areas of the tech sphere, the big names are set to dominate.

| 6 min read

Earlier this year we wrote about the coming of AI. We saw it as an accelerator of growth for the technology sector that would make inroads into many walks of life and business activity. We saw it as some stardust for a rally sprinkled on a tech sector which had taken a pounding last year with rising interest rates and slower growth to contend with.

AI and the shape of things to come

So it has proved. The shape of the changes is becoming clearer by the day. This week Amazon has announced another step up in its investment in this field. The big three US corporations that have done most to progress AI so far are Microsoft, Alphabet Google, and Amazon Web Services. There will doubtless be many smaller companies and entrepreneurs that develop ways to improve and use this technology, and whilst the chip makers led by Nvidia will do well from it, it is likely to be the big three US giants that make much of the running.

Amazon has announced it is partnering with Anthropic, a developer of an artificial intelligence offering. It shows that the giant AI companies will extend investment and friendship to smaller companies with interesting intellectual property to speed their growth and work with them on their ideas. Anthropic will use Amazon Webservices’ cloud facilities and Amazon’s proprietary chips. In return, Amazon will invest up to $4bn. Alphabet Google will retain a 10% stake in Anthropic.

Anthropic offers Claude and Claude 2: large language models to assist people’s work. It says it can offer sophisticated dialogue, creative content, complex reasoning, and detailed instruction. Amazon has other partners as it seeks to harness the best young challenger companies. It has Cohere as a provider of foundation models and Stability AI to add to the quality of images in film and video.

Amazon webservices is a major force in computing and cloud storage. It promises a “slew of generative AI releases” to write code, to use large language models, and to improve the speed and penetration of data processing and analysis.

What does the broad AI landscape look like?

Microsoft started the public race for AI. It invested $1 bn in OpenAI in 2019 and launched Chat GPT before the other main developers had gone public with a free offer to see how it worked. Google followed with Bard. For Microsoft, it offered great opportunities to supplement its traditional software packages with enhanced services. For Google it took Search to the next level, processing the findings of the search beneath the original question or request. For Amazon, it offered yet more business for its very successful cloud services of data storage and processing.

Microsoft heralds “the beginning of a new era, and one of the most exciting and pivotal years for technology in our lifetimes”. It works with a range of customers or business partners to offer them cloud storage and data processing resources, and to be a co-pilot on their flight to use more AI in their services. All three companies are wooing clients to adopt greater levels of fast processing and intelligent computing to improve their customer offerings, their efficiency, and the effectiveness of their staff.

All three stress the co-pilot model, where they will run the parts of your business you want to hand over and sit alongside you in designing the future. Which means all three now have access to the deepest secrets of many business partners, as they remodel their computing and assist them with better business techniques. Alphabet Google has brought DeepMInd together with Google Research to develop its AI capabilities. Bard connects to Google apps and services.

The digital revolution now offers faster developments courtesy of artificial intelligence

If you thought Google searches and Microsoft programs were already pretty smart, prepare to be amazed by what happens next. It was as long ago as 1997 that a computer first beat a Chess Grandmaster, and in the last decade, another computer won in a game of Go against a champion player. These were complex tasks that computers could accomplish. They were outliers or heralds of computers being able to do many other human tasks that require thought, analysis and deployment of data.

Today a computer can write an essay for a student on a chosen topic, provide a maths answer with workings, put new software into the computer on a typed instruction in English of what is needed, tell lawyers which cases and judgements are relevant to their clients’ problems, and help an investment manager sift through huge quantities of historic data to find patterns and relationships. Amazon is offering a system for medics to take care of patient notes and healthcare records.

How can investors reap the AI benefits?

For those with savings, AI offers more investment opportunities. It also threatens some of the traditional companies and investments people may own. So far Nvidia, the chip provider has performed very well in anticipation of big demand for advanced microprocessors, and the big three AI giants have had a good year so far as they demonstrate a new wind for growth. They are now on high multiples of profits in anticipation of fast growth rates and will need to deliver pleasing surprises from here. This week is a reminder that there are good fast fast-growing small companies out there at the cutting edge of these technologies, and a reminder that the giants know them and are seeking close collaborations. Many of these companies are unquoted, raising money through private markets.

This is revolutionary technology. Rightly used it can improve all our lives. For investors, it can provide some supercharged business growth in their portfolios with good timing and share selection. Companies need to be careful that they use it enough to succeed without losing the human touch or staying in sympathy with what their customers want by way of personal service. Whilst the computer can do much of the work it will still be a human being who has to take responsibility for the outcome and answer customers or appear in a court if something goes wrong.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Will artificial intelligence add sparkle to your life and portfolio?

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