Monetising AI

Feel free to reach out to PSG Wealth Manager  Franske Neiteler directly.

With generative artificial intelligence (GenAI) as the most widely adopted example of artificial intelligence, this could be the future opportunity for companies to monetise their newly built capabilities. Generative AI is trained on large amounts of data to develop relationships and patterns enabling it to learn and deliver an output in the form of text, images, video, code and many more. This effectively enables computers to augment human ability to generate information and create content. A basic example of this is the ability for a generative AI model to be able to create a song or video based purely on text input guiding it to a certain theme or script.

Figure 1: Generative AI inputs and outputs

Source: Nvidia investor presentation

According to Bloomberg, generative AI will be able to create up to US$1.3 trillion in revenue (10-12% of total tech spending) by 2032 – in hardware, software, services, advertisements, gaming and more – as businesses transform how they operate and supercharge products and services.

Figure 2: Generative AI Spending

Sources: Bloomberg Intelligence, IDC, eMarketer, Statista

In PwC’s recent global artificial intelligence study they published several key applications for the use of generative artificial intelligence that could transform our daily lives. We highlight only some of the most widely adopted examples below:

1. Healthcare
• Supporting diagnoses in areas such as detecting small variations from the baseline in patients’ health data
• Early identification of potential pandemics
2. Automotive
• Autonomous fleets for ride sharing
• Engine monitoring and predictive, autonomous maintenance
3. Financial services
• Personalised financial planning
• Fraud detection and anti-money laundering
4. Retail
• Personalised design and production
• Anticipating customer demand – for example, retailers are beginning to use deep learning to predict customers’ orders in advance
• Inventory and delivery management
5. Media
• Media archiving and search
• Customised content creation (marketing, film, music, etc.)
• Personalised marketing and advertising
6. Manufacturing
• Enhanced monitoring and auto-correction of manufacturing processes
•  Supply chain and production optimisation
7. Energy
• Smart metering – real-time information on energy usage, helping to reduce bills
• More efficient grid operation and storage
• Predictive infrastructure maintenance
8. Transport and logistics
• Autonomous trucking and delivery
• Traffic control and reduced congestion

Bloomberg Intelligence compiled market data to determine which of these categories could potentially see the largest growth rate for the 9-year period between 2023 and 2032. As noted in Figure 3, it is clear that the current largest market as of 2023 is the cloud and storage infrastructure market, as these so-called hyperscalers are building out capacity to handle large-scale generative AI workloads. Although infrastructure is still forecast to be the largest market by revenue by 2032, there are several other segments to show higher growth, as generative AI enables companies to increase profits by adding efficiency to their business models. Of these, the sectors showing the highest growth potential are drug discovery software, AI-based cybersecurity spending, sale of virtual goods and game design software. The next leg for growth in the generative AI market will have to be driven by these subsectors, as pharmaceutical companies, software designers and cybersecurity companies (only to name a few) make use of this newly found technology to optimise their business models, ultimately leading to higher profit margins and increased profitability.

Figure 3: Generative AI Revenue Potential

Profitability has been evident by looking at results of the artificial intelligence infrastructure suppliers over the last few quarters. As with all previous technological or industrial revolutions, the jury is always out on the sustainability of a new-found technology and which sectors will ultimately benefit the most over the long term. One thing is for certain: artificial intelligence will ultimately change the way we spend our recreational time, as well as how businesses operate in the future, with some of the abovementioned sectors proving to be the next winners in the race to ultimately monetise artificial intelligence.