Alternative Investments

How AI is Impacting Investing – The top 4 things you need to know

Alice Wilson June 4, 2024
A graph showing the increase in investments in digital data infrastructure, for “How AI is Impacting Investing”
Major US tech companies are boosting AI infrastructure investments, driven by the need for ultrafast chips, microprocessors, and data centers.
Source: Think.Ing

 

 

Artificial Intelligence (AI) is set to transform the investment industry.

According to GlobalData, the AI market will soar to $908.7 billion by 2030.

 

In this blog, we’ll explore how AI is impacting investments through increased industry investments, improved operational efficiency, more advanced analysis, and more effective ESG practices.

 

  1.  AI is providing more investment opportunities

Some of the largest US technology companies are set to profit from generative AI.

Companies like Amazon, Alphabet, Meta, and Microsoft have increased their investments in digital infrastructure to support AI deployment globally. 

 

Because generative AI needs ultrafast chips, microprocessors, and data centers, these requirements are driving investments.

In 2023, about 13% of Microsoft’s digital infrastructure spending focused on generative AI – a figure expected to grow. 

 

 

1. AI is improving operational efficiency

AI is transforming the operational side of alternative investments too, because AI can improve efficiency, reduce errors, and lower costs.

For example, an investment firm using AI can automate regulatory compliance to streamline due diligence.

This is because AI can quickly analyze large amounts of data, so it can identify potential issues faster and more accurately than humans – which can save time and money.

 

 

2.  AI is improving market analysis

AI’s ability to handle and analyze large datasets is also changing market analysis.

Advanced algorithms can predict market trends more accurately, identifying potential growth areas and spotting risks. 

 

For example, an investment firm might use AI to analyze market data and predict an upcoming surge in renewable energy stocks.

This means the firm can invest in these stocks and benefit from that predictive analytical data.

 

This predictive power helps investors make smart, fast decisions and can also help investors adapt quickly to market changes. 

 

Exterior, a field full of wind turbines in front of a sunset, for “How AI is Impacting Investing”
AI is transforming ethical and sustainable investing by enabling investors to evaluate potential investments based on environmental, social, and governance (ESG) criteria
Photo by Getty Images

4.  AI is making it easier to incorporate ESG investments

AI is changing ethical and sustainable investing by helping investors screen potential investments based on environmental, social, and governance (ESG) criteria.

 

This match of financial goals with ethical values supports a sustainable financial system and can attract socially-conscious investors. 

For family offices, understanding ESG principles can be important to meet the preferences of millennial clients, a growing customer base.

To learn more about this, click here. 

 

AI is transforming investments through increased industry investments, improved operational efficiency, advanced market analysis, and enhanced ESG integration. 

To dive deeper into these trends, explore our resources or take one of our interactive quizzes.

 

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