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Ask anyone in the investment world how important artificial intelligence is to their business, and few can give a better answer than what Jamie Dimon, CEO of JPMorgan, said on Monday.
“Although we do not know the full impact or the exact rate at which AI will change our businesses – or how it will impact society as a whole – we are firmly convinced that the consequences will be as extraordinary and perhaps as transformative as some of the major technological inventions of the past several hundred years,” Damon He wrote in his annual letter to shareholders. “Think of the printing press, the steam engine, electricity, computing, the Internet, etc.”
Some analysts have pointed to artificial intelligence as ushering in the “fourth industrial revolution.” Damon's comparisons underscore the same point, more specifically.
For JPMorgan, this is great.
The benefits of this technology have helped the country's largest bank handle its wide network of clients and business lines. Given the interconnectedness of the global financial system, we can be confident that the company is not alone.
But the AI trade that stunned investors in early 2023 was not a sudden realization that major companies were, or would be, using AI applications en masse.
Instead, as Yahoo Finance's Dan Hawley argued last year, OpenAI's launch of ChatGPT made the idea of enterprise-level data management technology tangible for consumers.
AI is no longer just about helping engineers or developers sort through thousands of lines of code or hundreds of commands looking for a problem, inefficiency, or error.
Now, you or I could call up an interface and ask it to write a song for us about, say, a business journalist trying to write a newsletter on deadline about Jamie Dimon's opinion on artificial intelligence.
Making AI tangible to consumers has enabled lucrative research work for big tech companies. The search function is display ads.
Combine the economics of targeted digital advertising companies with the investment cycle that has reshaped the income statement of companies like Nvidia (NVDA), and it's not hard to see why the stock market has been stuck on this topic.
However, as we move past this initial burst of excitement, the AI boom looks less like a revolution and more like executive decrees over the coming years.
The entry of artificial intelligence into the “fourth industrial revolution” is exciting. But Marc Benioff used this framework in 2017, the same year Dimon himself first referred to artificial intelligence.
“Since the company first began using AI more than a decade ago, and first mentioned it in my 2017 letter to shareholders, we have materially grown our AI organization,” Dimon wrote, adding that the company now employs more than 2,000 people. They focus on this area.
“We have been actively using predictive AI and machine learning [machine learning] “For years – and we now have over 400 use cases in production in areas such as marketing, fraud and risk – they are increasingly driving real business value across our businesses and functions,” Damon added.
The AI hype cycle outpacing its coverage does not make this technology a steamroller for the consulting category. In fact, it suggests the opposite.
Investors are less concerned with what happens today and more excited about tomorrow's possibilities. Pointing out any cracks in the AI trade probably says less about the perceived limits of the technology's potential and more about the benefits being realized today.
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