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Artificial Intelligence - Economic Impact and Investment Opportunities

9 March 2018Equities
AI - Economic Impact and Investment Opportunities - Market Insights - Citibank UK

  • Artificial intelligence (AI) could become one of the most disruptive technological developments
  • AI can offer lucrative opportunities and Investors are already seeing its impact on companies and sectors
  • Watch the recent webinar hosted by Citi and Allianz to discuss these developments and the potential benefits to investors

Vidur Varma, Director Wealth Management Citigold, recently held a client webinar with Johannes Jacobi, Product specialist for Allianz's Artificial Intelligence Fund and Amit Harchandani, Head of European Technology Equity Research at Citigroup Centre in London.

Although early development in the field took place several decades ago, it is only now with the advancement in computing power, algorithms and data generation that we are seeing significant development in the real-life application of the technology. Amit highlighted that, due to the recent advancement in computing and memory technologies, the economics of AI have become more realistic and that's why we are seeing the explosion of AI applications.

Artificial intelligence could be one of the most disruptive technological developments, with the potential to have significant impact on economies and societies. Fund managers and investors are already seeing significant impact of AI on various companies. Johannes mentioned how AI is disrupting almost every industry now and its imminent impact can be seen in industries like healthcare and finance.

For investors, this development can offer lucrative opportunities as companies embracing the change in AI technology will see significant growth over the coming years. Moreover, investors also need to think about the potential disruption caused by AI technology and its impact on the business models and profitability of incumbents in the industry. "Looking ahead, as Amit said, Auto industry is likely to be impacted significantly from the development in AI and in particular, tech companies providing new capabilities are likely to be among the key beneficiaries". According to Johannes, "Some of the semiconductor companies are already seeing significant demand for the components due to growth in AI and are likely to be one of the early beneficiaries of the trend".

Artificial Intelligence – Economic Impact and Investment Opportunities - Citibank UK

Source: Bloomberg as of 3 Mar 2018

To benefit from these trends, investors can either seek investment solutions that are focusing on the companies benefitting from this or can look at the technology sector in general. Technology stocks have significantly outperformed the general market over the last years and AI might contribute further to the earning growth of technology companies. In spite of the outperformance of technology sector, Citi strategists remain overweight on the technology sector due to higher growth potential and structural trends favouring the industry.

For further detail on what Artificial Intelligence is, how it is disrupting industry today, and how it will transform the future watch the full webinar here. Speak to your Relationship Manager to better understand the implications of these ideas for your portfolios.

Webinar recorded live at 13:00 GMT, March 8, 2018

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