WEEKLY E-MAIL

17 April 2018

ARTIFICIAL INTELLIGENCE (AI) AND THE IMPACT ON THE WAY WE INVEST

By Paul Nicol

During 2017 we wrote about Artificial Intelligence (AI) and the impact on future jobs and employment. We received very strong feedback to the article and the inevitability of robots replacing humans in completing everyday tasks and technology automating the way we do business.

From an investment perspective, the potential for technological disruption spans across all industries. Transformation is already happening in manufacturing, transportation and healthcare as economies of automation and innovation, driven by technology, have seemingly hit a sweet spot.

But in all probability, we are likely to be on the cusp of an inflection point where AI takes technological transformation to another level. AI (otherwise referred to as machine learning or deep machine learning) is being fuelled by abundant data where a machine can solve complex problems and make accurate predictions in a fraction of the time required by humans.

From an investment perspective, deep machine learning is revolutionary. Significant time and investment are being spent on natural language understanding, deep machine learning for image processing, cognitive computing, autonomous vehicles and ChatBots. Below is a listing by industry of companies investing in deep learning:

Source: The New Artificial intelligence market, Naimat (2018)

However, AI is currently still heavily concentrated in the large technology companies:

Source: Capital Group, MOC

There is a scary element to AI. Only recently Facebook abandoned an experiment after two artificially intelligent programs appeared to be chatting to each other in a strange language only they understood. The two ChatBots came to create their own changes to the English language that made it easier for them to work – but which remained mysterious to the humans that supposedly look after them. The bizarre discussions came as Facebook challenged its ChatBots to try and negotiate with each other over a trade.

It is probably too early to pick the winners and losers from AI. What we do know is that we are dealing in an increasingly borderless world where AI will have significant impacts on traditional business and economics.

Paul Nicol

Senior Partner
Senior Financial Planner
SMSF Specialist Advisor™
Authorised Representative No. 230876

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