According to an analysis by Goldman Sachs, over the next 10 years artificial intelligence (AI) could increase economic productivity by 1.5% per year, resulting in a 30% or more jump in S&P 500 profits over the next decade.¹

The anticipated productivity gains from AI means that its use will be spread wide and deep into almost every facet of the American economy, from manufacturing and services to marketing and advertising.

One of the lessons learned from the history of innovations is that its application is usually far more profound than initially imagined. Think of the internet or the printing press.

So, with that caveat, let’s examine how businesses are presently using or anticipate using artifical intelligence.

• Process Automation—Expect huge leaps in productivity from the automation of digital and physical tasks, such as back-office administration and financial functions. Examples include transferring data from email and call center systems into recordkeeping systems, replacing lost credit cards or ATM cards, identifying failures to charge for services by reviewing multiple document types, and reading legal and contractual documents.
• Cognitive Insights—AI can detect patterns hidden among vast volumes of data to predict, among other things, what a customer is likely to buy, identify credit fraud in real time, detect insurance fraud, analyze warranty data to identify safety or quality problems, and provide insurers with more accurate and detailed actuarial modeling.
  More importantly, it will think in ways humans cannot, paving the way for new, previously unattainable insights. Consider how DeepMind has redefined chess strategies when not bounded by the intellectual straightjacket of long-standing chess axioms.
• Greater Engagement—AI can be used to engage employees and customers using chatbots, intelligent agents and machine learning to offer 24/7 customer care; internal sites for answering employee questions on benefits, HR policy and more; product and service recommendation systems for retailers to elevate personalization and increase sales; and health treatment recommendations.
• Safer Operations—Feeding in data and image devices such as cameras, thermometers, motion detectors and weather sensors, AI can identify problematic behaviors or dangerous conditions before they result in employee harm or defective products.
• Dynamic Pricing—AI can track interest in and demand for a product or service in real time to adjust pricing to maximize margins in times (e.g., daily or hourly) of high demand or reduce prices to stimulate sales during low demand times.

Of course, there are many more ways businesses are finding use for artificial intelligence, from content creation and web design to inventory management and sales forecasting. However, the big surprise may come from uses that are yet to be imagined.

Source:

1. https://www.cnbc.com/2023/05/18/goldman-sachs-ai-driven-gains-could-lead-to-30percent-sp-500-profit-spike.html#:~:text=could%20push%20S%26P%20500%20profits%20up%20by%2030%25%20in%20the%20next%20decade,-Published%20Wed%2C%20May&text=%E2%80%9COver%20the%20next%2010%20years,Ben%20Snider%20told%20CNBC%20Thursday

Please reference disclosures at: https://blog.americanportfolios.com/disclosures/