Bank of America: Artificial intelligence is just in its infancy

The artificial intelligence boom is in its early stages and will follow the trajectory of the Internet in the 1990s, according to a Bank of America report, writes Business Insider.

It's a view that comes as skepticism about AI grows, after a long period in which the sector has been at the top of the preferences of investors who hope the technology will bring productivity gains to companies.

"Skeptics argue that the revenue potential of generative artificial intelligence does not justify the current level of investment in AI infrastructure," the report states. "But remember that the thousands of uses and companies that have sprung up because of the Internet have been far more important than the original uses."

According to Business Insider, the Bank of America report, which was released late last week, is based on a survey of equity analysts and macro strategists from more than 3,000 companies.

According to the strategists, artificial intelligence represents the third major technological cycle of the past 50 years and began with the launch of ChatGPT in November 2022. Thus, AI follows the waves of innovation brought by personal computers in 1981 and the Internet in 1994. But unlike those technological boom periods, which took 15 to 30 years to reach mainstream adoption, the impact of artificial intelligence will likely materialize sooner, according to the Bank of America report.

"Generative artificial intelligence can catalyze a disruptive technological evolution in every sector and transform the global economy in the next five to ten years," the report states. However, investors underestimate the technology's long-term impact and overestimate its short-term potential, which is typical of technology booms, according to the paper.

"Investments in artificial intelligence may reach over a trillion dollars in the next few years; making a parallel with the Internet, we are only in the year 1996", also mention those from Bank of America.

According to the report, the current level of investment in companies such as OpenAI, Anthropic and Inflection AI is only a prerequisite for making generative AI applications, which are mostly now in beta versions and will take time to develop and grow. . Strategists predict that artificial intelligence will lead to increased margins for most industries. The semiconductor and software sectors will post big gains, with margin expansions of 4.8% and 5.2%, respectively, over the next five years.

However, for now companies are not seeing the significant returns expected from the huge investments made in the technology. According to Morgan Stanley's chief equity strategist Mike Wilson, the AI investment theme is overexploited, and investors should shift to stocks with a defensive profile, according to Business Insider.