Artificial intelligence (AI) is likely to be a significant investment theme in the next decade, provided it can be deployed at scale, according to a fund manager.

Nick Hartley, co-head of active equities at Legal & General Investment Management (LGIM), said that spending on AI-focused technology is forecast to reach €51 billion by 2021, but that there is relatively little evidence of its success. However, Hartley said that if certain steps are taken, AI could become financially successful.

The key steps are the technical capacity of AI, access to large volumes of data from which it can learn, and the ability to deploy and implement AI at scale. “The final step may be the hardest to achieve and is potentially a major barrier to fully harnessing AI. IBM has spent billions of dollars on employing its machine learning tool Watson to the healthcare sector but adoption has been disappointing since it launched to market. Meanwhile AI in travel has been much more successful. Amadeus, a leading provider of IT solutions for the travel sector, is firmly at the heart of the travel ecosystem by using its AI to increase its relevance to travel providers by improving the look-to-buy conversion rate.”

Hartley added that the FANGs (Facebook, Amazon, Netflix and Google) are estimated to spend more than $5 billion annually on AI. “While it is likely that digital advertising in particular has been both an early beneficiary of AI and a strong motivating factor behind its development, in the cases of Amazon, Microsoft and Google, they are now commercialising their AI capabilities by renting them out to their cloud customer base. This opens up AI to all sectors and companies of every size.”

AI and robotics will not necessarily replace human labour, Hartley added. “In many cases AI is deployed to support, rather than replace, labour. AI can therefore been seen as a critical component in raising economic productivity.”


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Published: April 1, 2018
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