Investment & Strategy

Artificial Intelligence – Slowly becoming a part of your daily life

We introduced the concept of Artificial Intelligence (AI) and the various related technologies in our previous report Everyone’s Jarvis. In this article, we take a look at the key focus areas and initiatives undertaken by the leading players in the segment.

In 2015, AI accounted for more than half of Ad Services Technology, Investments, Retail and Media revenues (Source: AI research firm Tractica). While there are no recent estimates, we expect similar levels for the coming years, basing our view on current industry trends (advertising evolution, rising interest in computer based algorithms for trading decisions). AI systems’ ability to recognise and respond to data flows using algorithms and rule-based logic largely supported recent trends.

We believe home automation would be the next focus area supported by the integration of AI in leading players’ product range. Google CEO Sundar Pichai highlighted in the company’s 1Q17 earnings review that the group is transitioning to an AI first company and Google Assistant is one of the first steps towards that. Google has already developed a Smart Speaker & Home Assistant (‘Google Home’). The smart speaker can perform a range of activities including playing music, control Internet of Things devices and answer questions. On a similar line Amazon’s AI speaker Echo which runs on the company’s AI platform Alexa has received very positive market response, with more than 8.2mn users (Source: Consumer Intelligence Research Partners).

Autonomous driving will also become a main area of development with leading players such as Alphabet (Google’s parent company) and Apple working on making their cars available to the general public in the years to come. Alphabet’s fleet of autonomous cars has test driven more than 600 000 miles.

Intel should also become a leading player in the segment with the recent acquisition of autonomous driving solutions pioneer Mobileye (announced in March 2017). Intel is now positioned as an end-to-end solution provider (processors, storage and software).

Microsoft also aims for an easy integration of analytics, deep learning cognitive capabilities (vision, language and speech recognition) across the company’s range of products and services, with the development of its AI platform. With the recent launch of AI services such as Bing Predicts, Cortana digital assistant and Zo chatbot, the company aims to remain attractive to its wide user base. Every month there are over 500 mn and 100 mn active users of Windows 10 and Office 365 respectively.

While we are still at the early stages of AI developments, we believe this segment offers huge growth potential. Therefore, we focused our stock selection on leading players that, we believe, will be the biggest beneficiaries of the exponentially increasing adoption of AI globally.


Anirudh Srivastava

Equity Expert

Data & recommendations as of 15 May, 2017 close

This document presents equity ideas exclusively provided for potential investments. This document cannot be considered as adapted to a person or based on the analysis of the situation of a person.