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AI comes of age as sci-fi meets real life

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An increasing array of human interaction will be taken over by artificial intelligence. As Brian Dooley observes, it has drawn renewed focus on rapidly evolving fronts

For decades, artificial intelligence, or AI for short, had languished in the halls of academia and punting software engineers. But now with the explosion in usage of easily accessible programmes, AI has hit the big time!

Sort of like science fiction, AI promises a world of seamless interactions between humans and robots where computers take over a multitude of tasks ordinarily requiring the vast complexity of the human thought process.

Already, many important milestones in AI development have been reached. In 1997, IBM’s Deep Blue outmanoeuvred a world chess champion for the first time by defeating reigning champion Garry Kasparov.

Then, in 2016, Google’s Deep Mind system defeated the standing “Go” board game champion in a game some consider much more complex than chess. Deep Mind’s AlphaGo used deep-learning neural networks to teach itself the game at a level humans can no longer match.

In more recent years, AI has gone mainstream with multiple real-world applications drawing renewed focus on rapidly evolving fronts.

Last year, highly publicised ChatGPT moved AI one step closer to realising its potential. Delivered through a user-friendly interface accessible to anyone, everything from software coding to poetry can be quickly generated by brief user queries.

The below statement was written by the ChatGPT program in response to the query: “What would Warren Buffet say about the current state of the markets and how should investors position themselves?”

“Warren Buffett believes in buying quality stocks at a reasonable price and holding on to them for the long term. It is important to remember that the stock market can be volatile in the short term, and it is important for investors to be patient and to focus on the long term when making investment decisions.”

Nice having the Oracle of Omaha at your service.

ChatGPT uptake has been exponential. In just five days from inception last November, the program reached 1 million users. By comparison, it took Facebook ten months and Netflix 3½ years to reach that level of subscribers.

While the ChatGPT program still has many glaring kinks, it may be just a matter of time before AI becomes a basic tool in everyday work life, just as many of us regularly use Google search and Alexa to receive current news and verify facts. So, we must now wonder when the rise of the machines will take on a meaningful portion of knowledge workers’ skill sets. Industry watchers see an historic wave of disruption on the horizon.

Tech companies are striving for greater productivity in response to government mandated de-globalisation policies, increased regulation and soaring labour costs. In this environment, AI offers a possible solution to achieving knowledge worker productivity, just as advances in robotics continue to reshape the factory floors across the world.

At its most basic level, AI involves the simulation of human intelligence in machines which are programmed to engage in deductive reasoning, allowing them unassisted learning and adaptation to new data in a concept known as machine learning.

However, at another level, AI can also engage in deep learning, which means using associations to draw conclusions from vast amounts of data which may include public and private databases, text files, web pages, images and videos.

Breaking it down, industry observers note AI applications can be grouped into five categories:

Knowledge: the ability to present knowledge about the world such as financial market trading, purchase prediction, fraud prevention, drug creation, medical diagnosis and media recommendations.

Reasoning: the ability to solve problems through logical deduction such as financial asset management, legal assessment, financial application processing, autonomous weapons systems and games.

Planning: the ability to set and achieve goals including inventory management, demand forecasting, predictive maintenance, physical and digital network optimisation, navigation, scheduling and logistics.

Communication: the ability to understand spoken and written language, for example real-time translation of spoken and written languages, real-time transcription, intelligent assistants and voice control.

Perception: the ability to infer things about the world via sounds, images, and other sensory inputs. such as medical diagnosis, autonomous vehicles and surveillance.

In all categories, AI engagement is ballooning. According to consulting firm McKinsey and Co., AI usage doubled from 2017 to 2022 while the level of investment in AI has increased alongside its rising adoption.

Going forward, 63 per cent of McKinsey’s survey respondents say they expect their organisations’ investment in AI to increase over the next three years.

Microsoft Corp., for example, recently announced a ten billion-dollar, multiyear investment in OpenAI/ChatGPT.

With the new deal, some analysts believe Microsoft has taken the lead over Google and Meta (formerly Facebook) in positioning itself at the forefront of generative AI.

Satya Nadella, the company’s chief executive, has said a recent corporate restructuring would allow Microsoft to refocus on priorities such as artificial intelligence, which he called “the next major wave of computing.”

My first computer science teacher at the University of Florida, (yes, I majored in IT back in the day) once suggested that AI could claim success when a human and computer could sit in the same room divided by an opaque screen and the human could not tell whether he was speaking with a machine or another human. That would hold true even if the human was allowed to engage his neighbour in unlimited conversation.

By this definition, the barrier has not been broken by currently popular electronic assistants such as Siri, Alexa, or even the recently launched OpenAI program.

However, the massive investment under way in AI is clearly moving us in a more futuristic direction.

Bryan Dooley, CFA, is the chief investment officer at LOM Asset Management Ltd in Bermuda. Please contact LOM at 441-292-5000 or visit www.lom.com for further information. This communication is for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. Readers should consult with their brokers if such information and or opinions would be in their best interest when making investment decisions. LOM is licensed to conduct investment business by the Bermuda Monetary Authority.

An increasing array of human interaction will be taken over by artificial intelligence. As Brian Dooley observes, it has drawn renewed focus on rapidly evolving fronts

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Published February 15, 2023 at 7:46 am (Updated February 15, 2023 at 8:18 am)

AI comes of age as sci-fi meets real life

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