Without even realizing it, we have found ourselves hearing about "artificial intelligence accessible to all" and "innovative and generative green technologies." It's happening in the year of Italy's presidency of the G7, which has also been called upon to address these issues that have now moved out of laboratories and button rooms and landed on the front pages of the news, in school desks and even in bars.
The topic divides the great visionary entrepreneurs from the politicians who have a more conservative approach to the subject. New Eldorado or peril that it may be, artificial intelligence has in fact made technology even more democratic and cross-cutting - with the pros and cons that this evolution brings - and, most importantly, it has monopolized funds previously distributed over multiple channels.
In the past 10 years alone, private companies have invested more than $1 trillion in artificial intelligence and still have to invest more to create the infrastructure, to maintain it on a daily basis, and to make it available to all; suffice it to say that ChatGPT 4 pays an electricity bill equal to the output of an average nuclear power plant. Despite these obstacles, according to experts, the trend in 2024 will continue to be Ai and particularly generative AI.
Generative Artificial Intelligence: the example of ChatGPT
What is it? It is a technology that can create written text, images, videos, music tracks and other types of content by responding to requests that come in from users. It is precisely generative artificial intelligence that underlies the much-discussed and hotly contested ChatGPT, the application developed in America by OpenAI (a nonprofit corporation), which answers users' questions on any topic, creates written texts or translates them into various languages.
In addition to replacing man's physical labor, therefore, artificial intelligence seems increasingly destined to replace his intellectual labor as well, at least for certain tasks. Under pressure are mainly tertiarized economies, i.e., those in developed countries, a fact that will trigger a real revolution in the economy and society. In the prospect of this revolution taking place, therefore, investors have poured a mountain of money into a few companies that have AI-related business and are listed mostly on American stock exchanges.
Champions in the stock market
This is the case, for example, with Nvidia, which is headquartered in Santa Clara and listed on the Nasdaq technology list: in 2023 its shares gained as much as 239 percent in dollar terms and in a five-year period had a stellar return of more than 1000 percent. The boom on the list is mainly due to the growth in demand for processors produced by the company, which are finding increasing application with the development of generative artificial intelligence.
In general, investors have been scrambling to buy stocks on the Nasdaq. A triple-digit rise has also been netted by other stocks such as those of Palantir Technologies, a company based in Denver, Colorado, that specializes in big data analytics, another area that is experiencing great development thanks to AI. Over the past year, Palantir's stock has doubled in value on Wall Street, gaining 167 percent.
"Artificial intelligence is certainly a long-term trend that will change the way of working even within asset management companies and lead to greater efficiency in investment selection as well," comments Corrado Cominotto, head of Active Asset Management at Banca Generali. "In particular, one field of application where AI will be able to play a key role is in sustainable investments. The vast amount of data available to companies and asset managers will be able to be analyzed much more quickly and accurately, enabling the creation of models that are better able to respond to the challenges imposed by climate change. In addition, better management of data in the area of sustainability will make it possible to arrive at a greater impact of the investments themselves on the environment, and as a result, it is likely that investment flows aimed at Esg issues may increase over the next few years," the expert continues.
AI and Venture Capital
"The world of venture capital offers a telling example of what happened this year to the tech universe, which effectively monopolized the bulk of investments," explains Roberto Tognoni, executive partner at Reply. 2023 was not a good year for this form of financing, which saw flows fall by more than half compared to 2022: in the United States alone, it saw inflows fall by 67 billion compared to 2022 (-60 percent). However, the decrease in inflows is not the only phenomenon that has occurred.
In the past decade, venture capital, funded a very wide range of technologies: from blockchain to the metaverse, from cloud to data, from spatial computing to 3d computing. "These funds represented the marketing 'ammunition' of large U.S. corporations that had, among other things, the effect of stimulating the growth of niche players. In 2023, in addition to declining flows, almost all of them were focused on artificial intelligence and in particular on the generative Ai sub-segment. One figure is enough to capture the situation: in a year marked by the venture capital crisis, investments in artificial intelligence startups reached a record $27 billion," Tognoni notes.
The role of large industrial players and trends
It has not gone unnoticed that a large part of these flows for the first time have come not only from specialized players but-more than half-from large industry players: Microsoft, for example, has put more than 10 billion euros on the plate between investments made in Open Ai and ancillary initiatives supported. Alphabet (which controls Google), Meta (which controls Facebook and Instagram) and Amazon have also participated in the generative AI banquet with the latter pledging an investment of up to 4 billion euros in Anthropic, a start-up that has set up an intelligent assistant that tries to compete ChatGPT.
While Italy is still waiting for its national champion, turning our gaze to Europe, there are two emerging players that may soon get to compete with the overseas entities: the first is France's Mistral, which develops generative AI solutions and already has a valuation close to $2 billion. The second is Germany's Aleph Alpha, which offers tailor-made generative AI solutions for businesses and governments and recently raised $27 million. Note that large corporations are in some cases both investors and developers thus playing an essential dual role in the development of these technologies.
This trend will continue, according to experts, in the coming years with substantial investments by industrial big techs in venture capital on this specific segment.
"The AI trend is certainly destined to characterize the coming years in financial markets. In particular, attention will have to be paid to a possible geopolitical challenge between the United States and China that could trigger further development of AI-related companies," Cominotto concludes.
Corrado Cominotto, Head of Active Asset Management at Banca Generali
The AI trend is certainly destined to characterize the coming years in financial markets. In particular, attention will have to be paid to a possible geopolitical challenge between the United States and China that could trigger further development of AI-related companies.
