Artificial Intelligence will be used in 70pc of businesses by 2030: McKinsey
Link copied to
Artificial intelligence has the potential to deliver global economic activity of about $13 trillion by 2030, a new report says — giving investors in ASX-listed AI stocks a reason to smile.
‘Notes from the frontier: Modeling the impact of AI on the world economy’ is a new report from McKinsey & Company look at the future impact AI will have on our lives and the way we do business.
It finds that AI has a huge potential to contribute to global economic activity (while warning that adoption of AI could widen gaps among countries, companies and workers).
>> Scroll down for a table of ASX stocks with exposure to AI — and their recent performance
McKinsey estimates that by 2030 some 70 per cent of companies might have adopted at least one type of AI technology somewhere in their business.
That’s good news for the 30 or so ASX stocks who have some form of exposure to the technology, whether it be futuristic computer chips, makers of AI apps or companies leveraging AI to improve efficiency.
But investors have to choose carefully.
On average, ASX AI stocks are up about 30 per cent — thanks mainly to a small number that have made big gains. BidEnergy, 4DS Memory, Resapp Health, LiveTiles and Weebit Nano have made gains of more than 100 per cent over the past year.
But individually, the majority of stocks in our list are down year-on-year.
Some 17 of the 28 companies have witnessed downturns in their share price over the past year.
BidEnergy (ASX:BID), which sells an automated system that monitors a business’s energy spending, is up a whopping 504 per cent, hitting 14.5c on Friday.
4DS Memory (ASX:4DS) and Weebit Nano (ASX:WBT), both of which are working on ReRAM, an emerging technology that combines the advantages of RAM and Flash, are up 265 per cent and 142 per cent year-on-year respectively.
Innovative software company LiveTiles (ASX:LVT) is up 190 per cent while Resapp Health (ASX:RAP), which uses AI to help diagnose respiratory disease, is up 240 per cent.
Marc Kennis, founder of TMT Analytics, says companies with exposure to artificial intelligence remain a good investment.
“Looking at the semiconductor companies alone like Weebit Nano or BrainChip we’ve seen a lot of growth,” he said.
“You need to be patient but if you invest early on you’ve got time to let it play out and these technologies aren’t going anywhere.”
Mr Kennis said AI was a broad spectre which could be broken into two separate segments: companies working on AI-enabled software that uses supervised learning, and companies working on hardware that can be trained without supervision.
“There is a place for both, certainly, and software will be mainstream for a long time to come – it is what 99.9 per cent of AI companies are working with,” he said.
“But hardware-based AI is really interesting and something I think we are going to see a lot more of in the near future.”
Here’s a table of ASX-listed companies with exposure to AI and their share price performance.
Swipe or scroll for full table. Click headings to sort
|Ticker||Short Name||6-month price change||12-month price change||Price Sep 14 (intraday)||Market Cap|
|VHT||VOLPARA HEALTH T||30.7||64.2||89.5c||159.4M|
|ALC||ALCIDION GROUP L||20.0||-7.7||4.8c||38.7M|