In particular, the report highlighted the increasing concentration of earnings in a few technology stocks within the S&P 500, the index that tracks the 500 largest companies in the United States. BlackRock argues that investing in AI is a strategic approach to take advantage of this concentration.
“We believe this exceptional stock market demonstrates that a force such as AI can deliver significant returns even when macroeconomic conditions are not favourable.”
BlackRock’s investment team sees automation as the most obvious “advantage” of AI. While acknowledging that white-collar jobs are at “increased risk” of being automated, they argue that the resulting cost savings could yield significantly higher profit margins, particularly for companies with high staff costs and many tasks that are easy to automate.
AI drives business innovation according to BlackRock
The team also stressed that this emerging technology could benefit companies that currently hold valuable proprietary data. Using AI-driven tools, these companies can leverage dormant information and develop new, innovative models.
The report also identifies some key drivers for growth over the next decade, including the global shift to low-carbon economies, aging populations and a rapidly evolving financial system.
It’s not just BlackRock that’s paying more and more attention to AI. Matt Huang, CEO of crypto investment firm Paradigm, stated in a tweet on June 28 that the rapid and varied developments in AI are simply too interesting to ignore.
Nevertheless, not all commentators are convinced by the bullish investment thesis regarding AI. Macro-financial commentator Financelot shared with his 90,000 followers on Twitter that the recent surge in shares in GPU maker Nvidia, which is up more than 180% in six months, is primarily driven by demand for specific AI-focused computer chips.
According to Financelot, stock prices of AI-related companies will be significantly affected once the United States imposes export restrictions on these chips.
While there is optimism about AI, the investment giant has also shown interest in Bitcoin in recent weeks. On June 15, BlackRock filed with the Securities and Exchange Commission for a Bitcoin Exchange Traded Fund (ETF) on the spot market.
If approved, it will be the first Bitcoin trust product to be approved directly by the regulator. Bloomberg senior investment analysts estimate the likelihood of BlackRock approval at 50%.
