Morgan Stanley’s thematic research suggests investors are significantly underestimating the transformative and long-lasting impact of AI technologies across various industries.
Main Points:
- Financial analysts tend to miscalculate the adoption and market sizes of general-purpose technologies like AI, often underestimating their long-term impacts while overestimating short-term effects.
- AI technology adoption, evidenced by substantial improvements in productivity and efficiency across industries, is growing rapidly, with costs to utilize generative AI models plummeting by 90% since 2021.
- Despite the challenges in measuring AI adoption and success, companies utilizing AI are expected to see significant long-term benefits, challenging the current market skepticism and underperformance compared to AI enabler companies.
Summary: Edward Stanley of Morgan Stanley highlights a widespread underestimation of AI’s long-term impact on the economy, drawing parallels with historical underpredictions of technologies such as the internet and smartphones. Despite the dotcom era’s echoes and the market’s current fixation on AI enabler companies, AI adoption is already demonstrating significant efficiency gains and productivity improvements across various sectors. For instance, L’Oréal’s AI-powered app dramatically increased sales conversion rates, and other organizations have reported substantial time and resource savings through AI integration.
The article points out that while the immediate market response to AI adoption might be tepid, the underlying productivity gains and economic benefits are poised to reward long-term investors. Morgan Stanley projects that 2024 will be a pivotal year for AI investment, with tangible productivity improvements expected to commence in 2025. The narrative encourages a longer-term investment outlook, emphasizing the distinction between short-term market reactions and the substantial, enduring economic contributions of AI technology.
Source: Investors are still underestimating the long-term impact of AI
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