Are we in an artificial intelligence hype cycle, and will the cycle ever turn into meaningful value for enterprises?
That’s the big question as investors question whether revolutionary technology has been hyped out of proportion. Amid the concerns, Silicon Valley investors and tech giants remain optimistic that the technology at the heart of the fourth industrial revolution will one day deliver trillions of dollars in business value.
“We are definitely in a hype cycle, especially for generative AI,” said Konstantine Buhler, a partner at Sequoia Capital, speaking on a panel at The Wall Street Journal’s CIO Network Summit on Monday.
Some corporate technology leaders claim they cannot wait for AI to improve or demonstrate its long-term worth despite the technology’s return on investment taking longer. Customer service and code writing are currently the first fields where AI is promising, but the revolutionary developments that will yield those trillions may still be some time off.
If there is something history has shown is that generating returns from new technology investments is a high-pressure game that takes some time. According to Buhler, it took many years to generate significant returns from AI’s first and second eras despite trillions of dollars in market capitalization being created in the 2000s.
Despite the growing concerns about how long it will take to generate returns from AI investments, companies and businesses are increasingly integrating the revolutionary technology to enhance operations and efficiency. While American banks have been using AI for years to spot frauds, it’s only now that most are betting big on the technology.
In the past year, banks led by JPMorgan have rolled out large language models for more employees. Additionally, the banks use generative artificial intelligence in call centers for agents. At JPMorgan, over 200,000 people have an AI tool at their desks.
According to Teresa Heitsenrether, JPMorgan’s chief data and analytics officer, it is still early to start seeing productivity gains across the bank in integrating AI.
“It’s very early innings. First we want to put the tool in people’s hands, and let them be able to ask questions and get answers. That already starts to spawn ideas, innovation, some productivity,” Heitsenrether said.
While the focus has been on AI’s monetary value, the International Monetary Fund notes that AI will affect 40% of jobs worldwide. While technology is expected to complement most jobs, it will replace some.
“In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring,” IMF said in a blog post.
AI stands out for its capacity to influence highly skilled occupations. As a result, compared to emerging markets and developing economies, advanced economies face more risks from AI but also have more opportunities to take advantage of its advantages.
For this article, we selected AI news updates by going through news articles, stock analyses, and press releases. These stocks are also popular among hedge funds as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A financial analyst studying market trends on a laptop, surrounded by graphs and charts.
10. ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA)
Number of Hedge Fund Holders: 1
ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is a biotechnology company that helps pharmaceutical and biotechnology companies discover and develop therapeutic antibodies. The company leverages AI to develop therapeutic antibodies. On February 24, the company moved to strengthen its leadership realm with the appointment of Dr. Kamil Isaev to its board of directors.
Isaev joins the AI-driven biotherapeutic research company with over 30 years of experience in AI and semiconductor technologies. His deep expertise in AI, R&D leadership, and commercialization of cutting-edge technology should be invaluable as ImmunoPrecise Antibodies continues to expand its AI-driven biologics platform.
“Kamil’s proven track record in developing go-to-market strategies and his experience in bringing emerging technologies to commercial success aligns perfectly with our mission. His insights will be crucial as we navigate the complex landscape of AI in biologics and accelerate our path from innovation to market impact,” said Dr. Jennifer Bath, President and CEO.
9. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 17
XPeng Inc. (NYSE:XPEV) designs, develops, manufactures, and sells smart electric vehicles (EVs). It focuses on creating advanced driver-assistance systems and intelligent in-car operating systems, aiming to be a leader in the future of AI-driven mobility. On February 24, analysts at UBS upgraded the stock to Neutral, buoyed by growing investor interest in the company’s artificial intelligence initiatives.
According to the analysts, XPeng has strengthened its prospects by focusing on software and autonomous driving. That’s because the company has allocated at least 50% of its annual research and development budget to artificial intelligence initiatives.
“XPeng launched its first large multimodal model, XGPT, in late 2023, and as of now is the only Chinese EV maker that is working on a humanoid robot,” UBS noted.