Artificial intelligence may become a potential gold mine for investors navigating the current “extraordinary” market conditions.
BlackRock, a global investment behemoth overseeing approximately $10 trillion in assets, recognizes artificial intelligence as a “powerful catalyst” capable of generating significant investment returns amidst today’s “extraordinary” market.
The BlackRock Investment Institute emphasized their stance for bolstered investment in AI in their mid-year prognosis report—citing numerous “revolutionary” trends that could accelerate sector growth in the foreseeable future.
The report underscored the mounting concentration of gains in the S&P 500—the index monitoring the 500 most substantial corporations in the United States—within a select few tech stocks. The company suggests that investing in AI could be an optimal strategy to exploit this concentration.
The report postulates, “We believe this extraordinary equity market demonstrates how a potent catalyst like AI can drive significant returns, even when the broader economic conditions are challenging.”
According to BlackRock’s investment strategists, AI’s primary “advantage” is in automation. While acknowledging that white-collar jobs are at an “escalated risk” of automation, the report suggests that the consequent cost reductions could significantly enhance profit margins, particularly for businesses with substantial personnel costs and a wealth of easily automatable tasks.
Furthermore, the team proposed that this emerging tech could benefit companies sitting on a “treasure trove” of proprietary data—with AI-enabled tools facilitating the conversion of latent information into “ground-breaking” new models.
The report also recognized the worldwide shift towards low-carbon economies, ageing demographics, and a rapidly transforming financial ecosystem as crucial growth accelerators in the upcoming decade.
However, BlackRock is not the only one amplifying AI. On June 28, Matt Huang, the CEO of crypto investment firm Paradigm, tweeted that the swift and diverse advancements in the AI domain are “too compelling to overlook.”
Yet, not every observer is persuaded by an optimistic AI investment narrative.
Macro-finance commentator, Financelot, told his 90,000 Twitter followers that the AI boom—evident from the 180% six-month increase in GPU manufacturer Nvidia’s shares—is primarily driven by demand for specific AI-centric computing chips. He believes that the imposition of US export restrictions on these chips could lead to a decline in the stock prices of AI-related firms.
Despite the AI enthusiasm, BlackRock has recently shifted focus to Bitcoin. On June 15, the company submitted an application to the Securities and Exchange Commission for a spot Bitcoin Exchange Traded Fund (ETF).
Should the application be approved, it would be the first spot Bitcoin trust product greenlit by the regulatory body. Senior investment analysts from Bloomberg estimate Blackrock’s approval probability at 50%.