Why Bailador reckons Straker is well positioned to capitalise on generative AI
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Bailador Technology Investments says the ASX’s only pureplay, tech-driven language service provider Straker Translations is well positioned to harness the growth tailwinds that are emerging from generative artificial intelligence (AI).
In November 2022 the launch of ChatGPT, which is powered by OpenAI’s large language model (LLM), thrust generative AI into the mainstream.
A year on, AI continues to dominate headlines in the global tech sector as it fuels a recovery and innovation surge.
The generative AI market is facing huge growth from a market size of just $40 billion in 2022 to a forecast US$1.3 trillion over the next 10 years.
Bailador Technology Investments (ASX:BTI) partner James Johnstone says to understand the forecasted exponential growth it’s good to have an understanding of these language models.
“LLM’s have been trained on 175 billion+ and ever-increasing parameters and understand natural language prompts to provide human-like textual and graphic responses,” he says.
He says LLMs have the potential to deliver significant productivity improvements in industries like customer service, content creation, business task automation, healthcare, and entertainment.
“AI has been in the works since the 1980s in the research field but has really come into the mainstream with the launch of ChatGPT,” he says.
“Immediately everyone was grappling with how we best utilise this in terms of productivity enhancements and businesses are being built on the back of the content generation.
“We will continue to see new use cases and some of them will become adopted while others may fall by the wayside.”
Johnstone says the ease at which AI can generate content is driving an exponential increase in content.
He says the increased pool of content presents translation opportunities for Straker Translations (ASX:STG), which tech-focused capital fund BTI has a 13.5% stake.
STG provides automated language translation services with expert human translators in the loop to check for accuracy.
“The founder and CEO Grant Straker at the recent AGM started to demonstrate to the market how Straker is thinking about AI and how it will position to benefit from these tailwinds of generative AI as they unfold,” Johnstone says.
Data estimated by language industry researcher Konstantin Dranch. Source: BTI
Johnstone says while there has been a huge amount of hype about generative AI there are still some crucial requirements including the need for humans to validate important machine-driven content given AI’s tendency to ‘hallucinate’ or make errors.
Johnstone says AI is simply not yet at the point where people can completely rely on what it is producing.
“We know AI is prone to hallucinations or inaccuracies so where Straker is really looking to play a role is having the automated translation platform but also a network of 10,000+ human translators to validate and verify.” he says.
Johnstone says furthermore for enterprises to derive productivity gains, translation workflows will need to be both automated and integrated into an enterprise’s existing tech stack and workflows.
“Even if you’re using AI you may need to load documentation or content into it and Straker’s platform natively integrates into Slack and teams, so you don’t need to hire someone to manage the process,” he says.
“There’s talk about fatigue of having different applications to utilise, but Straker has recognised that and wants to work where their customers are working.”
He says STG’s newly launched LanguageCloud platform integrates with both Slack and Microsoft Teams so enterprises can work in their native environments.
Johnstone says privacy of data is a question which has continually been brought up. He says if you are a corporation and want your data to remain secure are you confident putting it into open source, large language models?
“Enterprises need to be confident their private data remains secure and is not being used to train publicly available LLMs,” he says.
“Straker has a closed loop in a sense that the data they are using on behalf of clients is only available to that individual client so privacy and sovereignty of data at the individual enterprise level is really interesting.”
Johnstone says STG’s hard to replicate attributes position the company well to benefit from the AI-driven growth in content.
STG has started FY24 on a positive note, showing stable revenue and continued profitability in the first quarter.
The company’s diverse geographical exposure globally and breadth of clients have proven beneficial amidst variable market conditions.
STG reported revenue a modest 2% rise from the preceding quarter to $13.1 million in Q1 FY24, which was considered encouraging sign given tough market conditions that have prevailed over the last 12 months.
“Straker’s LanguageCloud platform is really positioned to harness some of these trends we are seeing on the back of generative AI,” Johnstone says.
However, Johnstone says it does seem generative AI will lead to more content produced, with much of it needing to be translated in a quality, accurate manner.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.