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5 Sectors & AI: Hold On

Artificial intelligence (AI) has garnered significant attention in 2023 due to its immense capabilities. Generative AI and large language models provide a step-change evolution in the use of data. This technological revolution is likely to enhance efficiency and productivity across economies, benefiting equities in general, but the amount of disruption and transformation will vary between sectors.

10 min read
Senior Equity Strategist

In our latest white paper, we explore the adoption of AI across five sectors in particular: information technology, health care, financials, industrials and consumer discretionary.

The potential value of generative AI and the broader use of machine learning and deep learning applications is easiest to understand for information technology. Hardware advancements, such as advanced microchips (GPUs), are crucial for AI training, while cloud computing is integral to deploying AI models at scale. Meanwhile, there are significant advances being seen in software engineering and automation. For long-term investors, the answer is to hold on, as the full scope of AI benefits is still unfolding.

The health care and financials sectors have witnessed substantial technological advancements that may have been overlooked by the market. In health care, AI is transforming drug discovery and development, enabling faster R&D, personalised medicine, medical imaging analysis, and more precise patient diagnoses. Patient outcomes could change remarkably with new ranges of service. Use of AI in Financials includes data migration from legacy systems, risk analysis, and enhancing portfolio construction. Particularly key could be rapid progress in fraud prevention and insurance underwriting.

The industrials sector is benefiting from AI adoption in manufacturing, supply chain optimisation, automation, and clean energy infrastructure development. AI-powered machines are becoming more intelligent and adaptable, and AI is contributing to environmental sustainability. We may see a shift toward more consistent revenue streams.

Consumer discretionary companies are using AI to enhance customer experiences through personalisation, targeted marketing, and chatbots. Within the sector we have also seed tremendous advances in the automotive industry toward autonomous vehicles and energy optimisation.

While the overarching impact of AI on the economy is expected to be profound, certain sectors could benefit more than others.

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