AI Market Forecast: 3 Top Trends That Will Affect AI in 2023
What should investors expect from the revolutionary AI technology sector in 2023?
Artificial intelligence (AI) is one of the fastest-growing technology sectors. While its reputation may still be married to science fiction concepts and movie plots, AI serves as a core backbone for a wide variety of industries.
In the year ahead, the sky is the limit for this market as a potential recovery in the global economy allows for increased investment.
Here the Investing News Network presents a look at where AI is headed in 2023.
1. Tech market health may improve in 2023
From the biggest names in technology to up-and-coming startups, companies that don't already have AI capabilities are evaluating AI tools or looking at other ways to enter the sector. However, tech investments suffered a colossal downturn in 2022 due to massive global pressures, including interest rate hikes from the US Federal Reserve.
Some experts expect these increases to stop in March, which could switch how the tech market is viewed by investors.
According to Fortune, analysts at CitiBank believe that if the Fed eases up, investors will turn their attention to growth stocks and riskier plays. “The analysts added that sectors with greater potential for high earnings, including health care and technology, will take priority among investors,” the news outlet states.
However, the end of rate hikes doesn’t mean the end of volatility, the CitiBank analysts said. Investors will still have to be cautious in the AI market and the overall tech market.
2. Investment dollars set to flow to large AI players
The gap between the leading AI companies and the up-and-comers widened in 2022, and this trend may be exacerbated in 2023 as the top players continue to garner significant interest. A report prepared by the McKinsey Global Institute indicates that larger companies in the AI space already have a big lead, and will continue to receive heavy investments.
“The bottom line: high performers are already well positioned for sustained AI success, improved efficiency in new AI development, and a resultingly more attractive environment for talent,” the report states.
Michael Chui, a partner at the McKinsey Global Institute, said the most successful AI solutions companies are the ones that have dedicated a significant amount of time and money to their operations instead of trying to quickly gain an advantage.
Chui praised those that have learned from their mistakes and slowly added to their AI operations.
“They not only invest more, but they also invest more wisely, with the goal of creating a veritable AI factory that enables them to incorporate more AI in more areas of the business, first in adjacent ones where some existing capabilities can be repurposed and then into entirely new ones,” he wrote.
3. Safety to gain new importance in AI discussions
While excitement surrounding AI solutions continues to grow, experts want more investors to consider safety measures.
In their latest annual State of AI Report, AI investors Nathan Benaich and Ian Hogarth have included a new "safety" category. In this section, they explore what’s being done to mitigate unchecked AI.
“Safety is gaining awareness among major AI research entities, with an estimated 300 safety researchers working at large AI labs, compared to under 100 in last year's report, and the increased recognition of major AI safety academics is a promising sign when it comes to AI safety becoming a mainstream discipline,” the researchers wrote. “Increased awareness of AI existential risk is leading to increased headcount, with an estimated 300 researchers now working full-time on AI safety."
Benaich and Hogarth are encouraged to see more researchers than ever join the AI safety category. However, the number pales in comparison to the amount of researchers in the broader AI field.
The pressing need for AI safety comes from increased concerns when it comes to “the risks of human-level AI and superhuman (artificial general intelligence) in the near future.”
Despite the excitement and limitless potential attached to AI technology solutions, the industry will continue to be at the mercy of tech market trends as volatility continues to reign supreme in the broader markets.
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Securities Disclosure: I, Bryan Mc Govern hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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