For active asset managers, artificial intelligence promises deep change that will touch many holdings in their portfolios.
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“Superstar companies” that successfully harness AI to gain formidable competitive advantages will grow their profitability significantly. Meanwhile, some undervalued companies face major challenges to their business models and may not exist 10 years from now.
AI’s progress is set to accelerate in the next few years and will affect many stocks in an investment portfolio.
A key benefit of AI in many sectors will be the opportunity to capture efficiency and productivity gains. Relatively small productivity gains could lead to far larger increases in returns on invested capital.
Other businesses will harness AI to accelerate revenue growth by developing new products and services, based on the insights provided by data that they own, generate and, in some cases, buy in.
AI will entrench the dominance and superior profitability of a few leaders in major business sectors.