How AI Could Supercharge Three Industries

The rise of ChatGPT has introduced millions to the power of AI. In recent weeks much of the conversation has centered on ChatGPT’s capabilities in the context of education, coding, and legal services. What has been less discussed, however, are the broader implications of AI beyond ChatGPT.

AI has direct relevance to many other industries and in many ways that are different from simply entering queries into the ChatGPT interface. In the coming years, AI will dramatically boost the productivity and profitability of many other industries. In fact, it already is. Consider reporting from McKinsey which explains how a metals manufacturing plant used AI to optimize manufacturing lines resulting in a yield loss reduction of 20 to 40 percent.

This is not an isolated case. A Deloitte survey of 110 large and medium-sized manufacturing companies showed that 93% of respondents “believe that AI will be a pivotal technology to drive

growth and innovation in the manufacturing sector.”

Industries are embracing AI across other areas like healthcare and finance & insurance. The current moment is an early opportunity for investors to capitalize on a rising trend that will persist for years.

Here, we look at how AI can boost profitability in healthcare, manufacturing, and finance and how investors can participate in that growth.

AI in Healthcare

The globe is graying. In 1950 there were 1.7 people of working age (15 to 64) for every child under 15. Today that number is 2.6. For the first time in history, there are more people over 64 than children younger than 5.

This trend will accelerate. The result: more people will be in greater need of more healthcare solutions. For this reason, more healthcare businesses are harnessing the power of AI to help them meet this growing demand. Medical professionals are using AI across several domains. For example, AI is providing faster diagnostics, improved data aggregation, and predictive analytics. AI will also be able to speed up drug discovery and clinical trials, which will drive down the cost of healthcare and shorten the amount of time it takes for new drugs to reach the market.

AI is also addressing the problem of worker shortages. Today, AI-image analysis techniques are equipping general practitioners and technicians to make diagnoses that would otherwise only come from a specialist that has limited availability.

These and other applications of AI could translate into massive savings among healthcare businesses. Researchers from McKinsey and Harvard “estimate that wider adoption of AI could lead to savings of 5 to 10 percent in US healthcare spending—roughly $200 billion to $360 billion annually” in a paper published by the National Bureau of Economic Research. This level of savings will have a major impact on the profitability of healthcare companies and ultimately those invested in them.

How to Invest in AI-Powered Healthcare

• L&G Healthcare Breakthrough UCITS ETF
• Fidelity Digital Health UCITS ETF
• Global X Telemedicine & Digital Health UCITS ETF
• L&G Artificial Intelligence UCITS ETF

AI in Finance

AI has broad applicability to the financial industry. AI is already powering chatbots and analytical applications that help individuals make investing decisions and engage in the kind of financial planning that was once only possible with a professional.

AI solutions are also bringing much-needed security to finance. Insider Intelligence estimates that annual payment fraud losses total $48 billion. AI is uniquely positioned to address this problem with analytics and data monitoring that was previously unavailable at the scale needed to make significant progress. 

The use of AI in the financial industry is already well underway. Nearly one-third of financial service providers use AI for predictive analytics and security, according to research from Deloitte. Additional research from the Economist Intelligence Unit shows that 29% of the 200 business executives and C-suite managers surveyed  “expect between 51% and 75% of their workloads to be supported by AI technologies in five years’ time.”

AI-powered efficiency will allow financial businesses to offer a wider range of services to a greater base of customers. The result will be an increase in revenues with lower long-term operational costs.

How to Invest AI-Powered Finance

• L&G Digital Payments UCITS ETF
• Rize Digital Payments Economy UCITS ETF
• L&G Cyber Security UCITS ETF
• iShares Digital Security UCITS ETF

AI in Manufacturing

AI is introducing a new era of efficiency in manufacturing. Research from Boston Consulting Group suggests that AI brings the biggest impact to the production segment of manufacturing with quality and logistics coming in second and third. In this setting, AI brings new capabilities in error detection, self-optimizing machines, and prediction of quality loss.

Additional research conducted by the World Economic Forum finds that AI will influence operational performance, waste reduction, and workforce augmentation in the manufacturing industry. What this means is that in many cases manufacturers suddenly have an alternative to the capital-intensive process of purchasing additional fixed assets to meet output demands. These manufacturers can use AI to find previously inaccessible efficiencies that make better use of existing PPE.

AI also has ways of improving demand planning which can give manufacturers more time which they can then use to source the most cost-efficient goods because they are not beholden to a single supplier. Finally, manufacturers can use AI to make use of near-shore facilities via 3D printers and automation which requires a smaller physical footprint and a reduced workforce.

Where AI capabilities are currently being used within manufacturing companies

Source: PwC

How to Invest AI-Powered Manufacturing Industry

• L&G Battery Value-Chain UCITS ETF
• Global X Lithium & Battery Tech UCITS ETF
• L&G ROBO Global Robotics and Automation UCITS ETF

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Trackinsight. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A FINANCE PROFESSIONAL IS STRONGLY ADVISED.