2023 kicked off with talk of the immense potential of ChatGPT, and more generally Generative Artificial Intelligence (GenAI).
The initial buzz is now reaching a fever pitch similar to Twitter and Facebook, with over 100 million ChatGPT subscribers and nearly 2 billion site visits per month with an average dwell time of about 10 minutes. Bitcoin and the Metaverse of recent years come to mind immediately. These have appeared on the scene as well, but much quieter. Will GenAI follow the same path?
Graph-1: Google Search Trends [max=100]
5 Reasons Generative AI Means Every Business Beyond The Hype
We believe there are strong signals that the rise of GenAI is underpinned by a fundamentally healthy impetus. These include rapidly accelerating innovation, abundant capital even in a weak macro environment, increased demand for talent, and increased attention among senior executives and investors. We believe GenAI will tangibly disrupt our business in the next five years.
- A) Majority of companies expect GenAI to transform their industry over the next five years
A recent survey by Verdict Media found that 73% of respondents partially or fully understand GenAI and 29% are already using GenAI tools in their business, but the key insight is that more than 52% We expect GenAI to have a meaningful, tangible, and disruptive impact. Consider your business over the next five years.
Strong data signals from data and analytics leader GlobalData support the above industry views. Leveraging new alternative datasets such as patents, filings, job openings, and deals will provide clear insights into the transformative potential of GenAI and why its impact will continue into the future.
- B) Patents – an early indicator of the technology’s emergence, showing great potential for the future
Patenting activity in GenAI innovation has accelerated significantly over the past four years, growing almost fivefold from about 1,450 patents to over 6,000, representing a compound annual growth rate of 83% over the last five years. increase. This rapid acceleration demonstrates the researchers’ belief in the immense potential of GenAI. And that very belief was born in 2023 when the whole world is talking about it.
More importantly, we believe this trend will continue to accelerate in the future as more people realize the potential of this technology.
Figure-2: Patent acquisition trends for generative AI
It is worth pointing out that patenting is a difficult undertaking that requires significant resources in terms of time, effort and money. Each patent therefore represents a meaningful addition of knowledge to the field with the expectation of future monetary reward.
GlobalData’s Technology Foresight model, a unique innovation intelligence tool using state-of-the-art AI algorithms, caught early signs of the rise of GenAI quite early on.
Below is GenAI’s innovation S-curve. It uses proprietary AI algorithms to identify disruptive innovations in AI from millions of patent applications within artificial intelligence. And as you can see, most of the innovation was in the ‘Emerging’ or ‘Accelerating’ stage.
Figure-3: Generative AI – Innovation S-Curve
Some of GenAI’s key innovations are around GenAI for coding, Generative AI for images, GenAI for design, and AI-generated media, showing how broadly these innovations are applicable and how the industry as a whole has clearly shown that it can impact the business of Downloadable attachments delve deeper into these four areas, showing patenting trends, application areas, major players and start-ups, and examples of how these innovations are applied in practice.
More importantly, what the chart above shows is that simply focusing on broader AI hides the pockets of disruptive innovation within AI that are the real cause of disruption. The Technology Foresights model identifies over 150 notable AI innovations, and the above is his GenAI-only focused subset.
- C) Generative AI is at the forefront and central to business executives and investors alike
Another way to understand the relevance of technology is to understand how much of the mental space it dominates, especially for investors and corporate senior executives.
Recently, GlobalData’s filing analysis found a significant increase in analysts asking company executives GenAI-related questions to assess a company’s readiness for this new threat/opportunity to their business. I was.
Chart-4: Number of questions about GenAI from investors/analysts to corporate management (recorded in call transcripts)
Also, some companies are very vocal about GenAI in their application documents. Nvidia is one of the companies to highlight here, as he has been the most outspoken about GenAI most consistently in its filings. This is not surprising since his AI accelerators and graphics processing units (GPUs) are the foundation of the companies that run his GenAI models. For example, OpenAI used over 10,000 of his Nvidia GPUs to train the ChatGPT model. And it paid off: the stock has tripled since the beginning of the year.
Chart-5: Number of companies mentioning GenAI in filings, conference calls, etc..
In its filing, IBM believes GenAI will drive explosive growth over the next decade, starting now. Nvidia has in mind all companies that need advanced supercomputing in the world of GenAI and is well positioned for it. Snowflake expects consumers to be able to use his ChatGPT to create their own queries on his Snowflake. Salesforce also highlights several risks, such as the need for large investments and the need to test accuracy, bias, and other variables that are inherently complex and can affect profit margins. increase.
- D) GenAI Skillsets in Demand Across Sectors
Another reason GenAI is more substance than hype is that companies in a wide variety of sectors are doing it. Participating in the development of human capital in this niche sector. This suggests very broad applicability across industries, and in the future there will be very few businesses that will not be transformed by it.
Table-6: Active Jobs Needing GenAI Skills Across Sectors
The above also helps explain some people’s belief that GenAI skill sets are only in demand at tech companies. Ultimately, companies invest in human capital only when they determine that it has the potential to generate future revenue streams or expand their current revenue base. The adoption trend is another sign that GenAI will be a powerful driver of future business.
The documents available for download below detail examples of job vacancies at companies in various sectors. Examples include media houses seeking skills to translate creative visions into prompts, automotive companies seeking skills to generate data for simulations, and financial firms leveraging GenAI models to enhance their financial risk models. is mentioned.
- E) GenAI startups still attract investor attention despite start-up winter chill
We believe that funding startups is an important driver of innovation. And despite the tight start-up capital in general, startups offering GenAI products/services are still attracting investors in a tight funding environment. Savvy investors clearly see great potential in GenAI.
Chart-7: Startup funds – All startups and GenAI startups
GlobalData deal analysis reveals that overall startup capital has fallen 65% from its peak in 2021, falling from $684 billion to $240 billion in 2023 (first half trend year-on-year converted). In contrast, GenAI-focused startups are doing well, with he up 160% over the same period (converting first-half trend to full-year).
This document explores some of the more recent deals, such as Tomorrow.io, the world’s first AI to generate weather and climate, and Mistral AI, which is only four weeks old and has no product and currently only employs staff. I will explain the part.
Is there evidence that GenAI will lead to future business success?
This is a legitimate question, and to understand how impactful GenAI will be, we can look primarily at the financial markets that assess the future potential of companies.
Chart-8: AI winner/loser performance since ChatGPT launch in November 2022
Build a portfolio of AI winners and AI losers using the GlobalData Thematic Scorecard, which ranks companies by their thematic capabilities as winners and losers, and measure their performance since the launch of ChatGPT in November 2022 . Companies in the AI Winner Portfolio outperform his AI Loser Portfolio in most sectors, especially media-related areas.
In conclusion, strong signals like the ones discussed above help us look beyond the GenAI hype and see what it means for all businesses. In fact, from drug discovery to spacecraft, nothing is out of scope for GenAI. Recently, NASA started using GenAI to develop spacecraft parts. It looks weird, but the performance has improved a lot. Nvidia also used his GenAI model to generate protein molecules, speeding up the drug discovery process while also significantly reducing costs.
Examples of GenAI being used in novel ways abound across industries, and we believe that enterprise adoption of GenAI will play a key role in determining tomorrow’s winners and losers.
