A look at the evolution of AI and opportunities for growth in key sectors
Artificial intelligence (AI) is already having a huge effect on different sectors and realising its potential to fundamentally change jobs and create new forms of work. This mainly concerns the entities that the use of artificial intelligence as we know it today have brought into being; that is, the current global market leaders in the semiconductor, cloud and cybersecurity sectors. Their influence over global financial markets cannot be underestimated.
A journey spanning generations
The history of artificial intelligence is multifaceted, fascinating and as technological as it is philosophical. Back in the 1st century BC, Chinese, Indian and Ancient Greek philosophers developed concepts to formalise human thinking on which today’s understanding of artificial intelligence is based.
This idea also inspired Ada Lovelace, who, long before the development of modern computers in the 19th century, was the first person to write a computer programme. She thought about how machines could not only do calculations but also complex tasks, such as composing music.
Later, in the 20th century, John von Neumann and Alan Turing made important contributions to the development of computing and technology. In his book The Computer and the Brain, Von Neumann, who is known for his work on computer architecture, examined the relationship between computers and the human brain. Turing was instrumental in developing the fundamental theory of modern computing and invented the Turing Test, which tests whether a machine can demonstrate intelligence.
The term “artificial intelligence” was eventually coined in 1956 by John McCarthy at the Dartmouth Conference and this is considered to mark the official birth of AI research.
Artificial intelligence: much more than just ChatGPT
The first thing most of us think of when we hear the words artificial intelligence is ChatGPT. But AI has much greater complexity and goes far beyond ChatGPT. AI has developed at a meteoric pace in recent years in particular.
Artificial intelligence includes various techniques such as machine learning and deep learning that enable machines to simulate human intelligence. It is not restricted to one particular method or algorithm. AI refers to the development of machines and programmes that can perform tasks that typically require human intelligence – from simple automated control systems to complex systems that are capable of learning and adapting.
AI lends itself to a broad spectrum of applications: from speech recognition and imaging to autonomous vehicles and virtual assistants.
It is this diversity that is revolutionising sectors the world over and creating unique possibilities for innovation and growth. From semiconductor manufacturing through to the cloud sector and cybersecurity – artificial intelligence is advancing companies towards new frontiers and attracting investors from all over the world.
Pushing the digital boundary: how artificial intelligence is advancing investment strategies and growth in the global economy
AI signifies a paradigm shift for the economy. Things that used to be highly specialised are much more scalable and accessible today. Companies all around the world can use AI to strengthen their competitive position but technology companies in particular, which are driving the rapid development of AI, are likely to become more attractive to investors worldwide.
As a fund that focuses on structural growth trends, MainFirst Global Equities Unconstrained Fund homes in on investment themes such as digitalisation, automation, decarbonisation and AI.
“If you want to get in on the trends early, you have to recognise them in time and invest long-term.” Frank Schwarz
For a decade now, the investment team has been interested in manufacturers of graphics processing units (GPUs) and has been investing in some of today’s market-leading chip makers since as far back as 2015. GPUs today provide most of the computing power for AI applications. The strategic focus on long-term trends is paying off now.
Nvidia is a prime example of this development. The company is the undisputed market leader in graphics processors and AI chips. It has managed to establish itself as a global player and boasts enormous scalability of data centres and AI models. Nvidia’s partnerships with technology and research institutes facilitate constant innovation, which underpin the group’s dominant position for years to come. Despite strong revenue growth in 2023, Nvidia has enormous further potential as data centre and AI model scaling has just begun.
Another company that is benefiting from this development is SK Hynix. The South Korean company is the leader in the development of High Bandwidth Memory (HBM). Its chips are particularly relevant for AI applications. Other important links in the AI value chain are TSMC from Taiwan and ASML from the Netherlands. The latter is a major player on account of its leading role in the development of lithography systems.
However, the more digital services are used, the greater the risk of cyberattacks on companies, state agencies and private households. Cybersecurity and the cloud therefore also play an important role in the current positioning of MainFirst Global Equities Unconstrained Fund.
With its cloud computing platform AWS, Amazon provides companies and developers with powerful computing environments for training and implementing AI models. In addition, Amazon has invested USD 4 billion in the AI start-up Anthropic and plans to develop Small Language Models (SLMs) for AI training on private data.
For Microsoft, its involvement in AI revolves around its cloud platform Azure. With Azure, Microsoft has created a basis for companies to gain access to AI technologies. Microsoft’s investment in OpenAI is changing the way we use technology, and enables the software giant to integrate AI into Microsoft products to a greater extent.
As the whole world becomes more dependent on cloud services from Amazon, Microsoft and other companies, demand for security solutions is also growing. The company Zscaler, for example, is able to identify and analyse threats with the aid of AI. Since companies are increasingly moving their operations and data to the cloud, the role of providers such as Zscaler is getting increasingly important to ensure these resources are protected.
Another promising player in the cybersecurity sector is the US company CrowdStrike. Through the use of AI, the company has succeeded in making a mark for itself in the fast-paced and complex world of cyber threats and has gained a decisive market advantage.
Shaping the future: investment in AI development and innovation.
The AI boom is only starting. What needs to be done now is to implement and develop the new technology both on the hardware and software side. The pioneers in their respective specialist areas are likely to be at the forefront of development. The fact is that AI applications are among the most important developments of the past 20 years and offer one of the most interesting investment opportunities out there. By getting in on the right trends early and supporting the innovators in this area, not only can we fully exploit the potential of AI but also play an active part in shaping the digital future.
