Jump ahead to:
AI - Artificial Intelligence
When new technologies emerge they benefit different groups at different times. Generative artificial intelligence (ai) first helped software developers, who could use GitHub Copilot, a code-writing ai assistant, from 2021. The next year came other tools, such as Chatgpt and dall-e 2, which let all manner of consumers instantly produce words and pictures.
In 2023 tech giants gained, as investors grew more excited about the prospects of generative ai. An equally weighted share-price index of Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia grew by nearly 80% (see chart). Tech firms benefited because they supply either the ai models themselves, or the infrastructure that powers and delivers them.
In 2024 the big beneficiaries will be companies outside the technology sector, as they adopt ai in earnest with the aim of cutting costs and boosting productivity. There are three reasons to expect enterprise adoption to take off.
First, large companies spent much of 2023 experimenting with generative ai. Plenty of firms are using it to write the first drafts of documents, from legal contracts to marketing material. JPMorgan Chase, a bank, used the technology to analyse Federal Reserve meetings to try to glean insights for its trading desk.
As the experimental phase winds down, firms are planning to deploy generative ai on a larger scale. That could mean using it to summarise recordings of meetings or supercharging research and development. A survey by kpmg, an audit firm, found that four-fifths of firms said they planned to increase their investment in it by over 50% by the middle of 2024.
Second, more ai products will hit the market. In late 2023 Microsoft rolled out an ai chatbot to assist users of its productivity software, such as Word and Excel. It launched the same thing for its Windows operating system. Google will follow suit, injecting ai into Google Docs and Sheets. Startups will pile in, too. In 2023 venture-capital investors poured over $36bn into generative ai, more than twice as much as in 2022.
The third reason is talent. ai gurus are still in high demand. PredictLeads, a research firm, says about two-thirds of s&p 500 firms have posted job adverts mentioning ai. For those companies, 5% of adverts now mention the technology, up from an average of 2.5% over the past three years. But the market is easing. A survey by McKinsey, a consultancy, found that in 2023 firms said it was getting easier to hire for ai-related roles.
Which firms will be the early adopters? Smaller ones will probably take the lead. That is what happened in previous waves of technology such as smartphones and the cloud. Tiddlers are usually more nimble and see technology as a way to gain an edge over bigger fish.
Among larger companies, data-centric firms, like those in health care and financial services, will be able to move fastest. That is because poor data management is a big risk for deploying ai. Managers worry about valuable data leaking out through ai tools. Firms without solid data management may have to reorganise their systems before it is feasible to deploy generative ai. Using the technology can feel like science fiction, but getting it to work safely is a much more humdrum affair.