Artificial Intelligence or “AI” generally refers to the ability of machines to exhibit human-like intelligence using computer systems that can learn, reason, discover meaning, perceive their environment, learn from experience, and interact – ultimately solving problems without the use of hand-coded software containing detailed instructions
Impact of Artificial Intelligence
AI promises to have an enormous impact on the global economy. PwC estimates that artificial intelligence could add some US$15.7 trillion to global GDP by 2030.
Revenues generated by AI is estimated to have a compound annual growth rate (CAGR) of 54.4% over the next 5 years, which is more than twice the growth rate of other high-growth tech sub-sectors such as Big Data (+23%) and the Cloud (+20%).
AI is made possible by the massive digital transformation going on now within businesses, and is likely to be embedded in innumerable technology applications within a few years.
The Future of Artificial Intelligence
In fact, AI will likely be one of the most disruptive forces in the future as well as one of the fastest growing sectors within technology. As Google CEO Sundar Pichai said recently AI is “one of the most important things that humanity is working on. It’s more profound than, I don’t know, electricity or fire.”
AI is not about the future. AI is here and now.
AI is not about the future. AI is here and now. Businesses are now deploying AI as a differentiator in their offerings – be it software platforms such as chatbots for customer service, AI enabled systems for fraud detection, customer analytics, or hardware devices such as smartphones, wireless speakers, and intelligent robots (including autonomous cars).
Applications of Artificial Intelligence
There are many AI applications emerging in health care, the leading industry for AI investment deals. There is enormous potential in its ability to draw inferences and recognise patterns in large volumes of patient histories, medical images, epidemiological statistics, and other data.
AI has the potential to help doctors improve their diagnoses, forecast the spread of diseases, and customise treatments. Artificial intelligence combined with health care digitisation will eventually allow providers to monitor or diagnose patients remotely.
For retailers, AI can forecast demand, automate operations, and essentially deliver a better shopping experience and could eliminate many levels of manual activities in areas such as promotions, assortments, and supply chain.
Electric utilities can use AI to make the “smart grid” smarter and reduce the need to build more capacity by more efficiently predicting supply and demand, balancing the grid in real time, reducing downtime, and maximising yield.
By employing AI, manufacturing can become smarter, nimbler and less prone to error.
Manufacturing is already using artificial intelligence applications, from virtual assistants to advanced robotics. AI will compel manufacturers to adopt new plant designs, reshape their manufacturing footprints, and devise new supply chain models.
Investing in Artificial Intelligence
At Macrovue, we believe that AI is an exciting and investable theme. It has all the characteristics that we value when creating a thematic portfolio – we are getting in early, the addressable market is vast, there is a large and diversified universe of public companies to choose from and the investment horizon is decades long.
Also important in any high growth / disruptive theme is that there is a well – funded and visible pipeline of start-ups that will eventually come to the public markets.
Venture Capital site AngelList currently lists more than 3,500 AI start-ups with an average valuation of nearly US$5 million. That marks a 75% increase in the number of AI start-ups on the site since earlier this year.
Analyst firm CB Insights notes that corporate giants like Google, IBM, Yahoo, Intel, Apple, and Salesforce.com are competing in the race to acquire private AI companies, along with Ford, Samsung, GE, and Uber.
10 Artificial Intelligence Companies to Invest In
Macrovue’s investment team, made up of senior international equities experts, have constructed a concentrated portfolio of high conviction positions in ten stocks comprising companies that are focusing on the five main AI technology systems in practice now.
These companies are the early AI adopters that combine a strong digital capability with proactive strategies that have higher profit margins and are likely to widen the performance gap with other firms in the future.
The stocks have been short-listed based on their exposure to the technology and characteristics such as relative valuation, earnings growth potential and dividends and sustainable competitive advantage.
You can invest in these companies directly through Macrovue's Artificial Intelligence thematic share portfolio.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual and does not constitute financial advice. Consider the appropriateness of the information in regards to your circumstances.
Past performance is not a reliable indicator of future performance.