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Decoding the AI opportunity
Steven Smith
January 13, 2024
In 2023, we saw significant future value creation from artificial intelligence pulled forward and reflected in share prices of companies set to benefit from this multi-generational opportunity.
At all times, however, it remains important to separate short-term hype from the potential longer term investment opportunity. This is especially the case when considering AI, given the hyperbolic media attention it has received over the last 12 months. Statements like ‘AI may prove more profound than electricity or fire’ might grab headlines but give little insight on how these advances could help a business improve its efficiencies or grow its revenues.
Despite growing acceptance that this technology will have vast implications across the economy, current AI remains ‘narrow’; we are only just beginning to see the multi-model systems emerge that are required for artificial general intelligence.
As AI continues to proliferate, Capital Group has produced a framework to clarify the opportunities. At present, this is split across compute, infrastructure, models and applications, and beneficiaries, and we believe a research-based approach is key to identify potential winners and avoid potential losers.
A framework for investing in the AI opportunity set
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