According to BlackRock, the new macro regime is already offering a number of opportunities, all investors need to do is to be selective within asset classes and benefit from structural shifts, such as the rise of AI, decarbonization and the growth of private direct lending.
New York City-based multinational investment company BlackRock Inc (NYSE: BLK) has joined a list of artificial intelligence (AI) advocates, saying that AI is a ‘mega-force’ that will influence the major trends in the market in the near future. According to BlackRock Investment Institute, shares of AI-oriented companies will drive returns for developed markets in a challenging economic environment.
According to the report published by BlackRock, more and more companies start talking about AI, looking for highly skilled workers with AI expertise. AI is also taking an increasing part in their revenue reports, with the number of times AI is mentioned reaching over 14 thousand times in 2023 so far.
In addition, BlackRock Investment Institute highlighted the increased weight of tech stock in the S&P 500 index. As Head of the BlackRock Investment Institute Jean Bovin has stated, this environment “is going to persist”.
BlackRock Investment Institute team said:
“We think this unusual equity market shows a mega force like AI can be a big driver of returns even when the macro environment is not your friend.”
Notably, the Institute has an overweight allocation for AI-related shares in developed markets. BlackRock itself already owns more than 7% of Nvidia Corp‘s (NASDAQ: NVDA) stock. As of the latest transaction made, BlackRock holds 183,689,801 NVDA shares, worth $75.5 billion. Nvidia is certainly one of the forerunners in the rise and adoption of artificial intelligence, with the most powerful GPUs for AI coming from the company. Therefore, BlackRock sees huge potential in Nvidia’s future and heavily invests in NVDA shares. Currently, it is the second-largest institutional investor in Nvidia.
BlackRock’s AI Vision
According to BlackRock, the new macro regime is already offering a number of opportunities, all investors need to do is to be selective within asset classes and benefit from structural shifts, such as the rise of AI, decarbonization, and the growth of private direct lending.
BlackRock Global Chief Investment Strategist Wei Li commented:
“We’re not advocating getting into AI at this juncture because we already have exposure to these kinds of forces. We’re just advocating staying invested because we think demand for semiconductor chips [is] very real. The growth in sales and revenues are very real.”
Many are comparing the AI boom with the metaverse hype back in 2021. However, BlackRock believes that investing in AI differs from investing in the metaverse.
BlackRock’s CIO for Global Fundamental Equities Tony DeSpirito explained that “the demand is really real. I think that contrasts what’s going on in AI versus the metaverse of a year ago or virtual reality. The orders are there…The earnings growth is just coming.”
For BlackRock, the AI strategy is definitely not only investing in Nvidia. The company has created a research and development unit – the AI Labs – which is devoted to AI. The unit conducts research at the intersection of artificial intelligence and finance, synthesizing ideas to drive innovation in both fields. The AI Labs team applied their expertise in statistics, machine learning, optimization, stochastic control, and decision theory to various problems throughout the company, including retirement, trading, alternatives, and ETFs.
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Darya is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding the ways blockchain can change different industries and bring our life to a different level.
Source: https://www.coinspeaker.com/blackrock-ai-mega-force/