Artificial intelligence – endless possibilities

What is artificial intelligence?

In simple terms, artificial intelligence is where machines simulate human thinking and the concept can be traced back to ancient civilisations. However, John McCarthy first used the term ‘artificial intelligence’ at a 1956 workshop in the United Kingdom.

Fast forward to 2023 and technological advances have made it faster and cheaper for computers to process vast amounts of complex data, creating endless possibilities.

Data is the new oil

Globally, we create enormous amounts of data through the internet, social media platforms, text messages, emails, advertising and other sources.

Data creation has been growing exponentially for many years. According to the International Data Corporation (a global provider of market intelligence), more data is now created in one hour than what was generated over an entire year just two decades ago.

Furthermore, the amount of data we produce is expected to double every two and a half years.

Data is also being captured and stored in ways that make it more accessible and useful. This data production, storage and access has been the catalyst for artificial intelligence to become more capable.

Generative AI

Generative AI is the next generation in artificial intelligence. It uses a type of deep learning that enables machines to develop original content in text, image, video and audio formats, based on simple instructions.

Generative AI models understand what people are asking for and apply logic and reasoning to queries. They are more perceptive, predictive and creative than other forms of artificial intelligence.

ChatGPT

ChatGPT is a Generative AI model that has taken the world by storm. It’s essentially a chatbot that interacts with people and can perform a wide range of tasks on our behalf, like writing essays and composing music.

The capabilities of ChatGPT are impressive. For example, it can pass medical, law and business examinations.

The technology is also evolving at breakneck speed. It learns based on continuous feedback, meaning its performance will keep improving.

What is the potential of generative AI?

ChatGPT’s adoption rate has been faster than that of any other application in history. It reached one million users in just five days and 100 million users over two months.

There has been widespread interest in the technology, with many business leaders suggesting it’s transformational and a platform for the next industrial revolution.

Jensen Huang (NVIDIA CEO) has said, “ChatGPT is the iPhone moment of artificial intelligence.”

Marc Benioff (Salesforce CEO) shares this view and has said, “The coming wave of generative AI will be more revolutionary than any technology innovation that has come before in our lifetime, or maybe any lifetime.”

It’s too early to predict the full potential of generative AI, but some benefits are obvious and it’s likely to have a much greater influence on our daily lives in the future.

What are the main benefits of AI?

PwC (a global consultancy firm) estimates that extra economic output of 1.4% per annum is possible by 2030, adding US$15.7 trillion to the global economy. Most benefits will come from improved productivity in manufacturing and transportation, but also from new innovation in products and services.

Artificial intelligence can also improve the quality of decisions made by individuals and organisations, through access to better data and more robust analysis. IBM (a US technology company) estimates that bad decisions made using poor data cost the American economy US$3.1 trillion per year.

It may lower the prices paid for goods and services too, as machines replace certain human tasks. For example, the technology could summarise legal cases and draft legal documents for a fraction of the cost of a lawyer.

What are the risks and limitations of AI?

Leaving aside the existential threat to humans that concerns some people, a few risks and limitations of artificial intelligence include the following.

• Labour substitution – a big debate is whether this technology will cause significant unemployment.

• Content accuracy – naysayers point out the inaccurate information that ChatGPT and other generative AI models currently produce.

• Copyright issues – there have been problems in creative professions, with experts claiming it’s very difficult to discern what content is real and what is not.

• Ethical issues – there are problems regarding data privacy and the misuse of data.

• Carbon emissions – some estimate that training a single generative AI model emits 300 tonnes of carbon dioxide, which is five times the lifetime emissions of a car.

• Fraudulent use – the use of artificial intelligence to impersonate people or create fake media content is a major problem.

This is an excerpt of an article first published in the August 2023 edition of our flagship publication for clients only, News & Views. Craigs Investment Partners clients can view the latest edition of News & Views, including the full version of this article by logging in to the client portal.

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