Wealth Outlook 2024 - Slow then grow

85 Wealth Outlook 2024 | Unstoppable trends AI-propelled digitization in 2024: five areas of focus 3. AI-equipped robotics and automation The same underlying technology used in generative AI – neural networks – is also the engine that will power more human-like robots and other forms of automation. When combined with long-term trends of evolving supply chains and automobile technology, we see the stars aligning for investment in this space. As we discuss elsewhere in this report (again, see The implications of G2 polarization on global technology on page 98 ) , 2023 saw a boom in US manufacturing construction as the US aims to shift production of high-end semiconductors and cutting-edge batteries closer to home. The buildout of warehouse capacity to support ever-growing e-commerce continues apace. While manufacturing square footage is rising, we doubt that every overseas factory job will be replaced one-for-one with American workers in an already- tight labor market. More likely, firms will continue to invest in automation and robotics to move packages and operate assembly lines, to the immediate benefit of the leading industrial automation and supply chain management companies. Advanced driver assistance systems (ADAS) are another form of automation reliant on AI technology. These systems take in data from sensors, cameras and ultrasound devices positioned at every angle of a vehicle to gain 360-degree vision to assist and eventually replace human drivers. Creating human- like vision for a fully autonomous electric vehicle may have proved more elusive than originally anticipated (probably not available at scale now at least until 2035, according to the latest projections),² ² "Autonomous Vehicle Reality Check: Widespread Adoption Remains at Least a Decade Away," S&P Global Mobility, September 23, 2023. but it will continue to arrive in stages. AI will be the key to powering each advancement. 4. AI-augmented drug discovery Drug discovery and design is another field likely to benefit from significant AI disruption. In the same way that the latest chatbots can understand natural language, neural networks can also be tuned to interpret the language of the human body: DNA, RNA and the structure of proteins and drug molecules. Drug discovery today is often a game of trial and error. The world’s most highly sophisticated scientists pool their collective expertise and effectively make educated guesses on how certain combinations of proteins may affect the human body. Those tests then go through clinical trials, which can take over a decade to complete even before FDA review. According to Citi Research,³ ³ “Smart Thinking on AI in Healthcare Part 4: Biopharma," June 23, 2023. 92% of these candidate drugs fail. We believe AI will be able to dramatically reduce the failure rate of clinical trials. Given the amount of time and resources required to get a drug tested, approved and marketed to the public, a higher success rate for new drugs will have a dramatic effect on both the cost of drugs and drugmaker profitability. 5. Cybersecurity – AI boosts demand due to threats from AI Cybersecurity remains the No. 1 investment priority for chief technology officers at large firms. While AI will surely make us all more productive, it will inevitably become another tool for malicious actors to infiltrate networks and devices. Bad actors – even unsophisticated ones – can leverage the latest AI chatbots to help write the code needed to perform a cyberattack. Professional hackers can also leverage AI for pattern recognition and decryption. But AI can also be deployed to improve cyber threat detection and prevention. Industry-leading cybersecurity firms are more likely to develop and deploy cutting-edge solutions relative to in-house security operations.