AI Viewed as “Mega Force” for Enhancing BlackRock Returns

BlackRock Highlights Benefits of Investing in AI

BlackRock, the global investment giant that oversees around $10 trillion in assets, has proclaimed artificial intelligence to be a “mega force” that has the potential to yield substantial profits for investors in the current “unusual” market.

In the BlackRock Investment Institute’s mid-year outlook report, they outlined their rationale for increased investment in AI, citing various “disruptive” themes that may lead to a significant expansion of the sector in the years ahead.

The report highlighted the reality that the S&P 500’s growth, which follows the 500 biggest companies in the U.S., has become more focused on a few tech stocks. The firm suggested that investing in AI is a great way to benefit from this concentration.

For BlackRock’s investment team, the clearest advantage of AI is automation. Although they acknowledged that white-collar jobs are exposed to a heightened threat of being automated, they noted that the resulting cost savings could significantly raise profit margins, particularly for businesses with considerable personnel expenses and a plethora of tasks that can be easily automated.

The team suggested that the new technology could be advantageous for companies that possess a great deal of proprietary data – AI-driven instruments enabling organizations to utilize this untapped data to create “innovative” new models.

The report also highlighted the global trend towards eco-friendly economies, aging populations, and an ever-changing financial system as major contributors to growth in the upcoming decade.

BlackRock is not the only one to focus more on AI; on June 28, the CEO of crypto investment firm Paradigm, Matt Huang, tweeted that the swift and diverse advancements in AI are “too captivating to be overlooked.”

Despite this, not all observers are persuaded that investing in AI is a wise decision.

Google has announced that its next AI, ‘Gemini’, will be more powerful than ChatGPT.

Financelot, a macro-finance commentator, informed his 90,000 Twitter followers that the AI boom is largely driven by the need for AI-specific computing chips, which has caused shares in GPU-manufacturer Nvidia to soar by over 180% in the past six months.

In his opinion, if the U.S. puts export limitations on these chips, the value of AI-related firms will decrease.

BlackRock Shifts Focus to Bitcoin ETF

Recently, although there has been optimism for AI, the investment giant has shifted its focus to Bitcoin. On June 15, the company submitted a request to the Securities and Exchange Commission (SEC) for a Bitcoin Exchange Traded Fund (ETF).

If the application is successful, it will be the first Bitcoin trust product to receive approval from the regulator. Senior investment analysts from Bloomberg have estimated that Blackrock has a 50% chance of being approved.

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