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AI is coming! Investors: Are you ready?

 

Artificial intelligence—or AI—is either poised to save the world… or destined to doom it. It all depends on who you talk to on any given day. Proponents of AI see emerging technologies such as machine learning and big data mining as the key to a future in which life is easier, smarter, and faster. Naysayers fear economic disruption, unemployed workers, and a world that puts machines in control.

Like religion, it’s a debate that is nearly impossible to win. The reason? AI will cause disruption. AI will cause us to rethink the world around us. AI will, in fact, change the world as we know it, transforming how we work, play, and live our daily lives. For companies in every industry, that makes AI an imperative. And for investors, it potentially makes AI one of the greatest investment opportunities of our generation.

Even most doubters agree that AI is delivering significant and positive change. Machine learning capabilities are accelerating production on factory floors to increase productivity and reduce the cost of goods sold. Amazon is perhaps the most highly publicized driver of change in AI-driven logistics automation. The company’s fleet of Kiva robots raised the bar for speed and service, and made smart factory floors mandatory for any retailer who even hopes to capture market share in any retail sector. Case in point: Zume Pizza, the three-truck, 150-employee Mountain View startup that recently secured a $375M investment from Softbank’s Vision Fund. In years past, that transaction would have been unlikely (at best), but today, analysts see the investment as no surprise. Why? Because Zume is using AI to bring Amazon-like disruption to the food delivery supply chain.[1]

This massive disruption is already reaching the healthcare sector as well. In May, Google published the latest research on its application of AI-driven “neural networks” software[2] that automatically learns and improves over time as it analyzes massive amounts of data to more accurately forecast patient outcomes—from the odds of remission, to the length of a hospital stay, to predicting how long a patient will live. And while IBM’s Watson has come under recent fire for not getting treatment recommendations right 100% of the time,[3] IBM has said it remains committed to improving the technology to help doctors provide better patient care and achieve optimal outcomes. There’s clearly work to be done, but the key is that the work is being done, and new advancements are being made every day.

Not only is AI changing the nature of work itself, but as Amazon CEO Jeff Bezos predicted at the Bush Center’s Forum on Leadership last April, it will undoubtedly make work more engaging for most workers. The more of the dull, dreary, and dirty work robots can do for us humans, the more we’ll be able to apply our uniquely human creativity to develop new ideas to further change the world.

The rise of AI does, of course, have its downsides. Fear of AI is the stuff great movies are made of, and unfortunately a few threatening scenarios have already come to life. In 2018, private information and data belonging to hundreds of millions of people was exposed and sold on the dark web in a series of major cybersecurity hacks around the world. Among the most highly publicized breaches was Cambridge Analytica’s data leak of information accessed through Facebook profiles. Though it occurred in 2015, the revelation of the breach and its possible impact on the US presidential election brought data security under a whole new level of scrutiny in 2018. Not only must the battle for data security continue, but there’s also little doubt that AI’s power to introduce destabilizing dynamics into geopolitics will up the game from a national security perspective. Those seeking to disrupt the U.S. and our allies through digital tactics have new weapons at their disposal, and the more powerful those weapons become, the more ingenuity will be required to protect our most vulnerable assets.

Still, many see the potential for job loss as AI’s greatest drawback. But while it is true that AI is almost certain to disrupt many white-collar service professions just as profoundly as automation has disrupted manufacturing, that’s not necessarily a bad thing. As new tools have always done, AI is at the ready to make workers more productive and potentially generate higher real incomes. Will the change be disorienting? Definitely. But from a historical perspective, change is always a challenge. And yet new technologies have always enabled the economy to produce existing products with fewer workers, freeing up resources for the creation of new products and freeing up workers to produce them. Farm automation reduced agricultural work as a share of the labor force from 38% in 1900 to 2% today, and we produce more food than ever. Education, recreation, and healthcare, which absorbed a tiny share of household spending in 1900, now account for almost half our spending and many millions of jobs. Just look at Amazon, AI’s poster child: in the past year alone, Amazon’s employee numbers have jumped an incredible 66%, to 566,000 people worldwide. At least in some areas, AI is driving job creation.

AI is still in the very early stages of adoption and, historically, the stock market tends to under-appreciate the scale of opportunity enjoyed by leading providers of new technologies at this phase of development. At the same time, AI companies that are leading the way today are likely to grow faster than most public companies. For investors, the biggest takeaway is this: AI is coming. The time to prepare is now.

By Travis Briggs, CEO, ROBO Global


[1] Meet The Startup That Could Be The Amazon Of Food, Forbes, 8/11/18

[2] Google is training machines to predict when a patient will die, Los Angeles Times, 6/18/18

[3] IBM responds to recent Watson media coverage, Healthcare IT News, 8/14/18

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