AI – the next giant tech frontier
We are living in a digital era where artificial intelligence is reshaping our lives. AI is creeping into virtually every industry, from marketing to finance. It is boosting productivity, sales, customer service, product innovation, and operating efficiency. This evolution in AI in recent years has not been far from the headlines since it is impacting almost every sector and geography, and holding economic ramifications that could bring Industrial Revolution. According to the investment bank Oppenheimer, the next giant technology frontier is AI.
The interest in AI is growing with major AI inventions such as self-driving cars and AI-enabled medical diagnosis etc. McKinsey predicts that in 2030, roughly 15% of the vehicles sold will be autonomous. Such AI inventions are believed to unlock significant economic value for a business.
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AI shift from science fiction to business reality
The business world is getting through significant changes. As AI has shifted from science-fiction to the business world, both large and small businesses are investing in AI infrastructure. Gartner predicts that by the end of 2024, 75% of enterprises will move from piloting to operationalizing AI. A survey was conducted by MIT Sloan Management and BCGwhich revealed that 9 out of 10 respondents believe that AI is an investment opportunity for their business. However, 40% of the companies are unable to understand how to implement AI in their businesses to get economic benefits. On the other hand, for successful companies who incorporate AI into their overall business development strategy, AI is a tool to increase revenue. Among the business leaders investing in AI, up to 31% report increased revenue, 22% new products, 22% greater market share, 21% global expansion, 21% faster time-to-market, 19% development of new business models and 14% increased shareholder value.
Investment in AI: COVID-19 Impact
In technology, the first huge investment wave was the Personal Computer followed by software, the internet, and smartphones. Then social media and cloud computing got huge investments worldwide. The next big technology that is reshaping the world and is attracting investors is Artificial Intelligence. Nidhi Gupta, the leader of the technology sector at Fidelity Investments, believes that investing in AI offers a wide range of outcomes to investors.
It must not be wrong to state that for investors, the year 2020 has been a wild ride. The COVID-19 pandemic along with subsequent lockdowns disturbed many investors. However, for AI projects of any enterprise, the pandemic was just a slight bump in the road. Vice president at Gartner’s distinguished research, “Frances Karamouzis” states that enterprise AI investment has been persistent or even increased despite the crisis. According to IDC, the global investment in AI is projected to grow from $50.1 billion in 2020 to over $110 billion in 2021.
A survey by Gartner in 2020 revealed that almost one-fourth of business and IT professional (i.e., 24%) increased their investment in AI as a result of COVID-19, 42% kept their investments at the same level as before the pandemic, however 75% plan to continue the old projects or invest in new AI projects in coming 6-9 months. During the pandemic,. A study by IPsoft in august 2020 found that out of the businesses surveyed, 88% with over 500 employees added their AI projects during the COVID-19 pandemic, and hence a subsequent growth in AI was observed
Post-Pandemic Investment Uplift in AI
According to CEO of ESI Thought Lab, Lou Celi, since the pandemic is pushing businesses into the digital-first world, AI is going to be a key driver of competitiveness and corporate growth in coming years. In a survey of 1200 companies, two-thirds from the largest enterprises across the globe showed confidence in AI to improve their business revenues and are planning to uplift their investments in the post-pandemic era. By 2026, companies are projected to spend roughly $310 billion on AI solutions.
Most of the companies worldwide are planning to uplift their investments in AI by 8.3% annually on an average over the next three years, boosting AI annual spending from the current $38 million to over $48 million. In a socially distancing post-pandemic world, the value that AI is expected to bring includes personalized digital experiences, rapid decision-making, access to time-critical data, flexible work processes, tighter cybersecurity, event-driven forecasts, and greater cost efficiencies.
2021 – Investment Opportunities in AI
There are multiple reasons companies are finding investment opportunities in AI that are going to be beneficial for them in the year 2021. Investment in AI will help a wide range of organizations go through the economic crisis as they emerge from the pandemic. With life slowly getting back to normal, businesses are planning for their post-pandemic recovery.
AI has been employed by many organizations during and post-pandemic when physical interactions were restricted. Pandemic has accelerated both technological and societal shifts. In the current scenario, I believe that the healthcare and education providers, as well as the retailers, have the best investment opportunities in AI as the telehealth, telemedicine, work-from-home, online classes and online shopping trends are prevailing in 2021.
Healthcare sector: Investment Opportunity in AI
Healthcare has been a magnificent light in 2020 due to its critical role played during the pandemic. COVID-19 has transformed how the healthcare industry works. There is an increased burden on the healthcare sector as more and more patients need priority care while the medical professionals are overworked. The substantial adoption of telehealth assisted healthcare providers in offering uninterrupted services to a great number of patients during the pandemic. AI allows medical professionals to automate repetitive tasks and develop intelligence to uplift outcomes. AI is used in healthcare for disease diagnosis, drug discovery, pain management, clinical trials, and to provide personalized medicine. Healthcare provider’s investment in AI in 2021 can reduce the stress on medical professionals by reducing the workload. AI will also help in reducing the anxiety of people that has been worsened as a result of COVID-19. AI can help professionals to identify the patients at most risk and can understand trace trauma to provide the best medication and resources to help their patients. It has been projected that by 2025, the worldwide market size for AI in healthcare will rise from $1 billion in 2017 to over $28 billion. Healthcare providers will ensure to utilize the best and latest technology going forward and the most recent AI technology to invest in 2021 is expected to be “DeepMind”.
DeepMind
DeepMind, founded in 2010 is a UK-based AI startup. AlphaFold 2, created by Google’s DeepMind scientists, is hyped to be the biggest breakthrough in the field of biology and medical science. Google DeepMind’s AlphaFold along with OpenAI’s GPT-3 were two of the notable advances in 2020. AlphaFold 2 using DNA sequences can accurately predict protein folding. Its model can derive the amino acids 3D protein structures that could ultimately increase the understanding rate of doctors about diseases as well as the manufacturing rate of pharmaceuticals. In 2020, when the COVID-19 pandemic had engulfed almost the whole world and the mission of a great number of pharmaceutical giants was to find a vaccine, AlphaFold 2 was very helpful for scientists.
Education sector: Investment Opportunity in AI
Education technology was a drowsy corner until COVID-19 hit the world; however, it is high alert now. Pandemic has increased the use of digital products in education. According to an education research firm, “HolonIQ”, education tech companies in 2020 were raised in funding by $16 billion globally. The education tech company, Coursera’s IPO valued the company at almost $4 billion in late March 2021. The education sector has a huge opportunity to invest in AI startups offering AI-enabled tools to help teachers and students improve their online educational experience. AI-powered solutions can be provided at any internet-connected device to anyone in the world, opening up effective, data-driven teaching methods to students globally. AI in education can help to improve personalized learning and to simplify administrative tasks, and more secure online exams. With the help of AI tools, now the teachers can find out when the students start losing interest in their online classes and hence can shift their strategy to keep them motivated.
It might not be surprising, given that the COVID-19 pandemic struck the traditional education system and forced everyone, from parents and administrators to the investors to start hunting for solutions. Investors say that the COVID-19 pandemic has unleashed demand for education technology solutions and believe that AI-based approaches to education will continue after the pandemic. According to market research future, AI in the education sector is projected to reach $2 billion by 2023, increasing at 38% CAGR during 2018-2023. Byju, an Indian multinational educational tech, and online tutoring company raised $1 billion in 2020 and $460 million so far in 2021 pushing the valuation of the company to $13 billion.
Retail Industry: Investment opportunity in AI
Food, grocery footwear, and apparel stores are big followers of AI innovations. COVID-19 pandemic has forced the customers to have contactless online-shopping who encourage brands to offer personalized experience during shopping. AI retail solutions such as chatbots, voice search, visual search, customer behavior prediction, virtual fitting rooms, etc can transform the retail business dramatically. According to a report by IDC, in 2021, the retail industry will lead in global investment in AI systems with its automated customer service agents, product recommendation platforms, and shopping advisors. Among these, automated customer service alone will receive the largest amount of investments at $4.5 billion in 2021. The retail industry also prefers to invest in automation for better customer experience and contactless services. According to a survey of retail executives conducted by Capgemini on AI, the AI applications in retail could annually save nearly $340 billion.
Investment Opportunities in AI for VC (Virtual Capital) Investors
AI is at present one of the most disruptive technologies and great support for startups to achieve hyper-growth targets. With a great number of applications in computer vision, big data, NLP, and many more, AI is undoubtedly revolutionizing industries, businesses, and people’s lives. With more than 3600 startups worldwide, focusing on commercializing various AI aspects, venture capital (VC) investors have great investment opportunities in AI. A few years back, when AI hype was hitting its peak, suddenly many companies appeared claiming to be “using AI”. After this claim, their share prices surged to a great extent.
AI startups are drawing the attention of numerous investors across the globe, particularly in the US and China. The American AI startups are mostly interested in the areas of big data analytics, process automation for business, biotechnology, and autonomous driving. On the other hand, the Chinese AI startups are more interested in developing computer vision, facial recognition for applications in financial and public security, and AI for the internet of things (IoT). Many startups have achieved the “Unicorn” status that means they have a value of more than a billion dollars. Some of the AI startups attracting the attention of the investors for the year 2021 are discussed below:
OpenAI: GPT-3 – The first AI to understand language
OpenAI founded in 2015 is a US-based AI research company with total funding of $1 billion. It is an AI startup with a massive language model that presented new and surprising ways to ensure penetrating AI in our daily lives. Open AI introduced GPT-3’s in 2020, and that was a tipping point for AI. In 2021, this technology is expected to power the launch of thousands of other new startups. GPT-3 trained on trillions of words, is a transformer model of 175-billion parameters released by OpenAI. It has a remarkable ability to generate text and responses just like a human. It can write emails, retrieve historical facts and translate languages, and much more. With GPT-3’s beta launch, several new startups have started investing in it aiming to use the language model to develop various applications. Companies are leveraging and investing in GPT-3 model to generate emails and to improve an existing application’s capabilities. No doubt, a text expander is a beneficial tool for short-hand notation but if powered by GPT-3, this shorthand will be transformed into a product that will generate contextually aware emails just like your own style of writing. Moreover, it also allows us to have a conversation with computers about more specialized topics.
OpenAI’s GPT-3 introduced in 2020 is a great investment opportunity for Microsoftin the year 2021. In the recent Microsoft software development conference, “Build”, the biggest highlight was the presentation of a deep learning-based tool using GPT-3 for office applications. Since its release, many startups have declared to invest in OpenAI’s GPT-3 to develop new or augment their existing products or services. In 2021, researchers will undoubtedly look for new places to apply this promising model and there are of course good reasons to expect positive outcomes. According to ARK, conversational AI must spur large investment in the coming years. Hence, GPT-3 seems all set to dominate in the year 2021 and is undoubtedly a huge investment opportunity.
NVIDIA
NVIDIA founded in 1993 is an inventor and a global spearhead of GPU-accelerated computing. NVIDIA GPU accelerates the fastest supercomputer across the globe. Its net income has always been impressive with 21.8% annual increased revenue over the past few years.
It offers great investment opportunities for the fastest growing industries including healthcare, retail, banking, entertainment, robotics, automotive, and transportation. Many of the giant companies across the globe including Audi, Walmart, IBM Cloud, Alibaba, Microsoft, etc., are having a partnership with NVIDIA.
NVIDIA is a huge investment opportunity because of its continuous innovations and market dominance and its stocks had always been fantastic in price performance. So the investors are confident that in 2021, NVIDIA will remain profitable.
NVIDIA is planning to establish an AI lab in Cambridge featuring an AI supercomputer. For boosting its AI computing, NVIDIA has announced the purchase of Arm – a UK-based chip-maker for $40 billion in 2020. Once, it happens, the result could be enormous. Trillions of computers are projected to run AI very soon.
AI-enabled chip-makers
To use AI in computer vision, NLP, and speech recognition, a high-performance CPU is required. Even the most advanced CPU is incapable to improve the efficacy of an AI model by itself. Here, the solution to this challenge is AI-enabled chips that make CPUs intelligent to optimize their tasks. These AI-enabled chips offer a huge investment opportunity in 2021 for companies like Facebook, Google, and Amazon. These chips will help in predictive analytics and faster query processing by supporting next-generation databases.
GPU developed by NVIDIA is among the most widely used category of AI-enabled chips. GPUs are capable to process thousands of tasks simultaneously and render a better quality image. Beyond image rendering, modern GPUs are powerful enough to be used in complex tasks like cryptocurrency mining or machine learning.
Top AI Stocks to Buy
The most growing tech companies in the world like Apple, Google, FB, etc are investing in AI technology to improve their products or services or gain a strategic edge. These companies are the best investment opportunities for others who run small business or want to buy a stock at a private level.
At present, large-scale enterprises like IBM and C3.ai are investing huge amounts in AI. However, with its increased accessibility and affordability, smaller businesses will also be able to invest in AI to integrate it into their business. Let’s have a look at some of the top AI stocks to buy in 2021:
Apple (AAPL) – Apple is at the top of leading tech companies and as we all know, it never loses an opportunity to invest in something that has a bright future, for example, Artificial Intelligence. According to data shared by GlobalData, Apple is the spearhead buyer of AI companies worldwide. In the last few years, Apple has invested a huge amount in AI and bought AI companies like Emotient, RealFace, Drive.ai, SensoMotoric XNOR.ai, and more to improve the AI and ML capabilities of its products and services. Apple beat Accenture, Google, Microsoft, and FB acquiring the highest number of artificial intelligence companies i.e., 25 acquisitions from 2016 to 2020. With the advances in AI-powered technologies ranging from virtual assistants (VAs) to neural engines, it is projected that APPLE has a great investment opportunity in AI for the year 2021 because most of its acquisitions are aimed to improve Siri. According to Gartner, the global sale of smartphones in the year 2021 will rise 11% in 2021 that confirms that AI software has the features for power optimization, virtual assistants, imaging, and upgrade device performance.
Microsoft Corp (MSFT)
Microsoft (MSFT) has recently announced a deal to acquired Nuance Communications (NUAN), a company that offers speech recognition and conversational AI services, for $19 billion. With its acquisition, the shopping spree of Microsoft will reach a new climax. The AI tools of Nuance are extensively used in the healthcare market. The objective of Microsoft is to provide health care customers with Nuance AI tools via its Azure cloud computing platform. Microsoft has recently announced that after acquiring Nuance, the total addressable market (TAM) of Microsoft as a healthcare provider is expected to get double bringing the TAM of the company to nearly $500 billion. With Nuance’s acquisition and its reach in the healthcare market, Microsoft is projected to recoup its investment of $19.7 billion in the relatively short term. Apple and Google have already invested in healthcare initiatives but they are much older than Microsoft’s. Hence, Microsoft is well-positioned to get a competitive edge based on the Nuance acquisition.
Moreover, software giant Microsoft has recently gained applause for its successful shift from desktop computing to cloud computing and its stock has risen in return. On Feb 24, three new industry-specific cloud offerings were announced by Microsoft. They included versions of MS cloud for nonprofits, manufacturing, and financial services.
COVID-19 pandemic also has added the investment opportunity in Microsoft. The trends of work-from-home and learn-from-home during the pandemic in 2021 have spurred a growth in PC buying. The cloud software and services are also supporting at-home students and workers in the year 2021.
Amazon (AMZN)
Amazon, a leader in offering customer-centric innovations, is redesigning its company around AI and ML applications, hence has raised its business to another level. A customer can ask Alexa to check if the delivery arrives, while the product recommendation engine can identify if an end-user wants to buy a specific textbook. In Amazon’s recommendation engine, the role of AI is enormous generating 35% of the company’s revenue. After COVID-19 pandemic hype, while things are somehow getting back to normal, they remain largely uncertain. Thanks to Amazon, its success is essentially certain, no matter what is going around the world. It would not be wrong to say that COVID-19 has only managed to increase the strength of Amazon that has now become a jack of all trades, ranging from logistics to AI. In 2021, Amazon is projected to generate advertising revenue of over $26 billion; hence, the pandemic has proved to be a positive catalyst for Amazon.
ThinkMLWrapping Note
The year 2020 was extremely challenging for governments, citizens, and companies across the globe. However, the travesties in 2020 had not any negative impact on AI and the AI advances gained mainstream attention on various occasions and continued progress. 2021 is considered the year where AI is expected to get even more flourished in many sectors including healthcare, education, and other online businesses. AI is attracting huge amounts of corporate investment from these sectors.
AI stocks are very rare. Although many companies are touting AI technology and ML, the public AI stocks are very few. However, today, the private persons and the companies investing in AI stocks have a bright future to outperform the market in the long run.
Cutting the long story short, the year 2021 is projected to offer huge investment opportunities to explore the fascinating and advantageous AI technology. So gear yourself up to embrace the dominance of AI!