Asset management giant – BlackRock – believes that structural shifts like the rise of artificial intelligence (AI) have the potential to drive returns now and in the future. Its new report described the space as a “mega force” whose applications could disrupt entire industries.
BlackRock found that S&P 500 gains have become increasingly concentrated in a handful of tech stocks, exceeding levels seen during the 2000s tech boom.
The company believes that this “unusual” equity market demonstrates that AI can be a big catalyst of returns even during tough macro environment conditions.
- In its mid-year outlook report, the asset manager’s investment team wrote that the importance of data for AI and potential winners is “underappreciated.”
“Companies with vast sets of proprietary data have the ability to more quickly and easily leverage a large amount of data to create innovative models. New AI tools could analyze and unlock the value of the data gold mine some companies may be sitting on.”
- BlackRock Investment Institute also revealed that it has an overweight allocation for AI-related shares in developed markets.
- It also suggested that investors should get granular in portfolios in the “new regime” of economic volatility and high-interest rates, explaining that such a strategy is likely to be more crucial than relying on broad asset class returns.
- The report highlighted that AI-driven productivity gains could boost profit margins and could benefit companies with high staffing costs or a large share of tasks that could be automated while simultaneously admitting that white-collar jobs are at an “increased risk” in the process.
- Besides BlackRock, several companies have placed big bets on AI.
- In April, Bitget pledged $10 million for the development of the Fetch.ai ecosystem, which offers a service automation infrastructure that is powered by an AI agent network.
- Wall Street banking giant JPMorgan was reportedly developing AI solutions.