Market Perspectives on Artificial Intelligence

For a more detailed overview of AI, click here.

What is AI?

Artificial Intelligence (AI), the simulation of human intelligence by machines, has been around in some form since the 1950’s. The current focus on the technology stems from the advent of Generative AI (GAI), which allows computers to generate text, video, images, or code, which was not previously possible.

How does it work?

Generative AI uses neural networks, deep learning, and natural language processing (NLP) technology to “think” like a human would. Large data sets are used to pre-train models, which in turn can analyze and draw conclusions from data and generate new content/data from an underlying data set.

What are the risks?

Possible risks from GAI technology broadly result from the fact that there is a lot that people don’t know. We believe that three key risks are:

1. data leaks and misinformation
2. ethical and copyright issues, and
3. labor displacement that may arise from adoption of the technology.

Source: Source: Goldman Sachs Global Investment Research, and Goldman Sachs Asset Management. As of September 30, 2023.

Key Takeaways from Goldman Sachs Asset Management

Artificial Intelligence can:

1. provide personalized, convenient, and secure services
2. automate manual and repetitive tasks
3. analyze large and complex data sets, and
4. enable new opportunities that can create competitive advantages.

As technology continues to advance, we believe that the companies best positioned for early success in the GAI movement are:

1. companies with infrastructure that can integrate GAI onto their existing platforms
2. companies that are working with components of AI (i.e., chips or software), and
3. companies across industries that are early adopters.

GAI has given humans some of the most advanced “game pieces” with no gameboard or instructions on how the game should be played.

GAI has the potential to increase labor productivity growth of 1.5 percentage points annually for the next decade, informing our view that this technology is not just hype.

Key risks stemming from GAI include:

• copyright and privacy issues
• ethical and misinformation issues
• and job displacement.

GAI has the potential to impact nearly all industries, however, timing may be difficult to predict. We believe that widespread adoption of GAI will provide immense societal benefits in the long term.

Source: Goldman Sachs Global Investment Research and Goldman Sachs Asset Management. As of September 30, 2023.