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Investment in the new economic environment
In an interim report, BlackRock Inc.’s Investment Research Institute argued that in developed markets, artificial intelligence (AI) could be the driving force behind high returns for investors.
Our 2023 Midyear Global Outlook is out now!
A more volatile economic and market environment brings new and different investment opportunities. Find out how we’re identifying them 
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— BlackRock (@BlackRock) June 28, 2023
In a report titled “New Institutions, New Opportunities,” BlackRock calls five ongoing social transformations “megaforces,” which are revolutionary structural changes that bring major changes to the profitability of economies and sectors. identified the trend.
- Digital disruption represented by AI (disruptive innovation)
- Geopolitical rewriting of globalization
- Transitioning to a low-carbon economy
- aging population
- Rapidly developing financial system
BlackRock notes that new macro regimes and asset returns are being shaped from these trends. To seize investment opportunities, he says, it’s important to identify “megaforce triggers,” find sectors and companies that could benefit from them, and track whether the market is pricing them in. he said.
It should be noted that it will take decades, not several years, for the megaforce to have a noticeable social impact.
Focus on AI
BlackRock says that while the AI field is advancing rapidly with the deployment of consumer tools such as ChatGPT, the market is still assessing its potential impact as it risks disrupting the industry as a whole. Analyzing.
BlackRock notes that the rise in the S&P 500, the flagship US stock index, has “exceeded the level of the tech boom of the 2000s and is concentrated in a handful of tech stocks.” “This peculiar stock market shows that megaforces like AI can be big drivers of returns even when the macro environment isn’t on your side.”
The company said AI could help boost profitability through productivity and cost savings, as the range of tasks that can be automated with AI is expanding. Companies with particularly high labor costs or a high proportion of tasks that can be automated will benefit the most, but those who cannot adapt may be left behind, he said.
In a related area, the stock prices of the semiconductor manufacturers that support the AI industry have risen due to “market excitement” over the potential of AI, while the “importance of data is underestimated” for AI and potential winners. ”He said.
Companies with large data sets of their own have the ability to leverage large amounts of data more quickly and easily to generate innovative models.New AI tools could analyze and unlock the value of the data troves some companies lay dormant
The Investment Research Institute is overweight AI-related stocks in developed markets.
connection:BlackRock Submits Bitcoin ETF
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