Bank of America stated that the artificial intelligence trend is still in its infancy, just like the development path of the internet in the 1990s; The bank indicated that the impact of artificial intelligence will be felt earlier than past technological prosperity.
On September 13, Finline News (Editor Huang Junzhi) With investors gradually regaining rationality and the rise of US technology stocks stagnating or even experiencing a pullback, there are more and more doubts about the AI frenzy. However, Bank of America stated that the AI trend is still in its early stages, following the development trajectory of the Internet in the 1990s.
Bank of America analysts pointed out in their latest report: 'Skeptics claim that the revenue potential of generative artificial intelligence (GenAI) is not sufficient to prove that the current level of investment in artificial intelligence infrastructure is reasonable.'
'But please remember, more important than the initial consumer use cases of the Internet, are the thousands of use cases and companies that have emerged because of the internet,' the report added.
At the time of Bank of America's statement, investors have long been pouring funds into the AI industry, hoping to see companies benefit from the efficiency and productivity gains brought by AI technology. However, satisfactory results have not yet been achieved, leading to growing skepticism towards artificial intelligence.
For example, Mike Wilson, Chief US Stock Strategist at Morgan Stanley, pointed out that the AI theme is 'overhyped' and recommended investors to buy high-quality defensive stocks.
Bank of America's report released on Thursday is based on a survey of stock analysts and macro strategists covering over 3,000 companies.
These strategists believe that artificial intelligence is the third major technology cycle in the past 50 years, starting with ChatGPT's launch in November 2022. Artificial intelligence closely follows the innovation waves of personal computers in 1981 and the internet in 1994.
But the report states that unlike technology trends that took 15 to 30 years to be adopted by mainstream, the impact of artificial intelligence may happen faster.
"Generative artificial intelligence may catalyze a technological revolution, disrupting every industry and changing the global economy in the next 5 to 10 years," they wrote.
However, Bank of America analysts believe that investors have underestimated the long-term impact of this technology and overestimated its short-term potential, which is a typical characteristic of technological prosperity.
"In the next few years, the capital expenditure on artificial intelligence may exceed 1 trillion US dollars, but compared to the Internet era, we are only at the stage of 1996," they wrote.
The report also adds that the current investment levels in companies like OpenAI, Anthropic, and Inflection AI are only prerequisites for developing GenAI applications, most of which are still in the testing phase and require time to develop and grow.
Bank of America strategists predict that artificial intelligence will drive profit growth for most companies in the industry. The growth in chip and software business will be particularly significant, with profit margin increases of approximately 4.8% and 5.2% in the next 5 years respectively.
Editor/jayden