Generative AI – Our Thoughts on Investment and Macro Implications

Executive Summary

• Artificial Intelligence (AI) and its latest development, generative AI, is reaching an inflection point due to rapid increases in computing power, the availability of data, advances in machine-learning algorithms, and increased investment in AI research and development, which has helped accelerate progress.
  
  
• Generative AI could usher in a significant transformative technological change, laying the groundwork for possible disinflationary forces and future economic growth.
  
  
• Its application across a broad range of industries is likely to disrupt how many companies operate, which in all probability will create notable winners and losers.
  
  
• Groundbreaking progress can already be seen in its ability to enable human-level content creation across text, graphics, code, and multimedia.
  
  
• Investors will see opportunities across public and private markets and AI will be a new lens through which to evaluate both disruptive and incumbent businesses.
  
  
• Value should accrue throughout the AI-native technology stack, encompassing the creators of system-critical hardware, large language AI models, and business and consumer software applications.
  
  
• Incumbents that integrate AI effectively into business processes can benefit from cost savings, efficiency gains, and strategic insights, while consumer models that allow individuals to interact with AI capabilities on a range of devices could take first mover advantage.
  
  
• As with all fundamental technologies, AI can be used for good purposes or harmful ones. We are encouraged by rising engagement from policy makers, experts, and the public on finding ways to ensure that society benefits from generative AI while managing future risks.
  
  

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