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AI and the metaverse

24 days ago

Alex Burn, Investment Manager

Alex Burn, CFA,

Investment Manager, AXA IM Select

AI and the metaverse

AI, or artificial intelligence, has been called the most significant technological advance since the Industrial Revolution. AI is software capable of solving difficult problems, which allows machines to display a level of ‘intelligence’ at tasks such as search and logic. It is already used in the fields of industrial automation, the law, translation, or to create digital assistants, known as ‘chatbots’. As with the Industrial Revolution, the machines are designed to improve processes. But in just the same way, they could render certain human skills redundant.

While some consider AI a sinister tool, which could develop a mind of its own, others celebrate its potential for global digitalisation, allowing universal access to efficiency improvements. At the recent World Economic Forum in Davos, the Grammy award winning musician hailed AI as a vital tool for levelling life opportunities across the developing world. During 2023, a transformative year for AI, the potential was embraced by venture capital. VC deals in AI and machine learning totalled $80 billion last year, the largest of any sector, accounting for 23% of all deals.

AI platforms have sprung up around the globe, from ChatGPT and Bard in the US to Ernie in China. The European trailblazer Mistral has announced that Nvidia (the maker of advanced chips or GPUs) is not only an investor, but also a strategic partner, guaranteeing their future access to developments in Nvidia’s technology.

While chatbots grabbed the headlines last year, makers of domestic appliances from ovens and fridges to food mixers, scenting a profitable bandwagon, have rushed to market the AI credentials of their products. Mobile handset manufacturers would seem to be among the obvious beneficiaries. Samsung has highlighted AI-enabled features for its new phones, while announcements regarding Apple’s AI model integration are hotly anticipated.

AI has played a fundamental role in the development of the metaverse- the 3D digital extension of the world around us. Recent advances in AI have accelerated the move towards this digital paradigm, which could redefine how we spend both work and leisure hours. The appeal to gamers of a 3D parallel world is self evident. Moves into virtual shopping, including buying fashion items which only exist in the metaverse, and tourism are also developing at pace. The launch by Apple of its state of the art VisionPlus headset could drive acceptance further.

Virtual training in surgical techniques, industrial advances and defence applications, such as bomb disposal, are progressing rapidly, with the assistance of AI. Elsewhere, the metaverse has assumed critical importance in conservation, creating digital versions of significant buildings which risk being destroyed by warfare. And the restoration of Notre Dame de Paris has been greatly assisted by a minutely detailed 3D mapping of the cathedral by the makers of a computer game.

Architas view

Our view

After all the hype about AI fades, it is worth asking how close we are to a virtual form of reality and at what cost. Crucially, the systems necessary to run real time access to the metaverse for billions of people simultaneously are forecast to require a 1,000 times increase from current levels of computational efficiency. Nonetheless, the hope remains that AI has the potential to optimise processes significantly. This could bear down on input costs, thereby boosting corporate profitability, as well as reducing energy usage in the march towards net zero.

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