Artificial intelligence is one of the fastest growing areas of digital technology. It is transforming our lives and also our investment portfolios. The latest devices from Amazon, Microsoft and Google allow you to turn on lights, check the weather forecast, check the newspapers, listen to music, boil the kettle or book a taxi – all with voice commands.
Soon artificial intelligence – computer replication of actions that normally require human intelligence – will be able to achieve much more, and investment in companies with machine learning systems will be an important source of growth. In fact, robots are taking over the world, not with an army of cyborgs, but with a smooth and subtle infiltration of intelligent technology.
Now, through learning algorithms, machines can use data to find patterns and predict. The next step is the learning of the mistakes by the computers, with the predictions being refined with each new piece of information. They are becoming more adept at recognizing images and processing natural language like humans, as well as responding based on context. Artificial intelligence is already present in healthcare, retail and finance.
In health, it promotes medical diagnosis, paving the way for personalized medicine. In transportation, it is the key technology of autonomous cars. It is also transforming banks and advisors in the face of the threat of automated advice. In addition, retailers cannot ignore artificial intelligence, as machine learning can improve logistics and allow for greater product customization.
So companies specializing in the development of technology related to artificial intelligence can see a big boost in sales. In hardware, semiconductors are a rich hunting ground for investors. Keep in mind that deep learning requires a lot of processing power and an increase in demand for powerful graphics processors (GPUs) for parallel processing and analysis of large amounts of data is expected.
Driverless vehicles, for example, have to learn from their immediate environment and know how to react. In this regard, Tesla has increased the autopilot processing by 40 times. These companies are focused on design and most chip production is outsourced, which means better prospects for the semiconductor production, assembly and test industry. In addition, a second of autonomous driving can generate 1GB of data, so an increase in demand for memory chips and cloud storage solutions is also foreseeable.
From our conversations with key industry players, we estimate that artificial intelligence may account for around 25 percent of semiconductor demand by 2020, up from 10 to 15 percent today.
In addition, software-driven artificial intelligence is advancing even faster, generating recurring revenue from subscriptions and new products for vendors, in contrast to semiconductor companies that benefit mostly from a buying cycle. This is the case of Facebook, Baidu, Salesforce.com or Medidata, with access to a huge amount of consumers and data, which are capable of offering value-added services based on artificial intelligence.
Netflix, for example, estimates that it prevents more than $1 billion in lost sales a year from unsubscriptions by providing tailored results and recommendations. For its part, Amazon has reduced warehouse operating costs by a fifth through autonomous robots. Other prospective applications will make it easier to predict which policyholders are most prone to large claims, assess loan credit and help identify crimes in seconds by filtering hours of video surveillance.
So the artificial intelligence revolution may increase the profits of some companies and cause the disappearance of others in a wide range of sectors. In many cases the difference between commercial success and failure can be the efficiency and speed of implementation. For most companies, it means being able to analyze a large amount of data, taking into account that this can add up to 163 trillion gigabytes annually in 2025 -ten times more than in 2016-. Ultimately, the key to success in the digital world is the ability to take advantage of data and turn it into business opportunities.
As a whole, the artificial intelligence market may represent a market of 127,000 million dollars by 2025, from 2,000 million in 2015, with the US and China at the forefront in investments. For the world economy it can mean trillions of dollars of additional growth from increased productivity and the consumption of new or improved products and services.
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