AI set to be a game-changer in investments

Artificial intelligence (AI) is set to be a game-changer in investments, primarily because it is driving a major disruption in the technology industry and beyond, experts say.

“Historically, we’ve seen technological cycles emerge every 15 years or so, with each cycle leading to profound shifts in the economy and industries. From mainframes in the 1960s to the rise of personal computers and smartphones, each cycle has brought increased demand for key technologies like semiconductors, which have seen demand triple or quadruple during these periods. AI is triggering the next big cycle,” Wesley Lebeau, deputy head of global thematic equities department at Amundi Investment Institute, said in an interview with Khaleej Times.

AI’s influence is unlikely to stop with the technology sector; it will likely have a positive long-term positive impact on productivity and GDP growth. However, not every company will benefit equally, Amundi analysts say. “In this new AI-driven cycle, there will be clear winners and losers. Companies that are early movers in AI, possess a proprietary data advantage, and have an existing competitive edge will likely outperform. Those that fail to innovate or rely solely on adopting AI technology without a distinct advantage may find their competitive edge eroded,” Lebeau said.

For the next few months, markets will focus on economic activities and job data, playing a central role in the performance of the equity market. Direction of monetary policy will be data dependent. A key trend that is expected to gain momentum in a soft-landing scenario is the capital expenditure cycle linked to power infrastructure and grid upgrades. “As industries and governments strive to meet increasing energy demands, upgrading aging infrastructure is becoming an urgent priority. After almost two decades of stagnation, demand for electricity is booming, marking a major turning point in global energy management, fueled in particular by the exponential growth of energy-intensive facilities such as data centers in order to provide a reliable, efficient power supply,” said Vafa Ahmadi, head of global thematic equities at Amundi.

Investing in disruptive sectors can be incredibly rewarding, offering the potential for exponential growth as industries are reshaped by groundbreaking innovations. However, with great opportunity comes heightened risk, experts warn. “To successfully navigate these fast-evolving markets, investors need to consider several crucial factors that go beyond the surface-level of buzzwords. This includes understanding the underlying technology, the competitive landscape, assessing market potential addressable market, scalability and speed of adoption. Investors should consider diversifying their exposure across multiple disruptive themes, rather than concentrating all their investments in a single area. This not only reduces the risk of underperformance in one particular theme but also allows investors to capture opportunities across a wider range of innovations,” Ahmadi added.

• Business