Decoding GenAI’s Stock Market Impact: 5 Key Takeaways from the Public Market Panel at our Conference
Keen insights about productivity, real estate, and healthcare
At our first Generative AI World conference earlier this month, we hosted a panel of equity strategists from one of the world’s largest private banks. They delved into the transformative power of GenAI and its impact on various industries.
The group offered confirmation of trends we’ve been hearing about as well as fresh perspectives on everything from GenAI’s under-appreciated impact on the real estate sector to the pitfalls tech companies face alongside their enormous opportunities.
Here are five insights that stood out for me. I’ll dive into them in depth below.
1. GenAI is not just lifting stock market prices—it’s already boosting productivity
2. LLMs will likely become commoditized—data is the the real differentiator
3. The promise is substantial, but so is the level of CapEx required
4. Real estate is a sleeper sector poised to benefit from the GenAI boom
5. Interest in improving healthcare with GenAI is picking up, to the benefit of us all
Soon you’ll be able to access the rich detail underneath these points and everything else the panel of esteemed experts covered — we’re making all the videos from the conference available to our Basic Members in the next two weeks.
1. GenAI is not just lifting stock market prices—it’s already increasing productivity
The panel pointed out what we’ve all borne witness to—the tech-heavy NASDAQ shooting up over 30% this year off the back of GenAI excitement. AI-related companies have seen even more significant growth.
And the number of S&P 500 companies discussing AI in their conference calls has tripled in the last year.
Over 30% of these companies are now talking about leveraging AI to gain high productivity and decrease costs. And these productivity gains are already rolling in, even though we’re in the very early stages of this technological wave.
One panelist pointed to a 20% improvement in developer productivity gains from GAI tools (and we at GAI have seen reports of gains as high as 50%, for example, as evidenced by this study from McKinsey).
Another noted that customer service and document summarization are the most promising early applications.
While it's too early to quantify the exact productivity gains for the economy, estimates suggest a potential 1% increase in productivity over the long term.
2. LLMs will likely become commoditized—data is the real differentiator
Some panel members suggested that while foundational models may become commoditized, the real value in GenAI will be reaped by companies with proprietary data. Large SaaS companies with customer data repositories are particularly well-positioned.
One interesting thread in the discussion was on synthetic data. The panel suggested it will have a role, for example in helping to remove bias, but its utility might be limited in customer-facing applications.
3. The promise is substantial, but so is the level of cap ex required
This will hold true for both the technology providers and companies in other industries looking to leverage GenAI.
One panelist noted, for example, that Google has already increased its CapEx guidance once this year. Tech companies at the bottom of the GenAI stack will need to invest heavily in hardware, like NVIDIA's H100s hundreds (if they can even get their hands on them) to keep up with the technological demands.
Another panelist noted that most companies outside of tech aren't really ready for GenAI, neither technologically nor culturally. But even companies that are ready to embrace it from a culture standpoint are realizing that their technology stack isn't quite where it needs to be. While some individual employee uses of generative AI require no upgrades, many of the more significant use cases will.
4. Real estate is a sleeper sector poised to benefit from the generative AI boom
Real estate, although a small segment of the S&P 500, is also becoming a significant part of the AI conversation, particularly in the context of data centers and cooling centers.
The panel delved into the symbiotic relationship between data centers and real estate. They noted that the demand for data centers has already surged, and rising data needs could push demand much higher.
The panel also noted that data centers require specific types of real estate—locations that offer not just space, but also robust electrical and networking infrastructure.
5. Progress in improving healthcare with GenAI is picking up, to the benefit of us all
The panel discussed the role of GenAI in healthcare, highlighting its transformative potential. One panelist mentioned hearing about increased activity in an area we’ve been hearing about for a while - using AI to identify compounds that are more likely to make successful new medicines.
But one panelist mentioned that medical device companies are also exploring the use of AI. For example, they’re looking at using it to both predict outcomes of surgical procedures and devise tailored recovery plans to reduce their costs and often-extended timelines.
The panel also noted the advances already seen in using AI to find commonalities among diagnostic scans to enable earlier detection of disease, which could also improve patient outcomes and take cost out of the medical system.
But you’ll be able to experience for yourself soon via our Basic membership subscription for $89/year that includes access to all the videos of the conference.
Notable funding related to LLM vendors
Pyron, a startup developing and selling an AI-powered platform to look for insights and is one of the vendors features in our Corporate Buyers’ Guide to LLMs, closed a $100M round
Imbue, also in our report, raised $200M in Series B to accelerate product development
Employee use of GenAI
We spoke with one publicly traded company that really impressed us with their aggressive embrace of GenAI. Part of the Digital and AI team’s mission is to “Educate and Inspire” around GenAI. (Yes, change management is hard. There is no short cut, but some tactics work better than others
Google rolled out Bard for Google Workspace which enabled a user to use Google’s LLM to interact with their data in Google docs, email, slides, etc. We just turned it on for our company. Let us know what you think
GenAI are power tools for knowledge workers. You would never hire a carpenter that used a manual drill. Why are you satisfied with a workforce that isn’t trained on GenAI tools for 5-15% productivity improvement?
Nice press coverage of our Conference from Tech Target
“If a man does note keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away.” — Henry David Thoreau
Onward,
Paul