BlackRock, a globally renowned investment powerhouse overseeing approximately $10 trillion in assets, has labeled artificial intelligence (AI) as a “mega force” capable of generating substantial returns for investors in the current “unusual” market climate.
The recently published mid-year outlook report by the BlackRock Investment Institute elaborated on their rationale for heightened investment in AI, highlighting various “disruptive” trends that have the potential to propel the sector’s rapid expansion in the upcoming years.
The report specifically highlighted the growing concentration of gains in a select few tech stocks within the S&P 500, which tracks the largest US companies. BlackRock suggests that investing in AI presents a favorable opportunity to leverage this concentration and benefit from it.
“We think this unusual equity market shows a mega force like AI can be a big driver of returns even when the macro environment is not your friend.”
According to BlackRock’s investment team, the primary advantage of AI lies in its automation capabilities. They acknowledged that white-collar jobs face an increased risk of being replaced by automation. However, they highlighted that the cost savings resulting from automation could substantially enhance profit margins, particularly for companies with high labor expenses and tasks that can be easily automated.
The team further emphasized that AI has the potential to be a game-changer for companies possessing valuable proprietary data. They referred to this data as a “gold mine” and stated that AI-powered tools enable firms to unlock the potential of dormant information and develop innovative new models.