Unsurprisingly, S&P500 earnings estimate dispersion reached a new record high (100th percentile) in 2Q2020, as the pandemic outbreak has contributed to widening the revenue gap between companies who embraced the digital revolution vs. companies with low exposure to technology solutions.
This situation is pushing business leaders to quickly adapt, rapidly evolving legacy business models: as multi-trillion dollar industries turn to AI to accelerate their digital transformation and enhance their chances of survival, investment flows towards the AI market continued to grow at a CAGR of 43.39% this year, up to $40.7B in 2020 from $28.42B the year before
As reported by a McKinsey global survey, companies and business leaders agree that leveraging AI will drive profit growth by reducing costs, managing risks, increase margins, and fueling innovation. Moreover, the potential of AI technology can be exploited in many ways and in different sectors.
Think about digital payments, where people experienced drastic changes in their payment habits during lockdowns and companies must deal with an increase demand for online transactions, making digital payments more accessible and transparent for their customers.
For example, Chinese Giant Alibaba launched the “smile to pay” service, a facial recognition technology allowing customers to literally pay by smiling in a 3D camera, after having recognized and verified the customer’s identity through AI technology. Customers can save time and enhance their shopping experience by eliminating extra steps in the payment process, like taking out the card and entering the PIN, also reducing the risk of fraud.
Recently, Amazon opened the new era of smart grocery shopping supported by AI technology, by launching its Dash Cart in its Amazon Go stores. Each cart is provided with sensors and cameras which identify all items that shoppers put inside the cart, automatically charging items to the bill and showing all product details on the cart display, eliminating wasted time with traditional check out systems and improving shopping experience. Those carts are powered by an AI software which communicates with hundreds of cameras in the ceiling, supporting the entire system.
Other great innovations come from the healthcare industry: recently Google-owned Deepmind, through its AI service AlphaFold, captured 3D shapes of proteins, answering a big challenge for scientists to finding a treatment for genetic diseases. The 3D model generated by AlphaFold is more accurate than any other generated before: while the average performance of other systems typically scored 75 on a 100-point scale of accuracy, AlphaFold scored around 90 on the same target. That represents a big milestone for the health industry because through AI technology it will be possible to design drugs more accurately and accelerate the understanding of severe human diseases, including cancer.
AI is becoming the new normal for many companies, not only tech giants who were among the first to understand the long-term potential provided by technology innovation. With the ability to analyze more data and a more flexible approach to work, companies can offer better customer experience, more customized services, enhance people's lives, and most importantly they can improve their financial metrics.
The adoption of AI technology started a long time before the pandemic, but the recent breakthrough in AI computing ability and the benefits witnessed by companies who adopted these technology solutions, are a positive signal that we are still in the early stage of a massive wave of innovation and growth for the sector, which will persist after the current crisis.
The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.
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