A is for Alpha

Since the advent of ChatGPT in October 2022, which kicked off the era of generative AI (genAI), programmers, companies, and governments have been considering how we safely teach technology  to be intelligent. While AI existed before ChatGPT, algorithms were predominantly designed to analyse patterns in data and make predictions, such as inferencing consumer preferences based on past behaviour, and optimise processes. The new generation of AI models, however, will be used to generate content, from text, to images, pictures, and more – making the technology both more ubiquitous and more intelligent, but posing additional questions around its safety and evolution.

Given this, it is fitting that Julius Baer’s series of recent Alpha Conferences focused on the debates and developments of genAI that are likely to surround the sector for a while to come.

For investors following the genAI trend, the pace of progress definitely represents the start of a strong investment cycle expected to last for a number of years. This  cycle is still in its first innings and is currently centred around strong infrastructure investment. The demand for datacentres and chip manufacture is growing at speed, the rate of innovation for AI models is increasing, and many companies have already started to integrate genAI to improve functionality – with innovation spanning multiple sectors such as productivity software, travel, ecommerce, and cybersecurity.

B is for better

As genAI evolves, the products themselves will become more impactful and efficient and reinforce the investment cycle. Subsequent product launches will bring greater investment, expanding the scope of what the technology can do. This will bring yet more investment and progress, while reducing costs and allowing further market penetration. In turn, new capabilities and opportunities for growth that were not previously evident will become clear.

But why is this important? The potential for AI to increase labour productivity and positively impact global growth are widely touted, and, according to some, the sector could add trillions to the global economy by 2030 through process automation and new consumer products. What still remains to be seen is whether genAI will simply replace existing activities or enable brand new ones. If the latter is the case, then, for example, it could be used to research new materials for electric vehicles or semiconductors, allowing for the creation of new segments.

C is for competition

The investment cycle will also be propelled by competition between companies to release new products and services, therefore increasing market activity and expanding the potential landscape for investment. But for investors considering their positions and future exposure to the sector, this warrants closer scrutiny of the sustainability and principles of the technology, which is why discussions like those at Julius Baer’s Alpha Conferences are so vital.

These conferences, held in Lisbon, London, and Stockholm, provided a unique forum for scrutinising the themes most pertinent to generative AI today. Bringing together leaders in the AI field and partners from best-in-class portfolio managers, clients benefitted from expert analysis to support any crucial portfolio decisions they were considering.

For now, the most insightful points on how AI and digitalisation will impact our way of life came from the assembled human intelligence. For the next series of Alpha Conferences, perhaps the astuteness will be more artificial.