Artificial Intelligence - The New Kid On The Block

Not sure if you remember watching a movie called Singularity; a film where computers started taking over the world. A once hypothetical fantasy is now proving to be a reality and Artificial Intelligence (AI) has arrived in full swing; a powerful technology with the potential to change the world.

Over the past few months, there has been much hype about certain chatbots such as OpenAI's ChatGPT and Google's Bard that allow users to perform almost superhuman search activities at the click of a button, saving hours of research and time.

In late 2022, ChatGPT was released to the world and it didn't take long to catch on, reaching 100 million users in just 2 months; the fastest growing application in history. To put this in perspective, TikTok took 9 months to achieve the same, with Instagram taking 2.5 years. Since then, the entire AI space has blown up with variants coming in all shapes and forms.

What is Artificial Intelligence?

Artificial Intelligence (AI) is a branch of computer science that deals with the creation of intelligent agents, which are systems that can reason, learn, and act autonomously.

Simply put, AI is a type of computer program that can learn and think for itself. AI programs are often used to do tasks that humans find difficult, such as playing chess or driving a car. They are becoming more and more powerful and are able to learn and improve as more information is fed into their system.

Types of Artificial Intelligence:

• Machine Learning - AI that allows computers to learn without being programmed (applicable to self-driving cars, medical diagnosis, and fraud detection).
• Deep Learning - type of machine learning that uses artificial neural networks to learn from data (such as image and speech recognition).
• Natural Language Processing (NLP) - type of AI that allows computers to understand and process human language (used in question answering and machine learning).
• Computer Vision - type of AI that allows computers to see and understand the world around them (i.e., object detection, face recognition).
• Robotics - deals with the design, construction, and operation of Robots that can perform tasks automatically (often used in manufacturing, healthcare, and logistics).

So, what are ChatGPT and Bard, and how do they work?

ChatGPT and Bard are Large Language Models (LLMs) that are a type of deep learning model (#2 above) and are trained on massive datasets of text and code.

Imagine a big computer that has read all the books, websites, articles, and conversations that ever existed. Now imagine this computer can understand all of that information and can use it to answer your questions, write stories, and even create new things. To a degree, that's what Bard and ChatGPT are. These chatbots are powered by AI, which allows them to learn and adapt to the way that humans speak to them, allowing them to become more accurate and efficient over time (intelligent).

As mentioned, there are numerous AI alternatives coming onto the market but Google's Bard and OpenAI's ChatGPT are the major players at the moment.

The chatbots spoken about above are still largely under development but perform tasks that include:

• Answering questions in a comprehensive and informative way, even if they are open ended, challenging, or strange.
• Generating different creative text formats of content, like poems, code, scripts, musical pieces, emails, letters, etc.
• Translating languages.

The Implications of Artificial Intelligence on the World, Job Functions, and Education

Overall, the implications of AI are far-reaching and likely to be highly disruptive. Many industry leaders and politicians, globally, have been vocal about this, and called for stringent regulation to be placed on the AI industry and developments thereof.

AI is automating many tasks once done by humans, improving efficiency, and making better decisions, all of which have the potential to displace jobs in certain sectors. It will, however, create new opportunities in others.

In education, AI is being used to personalise learning, provide feedback, and automate grading, which is making it easier for students to learn and is likely to revolutionise the education industry going forward, offering a higher level of education to those who have not had access or been able to afford it until now.

With such great implications of this somewhat 'new' technology, it is important to be aware of the potential benefits and risks of AI so that we can make informed decisions about how to use it going forward.

Companies that are Adopting AI

As with any new technology, most of the largest listed companies involved in technology are looking for ways to adopt AI and utilise it to increase profitability. Google, Microsoft, and Amazon have been actively pursuing this theme, investing large sums of money in order to become leaders in the technology.

Google and Microsoft have made significant progress with regard to Large Language Models such as Bard and ChatGPT discussed above, while companies like Amazon and Tesla have made major breakthroughs in Robotics and machine learning.

Other companies, such as Nvidia, have also increased pipeline profits significantly due to the integration of their graphics processing units (GPUs) that are required for AI to operate.

We are currently at the tip of the AI iceberg and with time, should see many companies benefitting as they adopt AI into their business models.

In Conclusion

Artificial Intelligence is rapidly developing and it is difficult to predict what the future holds. It is likely that AI holds the key to many important advances in medical treatments, education, entertainment, work productivity, and efficiency in transportation.

It is likely to have a profound impact on our lives and is already being used to improve them in many ways. The technology, however, raises numerous ethical concerns around job redundancy and automation that may impact the lives of many skilled workers. It is, therefore, vitally important that continuous development in this space is carried out in a way that is safe, ethical, and beneficial to all, and doesn't add further fuel to an already increasing wealth gap that the world is currently experiencing.

In the near future, the use of AI will likely become part of our everyday lives, streamlining tasks that once seemed tedious and time consuming. It is also likely to impact and benefit the Asset Management industry, creating further efficiencies; something that Absolut Wealth will embrace to enhance our client's investments into the future.

Chart of the month:

The chart below shows the companies that have assisted in recent market strength. In essence, 7 stocks: Meta, Amazon, Apple, Microsoft, Google, Tesla, and Nvidia (which have large weightings in the S&P 500 Index), are collectively up 44% year-to-date. The remaining 493 companies that, together, make up the remainder of the Index are only up 1% year-to-date. This shows a significant lack of market breadth, which is not a true reflection of the actual strength of the Index.

"Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected."??-?George Soros