The Impact of AI, Metaverse, and Robotics on Investor Strategies

The world of technology has been buzzing with excitement recently due to the introduction of OpenAI’s groundbreaking text-to-video generative AI tool, Sora, and the launch of Apple’s Vision Pro goggles. Sora can create advanced videos from text prompts, while Vision Pro opens the door to immersive experiences that could revolutionize how we watch movies, learn, and collaborate.

These innovations aren’t just cool tech; they signify the rapid progress towards a world filled with AI and metaverse solutions, offering new avenues for creativity, productivity, and investments.

Generative AI has the power to manipulate vast data sets to produce outputs beyond human capabilities, with enormous potential to disrupt various industries and drive innovation across sectors like automotive, healthcare, and finance.

“Despite ongoing macroeconomic and geopolitical challenges, the growth prospects for companies involved in key technology trends remain strong,” according to Mr. Chris Iggo, AXA Investment Managers (AXA IM) Investment Institute chair and AXA IM Core’s chief investment officer.

Ripe for rapid growth

AXA IM believes this technological leap will shake up industries across the board, from automotive to healthcare and finance, heralding a future where AI-driven applications become commonplace.

“AI is a driving force that we anticipate will unlock unprecedented opportunities for companies, consumers, and investors, playing a vital role in transforming creative concepts into highly realistic and immersive content and experiences,” says Mr. Iggo.

“While infrastructure like cloud computing, computing capacity, and semiconductors has been the main focus, numerous sectors are poised to benefit,” he adds.

McKinsey projects that generative AI could add trillions to the global economy by taking over more manual tasks from human workers, potentially automating work activities that currently occupy 60 to 70% of employees’ time.

Moreover, as AI permeates various industries, different sectors in the tech realm stand to experience significant growth. The metaverse, for example, projected to reach a value of up to US$5 trillion by 2030, is anticipated to reshape the way we live, work, and play.

The metaverse’s influence extends beyond gaming and into fundamental aspects of life, with companies using it for applications ranging from product development to environmental simulations.

As more companies embrace automation, investments in advanced robotics driven by AI are expected to rise. AXA IM notes that robotics is increasingly seen as a viable investment with potential for superior market growth. Automation can enhance efficiency, reduce costs, improve reliability, and handle intricate tasks with precision.

In this era of rapid innovation, the investment firm believes there are ample long-term growth opportunities in tech stocks.

A positive macroenvironment

The expected decline in inflation will further bolster equity prospects, especially in the tech sector. After peaking in June 2022, inflation has decreased significantly, raising hopes that the US Federal Reserve will cease interest rate hikes.

The resurgence of e-commerce post-pandemic slump is enhancing prospects in the digital economy. E-commerce penetration levels have normalized, with expectations of better future growth, according to AXA IM.

Gartner forecasts a surge in IT spending, reflecting the growing reliance on emerging technologies like AI, metaverse, and robotics, driving demand for semiconductors, cloud computing, and cybersecurity solutions. Gartner projects a 7% growth in technology spending in 2024, up from 4.8% in the prior year.

Government initiatives in major economies will further support the technology sector. While Asia remains a leader in industrial robotics adoption, significant economies are set to increase investments in 2024. The US has passed legislation to enhance domestic technology capabilities.

AXA IM believes that with the current trends in the tech sector, investors have numerous opportunities to capitalize on the growth potential of companies leveraging emerging technologies.