Artificial intelligence poses existential threat to some companies, warns S&W’s Ford
Companies which fail to grasp the importance of artificial intelligence (AI) could disappear in the coming years as the gulf between those successfully adopting AI and those not engaged with AI continues to widen, according to Chris Ford at Smith & Williamson.
Artificial intelligence is coming to the fore across a broad spread of sectors including finance, healthcare and industrials. Ford, who alongside Tim Day co-manages the £137m* Smith & Williamson Artificial Intelligence Fund, believes AI will have increasingly profound implications for a range of industries and warns that companies which fail to embrace it could eventually become extinct.
“Companies failing to engage with AI could face existential risks in the longer term. To be frank, there is a group of companies which understands the implications of artificial intelligence, cloud computing and other advancements, and there is another group which does not,” he says.
“The ones who have grasped the benefits of AI are growing much faster than competitors, and that same technology is enabling them to keep extending their lead.”
Ford says there is evidence of this across many sectors, including the automotive industry where it takes the incumbents around seven years to get a vehicle from the design studio to production versus three years for Tesla, or the advertising market where advertising agencies are being usurped by AI-enabled disruptors such as Google.
“Incumbents in large parts of the economy will not be able to change their business models to counter this, and while investors may refer to such companies as value stocks while they underperform, these businesses will likely stay as value stocks because the business model has limited longevity,” he says.