BlackRock is making a big bet on artificial intelligence, saying the emerging technology can be a big driver of returns even when the macro environment isn’t in your favor.
Asset management giant BlackRock believes structural shifts such as the rise of artificial intelligence (AI) have the potential to drive returns now and in the future. Its new report describes the field as a “huge force” whose applications could disrupt entire industries.
BlackRock found that gains in the S&P 500 have become increasingly concentrated in a handful of tech stocks, exceeding levels seen during the tech boom of the 2000s. The firm believes this “unusual” stock market performance shows that artificial intelligence can be a significant catalyst for returns even in challenging macro conditions.
The importance of data to artificial intelligence and potential winners is “underestimated,” the asset manager’s investment team wrote in its mid-year outlook.
"Companies with large amounts of proprietary data are able to more quickly and easily leverage large amounts of data to create innovative models. New AI tools can analyze and unlock the value of the gold mine of data some companies may be sitting on."
BlackRock Investment Institute also revealed that it has an overweight allocation to AI-related stocks in developed markets.
The report also recommends that investors should be careful with their portfolios in the "new regime" of economic volatility and high interest rates, explaining that such a strategy may be more important than relying on broad asset class returns.
The report stressed that AI-driven productivity gains could improve profit margins and could benefit companies with high personnel costs or where most tasks can be automated, while acknowledging that white-collar jobs are at "greater risk" in the process.
BlackRock is one of several companies making big bets on artificial intelligence.
In April, Bitget pledged $10 million to develop the Fetch.ai ecosystem, which provides service automation infrastructure powered by a network of AI agents.
Wall Street banking giant JPMorgan Chase is reportedly developing artificial intelligence solutions.