Me, myself and AI
The excitement around ChatGPT has been nothing less than jaw-dropping. The number of use cases for chatbots is large and, more broadly, artificial intelligence (AI) is expected to turbocharge economic growth. We are only just starting to understand its potential.
As word has spread about ChatGPT, people have rushed to experience it themselves. They are having it finish their homework, write code or recommend books and films (it suggested that I watched The Shawshank Redemption). In fact, when the chatbot launched in November, it was so immediately popular that it amassed one million users in just five days. That’s far quicker than Instagram, Facebook or Netflix, and more than three times the adoption rate of TikTok.
As one of the most advanced artificial intelligence (AI) models available today, ChatGPT has been trained on vast amounts of text data. It has been developed by OpenAI, and its data sources include books, articles and websites. And it can generate responses to users that seem surprisingly human.
ChatGPT sprints to one million users
Time it took for selected online services to reach one million users
Source: Company announcements via Business Insider/Linkedin
Is AI improving?
Deep Blue, an IBM supercomputer, beat a chess world champion, Garry Kasparov, in 1997, the first time a computer had beaten a grandmaster. Many called it the watershed moment for AI. Since then AI has evolved beyond chess to more useful areas. The chart on the opposite page compares AI’s performance in tests with humans since 1998. AI beats human scores in every category by 2019. With AI catching up to humans in just 20 years, where could it be in another 20?
As the adoption rate across industries increases, there will be higher levels of funding from the private sector, fuelling further development of AI. Microsoft has already committed $8.1 billion in investment to OpenAI, for example. Support is widespread, with global private investment in AI increasing by 48% in 2021 year-on-year to $93.5 billion – more than double the total private investment in 2020.
Language and image recognition capabilities of AI systems have improved rapidly
Source: Kiela et al. (2021) – Dynabench: Rethinking Benchmarking in NLP
Why is AI so important?
AI’s importance cannot be understated. With its ability to improve productivity and efficiency across industries, it will likely revolutionise many areas of our lives. This is achieved by automating repetitive tasks, shortening the time to complete tasks and enhancing the quality of products and services.
AI can help doctors diagnose and treat diseases more accurately and efficiently. It can help self-driving cars navigate roads more safely. In agriculture, AI can optimise crop yields, reduce waste and improve sustainability. In finance, it can be used to detect anomalies, automate customer service, manage customer data and predict financial trends. Many banks are already using AI to detect fraud, make credit decisions and give personalised recommendations to customers. There are more ample examples across other industries.
The increased output from efficiency gains and innovation could lead to higher wages and profits, bringing about further economic growth.
This has led many to believe we are entering the next wave of the industrial revolution, where humans and machines coexist and collaborate. Nvidia CEO Jensen Huang has heralded ChatGPT as the “iPhone moment” for AI. He believes the impact will be similar to that of the smartphone since the iPhone was unveiled in 2007 – if not greater.
PWC is forecasting the global economy to grow by $15.7 trillion more by 2030 if AI adoption becomes as widespread as they believe it can.
Its effect on growth is so profound that Accenture is estimating the US gross domestic product (GDP) growth rate will rise from 2.6% to 4.6% annually by 2030, as AI is implemented across the economy.
Investment opportunities in AI
While every sector will benefit in time, the more immediate beneficiaries include semiconductors, data centres, cloud software, analytics and cybersecurity. These are some of the areas we have exposure to now and expect to outperform the wider market over the next five to ten years.
Nvidia, the US semiconductor design company, invented and designs GPUs, a computer chip that is essential for AI due to the sheer number of computations involved. ChatGPT runs off these chips exclusively. Nvidia has been incorporating AI into all areas of its business, but the one most likely to benefit is its data centre business. Data has become so valuable, with many arguing it is the new oil. And, there is an abundance of it: more data is created per hour today than in an entire year just two decades ago. More data centres will be needed to process it, giving Nvidia a long runway of growth. It has been successful in taking market share from Intel and we expect this trend to continue. TSMC, a Taiwanese manufacturer of semiconductors, is also likely to benefit considering it is one of only two companies able to build the GPU chips AI requires. With TSMC’s expansion out of Taiwan into the US and Europe, it will be able to fulfil the huge demand for their services and increase its earnings potential.
Adobe has incorporated many AI-driven improvements of late, with its canvas application turning finger painting into photo-realistic images in seconds. This allows users to create artwork that would have taken potentially years to master in the past. We expect its software to improve across the entire product suite and attract new users.
There are some risks. It makes it easier for bad actors with limited programming skills to generate code for cyberattacks. Legitimate-sounding phishing emails are another example, and with over 80% of cyberattacks starting from phishing emails, this is a serious concern. However, cyber security companies, such as Palo Alto and Fortinet, offer phishing prevention software, amongst other products, that will help counter these threats. Given the growing addressable market, we expect these companies will benefit greatly over the next five to ten years.
While it’s difficult to predict exactly where AI will be in five years, it’s likely that there will be continued progress in natural language processing, machine learning and deep learning. This may lead to improvements in areas such as machine translation, speech recognition and even more advanced conversational abilities for language models like ChatGPT. However, the development of AI is unpredictable, and it’s impossible to know for sure what will happen in the future.
You probably didn’t detect that the previous paragraph was not written by me, the human. It was in fact written by Chat GPT in under five seconds!
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