24.03 Liontrust Global Innovation Report - The Rise of AI 04.24 - Flipbook - Page 5
INTRODUCTION
As the Liontrust Global Innovation team, it is perhaps not
surprising we believe that innovation is the biggest driver
of stock returns. Why? To put it simply, innovative companies
have better fundamentals – they grow faster, build better barriers to competition and are
more resilient and adaptable in tough times. Over the long term, the most innovative
companies tend to rise to the top and so do their stocks.
There is no more innovative area than the technology
sector and right now we are at the very beginning
of a brand-new cycle of technology and innovation,
which is being driven by the rise of artificial
intelligence (AI). This has the potential to create
enormous value and those companies that can harness
the benefits of AI, while also capturing value for their
shareholders through barriers to competition, will achieve
strong investment returns.
At the same time, the technology sector has been working through
a significant recession that began in 2022. This is the end of
the old cycle and the beginning of a new one. Firms are cutting
wasteful costs and extraneous projects and focusing on their
core business. There were excesses in the last cycle, particularly
during Covid. But the best technology companies have not shied
away from making tough decisions in the past couple of
years. Such companies will be first in and first out
of the macroeconomic challenges arising
from an environment of higher
interest rates.
In turn, the impact of technology, through AI in particular, on the
economy and society over the coming years will be significant. AI
is already beginning to demonstrate the ability to drive productivity
gains far and wide in the economy. This will be a major positive for
economic growth, but we do not yet know what the impacts may be
on potential job losses and broader societal risks, and what approach
governments will take towards any trade-offs.
In the interview on the next page with renowned academic
Professor Joshua Gans, we asked him for his views on some of
these questions, as well as where he is most excited about the
potential for AI and how he sees companies evolving to make the
most of the new technologies available to them.
Further on in the report we hear from Michael Secora of Recursion,
the exciting young biotechnology company using AI to decode
our biology and develop groundbreaking new drugs. We also
speak to Andrew Giessel of Moderna, the pharmaceutical and
biotechnology giant behind mRNA vaccines and more besides.
We hope you find this report interesting and enjoy reading it as
much as we did writing it.
The rise of AI: Technology and Innovation Report - 5
