The AI revolution: can we manage the risks and reap the rewards?

The growth of artificial intelligence (AI) looks set to change the way we live, work and interact. But are these changes we should welcome? Recent comments from Geoffrey Hinton, widely called the ‘godfather of AI’, suggest that we should be worried.

The Association of Investment Companies (AIC) has gathered views from investment company managers with exposure to AI-enabled businesses to review the opportunities and potential impact on society.

Harry Raikes, Manager of Schroders Capital Global Innovation Trust, said: “Our belief is that AI, most recently focused in the field of generative AI enabled by the advent of large language models, has the potential for innovation and disruption on a scale comparable to the introduction of email, the internet and the smartphone. And it’s not just the magnitude of this innovation that’s remarkable, but also the speed at which it’s being adopted.

“However, we know we cannot ignore the significant unknowns we face as a society regarding its longer-term implications. For example, will the widespread use of AI ultimately foster greater creativity and intelligence or will it stifle them? Will it enable better knowledge sharing or fuel rampant misinformation?

“Most significantly, will it mitigate social inequality, or will it exacerbate the concentration of power and wealth among a select few? In our view, the answers to these questions are not predetermined; rather, they will be shaped by the choices we make as a society about how we use these powerful new tools. Again, we are cautiously optimistic since history tells us that advances in technology help improve society and efficiency, as opposed to a dystopian view of technology ruining lives.”

Alastair Unwin, Fund Manager in the Polar Capital Technology team, said: “AI is set to be the next major secular technology trend driving the technology sector’s growth, taking on the baton from the cloud and mobile internet. The early beneficiaries of AI largely reside in the technology stack which powers the training and inference operations of large language models, particularly semiconductors.

“The quantity and quality of data on which models are trained makes a material difference to their performance, so there may be large growth opportunities for infrastructure software companies whose products can help with the collection and management of vast datasets.”

Claire Shaw, Portfolio Director of Scottish Mortgage, said: “The pace at which AI is evolving is leaving people scrambling to understand the ecosystem that is developing around this area and trying to work out who are the winners and who is at risk. One perhaps uncontroversial statement we can make at this stage is that generative AI systems need knowledge – and lots of it – to create content which is not something traditional computer hardware can handle. These workloads require graphic processing units (GPUs) or tensor processing units (TPUs) with specialised ‘accelerator’ chips capable of processing all that data across billions of parameters in parallel.

“NVIDIA, a company Scottish Mortgage has held since 2016, is one of the players that dominates the design of these chips with around 90% of generative AI programmes being trained on them. Against that backdrop, NVIDIA is likely to be one the foundational companies in this ecosystem. Another long-standing Scottish Mortgage holding, ASML – the dominant manufacturer of the lithography equipment used to make chips – is also set to be a beneficiary of the rapid adoption of generative AI and machine learning technologies given their unparalleled competitive advantage in this field.”

Stuart Veale, Managing Partner of Beringea, which manages the ProVen VCTs, said: “AI has the potential to dramatically improve productivity in the workplace. We are already seeing businesses across the portfolio of the ProVen VCTs leverage AI tools to streamline the work delivered by their teams.

“For example, many enquiries that were previously delivered by customer service teams can now be efficiently managed by AI-based agents. This enables the workforce to focus on higher value, more complex interactions with customers.

“We have also seen that AI can have a dramatic and positive impact on the healthcare industry. Businesses are already leveraging AI to generate efficient and reliable diagnoses for patients, while AI-based platforms are producing huge amounts of opportunity in drug discovery.”

Steven Tredget, Partner of Oakley Capital, which manages Oakley Capital Investments, said: “Education is just one of many sectors we think will be transformed by AI. Currently there aren’t enough teachers, classes are too large, textbooks are expensive, private education is prohibitively expensive! And exams can be too blunt and stressful an instrument for assessing diverse students with differing abilities. AI removes all these constraints to the benefit of students. It’ll become easier, faster and cheaper to create course content, putting more of an emphasis on personal delivery and outcomes. It will enable personalised teaching, enabling students to learn at their own pace, tailoring content and delivery to individual ability, and identifying gaps in their understanding. Imagine having your personal teaching assistant on hand, 24/7, to complement traditional tutoring – no longer having to raise your hand in a crowded university lecture hall to ask an embarrassing question!

“Our portfolio company IU Group recently launched its AI-driven teaching assistant Syntea to help its 120,000+ higher education students. Feedback has been overwhelmingly positive. Leveraging AI in this way to deliver effective, personalised, one-on-one teaching also promises to make quality education accessible to all, helping to democratise learning.”

Tim Levene, Chief Executive Officer of Augmentum Fintech, said: “Geoffrey Hinton’s comments were specifically addressing the developments in generative AI and the risks that these pose. We recognise, as with all new technologies, the merits in responsibility and caution but there is also a huge opportunity when it comes to AI more broadly that cannot be ignored. Many of the non-generative AI models that are used practically today are well established and the implications are understood. The advantages that these bring should not be overlooked, lots can be achieved with AI models that are relatively simple when compared to the large language models and generative AI that are grabbing the current headlines. 

“A robust regulatory framework will be essential for maintaining safety and addressing ethical concerns as generative AI becomes more widely adopted across society. We have seen lawmakers in the UK, USA and EU indicate plans to implement rules that cover the use of AI. Overall, we welcome regulation and scrutiny of the industry, and believe the opportunity remains extremely compelling.

“We are excited about how consumers stand to benefit. There remain big challenges to solve in the consumer space such as financial literacy and financial inclusion. In improving operational efficiency of firms, it will be possible to deliver high quality services at lower costs, and to provide personalised offerings. For example, tailored wealth advice, once a service exclusively available to high-net-worth individuals, can now be partially generated by AI and therefore provided to a wider audience at a lower cost.”

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