We look at both the opportunities and the risks that the generative AI trend is creating.
Generative AI – simply put, a type of AI technology that can create human-like content – has been the hot topic on everyone’s lips this year, with the buzz continuing to gain momentum.
The initial market reaction has been to reward those companies that stand to directly benefit from increasing investment in AI with higher share prices. Semiconductor chip manufacturer, NVIDIA, has emerged as the standout performer of the AI revolution so far, due to the fierce demand for its H100 chips which power everything from PCs to industrial machinery to innovative AI technology. The company’s revenue more than doubled in the second quarter, with the share price hitting an all-time high in August.
Few businesses are as directly involved with AI as NVIDIA, but it is clear that market is nevertheless also rewarding those that have demonstrated a way of monetising AI, such as through the sale of AI productivity tools.
However, for the majority of businesses, the outlook from AI remains uncertain, with excitement around new business opportunities, efficiencies and cost savings balanced with concerns over new competitive threats.
In our piece, we present a balanced argument and discuss:
- Businesses and industries which are set to benefit from the AI boom.
- How rapid innovation can create losers as well as winners.
- Why new ESG considerations shouldn’t be overlooked.
Emerging industries can often be exciting because of their growth and the progress they offer, but the process of change inevitably causes disruption, with the benefits unevenly spread. Furthermore, new industries may lack established norms and appropriate regulation. If these considerations are not addressed in a sensitive manner, contingent liabilities may become realised to the detriment of investors and other stakeholders.
Contingent liabilities – or potential liabilities – are created when a company chooses to compromise the future in order to flatter short-term results. They might be deferred for a period of time but ultimately cannot be avoided, thus impacting the value of a business and resulting in negative financial consequences for shareholders, when they become realised.
AI has great potential as a platform technology to improve labour productivity and incomes for millions, but the long-term benefits will only be realised if the right balance is struck between responsible innovation and societal considerations.
Please read the full piece here.