A key question that has to be addressed is whether generative artificial intelligence is a breakthrough technology – and the answer is obviously affirmative. But is it a major game changer on par with the internet, the personal computer, the microprocessing chip, electricity, the steam engine, the cotton gin or even the wheelbarrow?Advancements in AI technology, and its knock-on effects on profitability and productivity, is a legitimate investment thesis.
This AI arms race has spilled over to the broader market, with seemingly more and more companies issuing news releases on their plans to capitalize on the technology. In recent weeks we have seen Kraft Heinz play up I actually have been bullish on the adoption of AI and robotics – broadly referred to as the “fourth industrial revolution” – for some time. Even this permabear is no Luddite. There is no doubt that advancements in these technologies will help drive efficiencies in all sectors, flowing into wider profit margins and corporate profitability.
If you are of the view that we have headed into some sort of brand spanking new post-COVID-19 world of labour power and wage inflation, my advice would be to revisit this thesis. There is no denying that one side effect of generative AI becoming more ubiquitous is labour market displacement and potentially higher levels of unemployment on the horizon.