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Is artificial intelligence a promising global investment opportunity?

Is artificial intelligence a promising global investment opportunity?

Technologies today enable machines to perform the cognitive functions of sensations, concept and intent

“Can a machine think?” asked Alan Turning in 1950 (in his seminal paper called “Computing Machinery and Intelligence”).

This is the first occurrence of Artificial Intelligence (AI) long before the term was coined. After a long period of disappointments, conditions are now ripe according to us for AI to deliver on its initial promises thanks to: the tremendous increase in computing power, the explosion of data generation and collection; the advances in cognitive science and finally the significant increase in data scientists trained at universities around the world.

As a result, technologies today enable machines to perform the cognitive functions of sensations (by sensors); concept (by deep learning) and intent (by inference).

Simply put, artificial intelligence is the science of self-learning software algorithms that execute tasks otherwise typically performed by humans. Over time, these machines will be equipped to make more decisions, helping us devote more time to higher-order thinking.

Artificial intelligence is already all around us. On a daily basis, we use it without thinking about it anymore: Google search algorithms, Alexa and Siri to give voice commands to assist in our daily lives, Netflix and Spotify to determine our taste in film and music.

Artificial Intelligence is already enabling more personalised medicine and treatment plans in healthcare. Facial, voice and fingerprint recognition are becoming more commonplace as well.

Even in finance, AI evolves to these next levels. Special indexes have been created for this ongoing trend: The STOXX AI has already generated significant outperformance (vs MSCI World) since its launch end of 2013.

It is noticeable that this outperformance has widened since mid-2016, coinciding with the time when it became possible to clearly identify some companies based on the artificial intelligence theme. In the future, we believe there will be increasing communication of listed companies on artificial intelligence.

As investors, we see our role in distinguishing between hype and reality and in developing and understanding as to what extent AI can really contribute to the shareholder value.

At ODDO BHF Asset Management, we have established an investment process that combines AI and our long-term know-how in quantitative stock management.

Disclaimer: Past performance is not a reliable indication of future return and is not constant over time.

Brice Prunas is the global equity fund manager at ODDO BHF 

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