How Does Artificial Intelligence Work? And How Is It Disrupting The Tech Industry?

Key takeaways

• The power of AI is evident in our everyday lives, from what we see when we log in to social media to what we watch on streaming services. We’re going to look at how AI works and why it’s so disruptive to the tech industry.
• Google recently had to issue a “code red” upon the release of ChatGPT, as the new products in this field are changing the tech industry at a rapid pace.
• Major companies like Alphabet are struggling with deciding how to compete with smaller startups like OpenAI when it comes to new releases of innovative products to the general public.

Artificial Intelligence has been making headlines lately as new tools that allow you to create art or content from text prompts are released to the public. The pace of AI-related innovations appears to be increasing as new tools are coming out faster than ever. The entire tech industry is paying close attention as every innovation can become a new disruption to the current way of things.

We’re going to look at how artificial intelligence works and how it’s altering the tech industry in a major way—plus, how to get started investing with AI.

What’s artificial intelligence all about?

At the most superficial level, AI is about using computer systems to handle tasks that humans have normally performed throughout history. These tasks include creating art and content, making decisions, translating languages, handling customer service issues, filing insurance claims, giving recommendations and much more.

The field of AI has greatly improved lately, as the newest tools can create graphics and long-form content from simple text prompts. We recently wrote about ChatGPT and DALL-E 2, two innovative products that have been revolutionary in the field of AI that seemed to appear out of nowhere to those unfamiliar with the space.

While these new tools are taking the world by storm, AI has been quietly working in our daily lives for years. Here are a few examples.

• Netflix relies on AI to suggest movies and content to users to increase customer retention.
• Google Maps helps you get to your desired destination in the most efficient manner.
• You’re likely speaking with a machine when you contact a help desk on a website.
• Search engines use AI to determine what kind of content is best served for you based on what you’re looking for.
• Amazon’s Alexa device that many of us have in our living rooms uses conversational AI, and the Amazon.com website uses it to recommend products for you when you’re shopping.
• Social media companies use AI to determine what kind of content you’re going to see when you log on.

How is AI disrupting the tech industry?

While AI has impacted almost every industry possible, we can’t deny the profound effect of machine learning on the tech space, where we’ve recently seen plenty of layoffs and changes.

Here are some of the ways that AI is disrupting the tech industry.

Newly created tools

AI-powered tools are accelerating rapidly, and new software is coming out that makes specific tasks even easier to perform. We’ve extensively covered generative AI, where you can simply input a text prompt to create a desired piece of art or content. These tools alone are leaving many concerned about future layoffs as machines are now able to write articles, create content, and even generate social media graphics.

Funding is shifting toward the field of AI

During the pandemic months, we kept on hearing about the blockchain and how this innovative technology was the future. New information is coming out indicating that venture capital firms have turned to AI now. We’ve even seen headlines about how Microsoft is investing $10 billion in OpenAI, which is a surprising figure when you consider that the tech giant also laid off about 10,000 employees in the same time period. With more funding for the power of AI, this means that other areas of the tech industry won’t get as much attention.

Search engines

Upon testing out ChatGPT, many folks commented that this tool could be more powerful than a search engine. When you use Google to find something, you have to filter through plenty of results, ads, and random websites in an attempt to find the solution. As a result of these disruptive AI tools, Google even announced a “code red” as they now have to figure out how to proceed since the search engine business may finally have a strong competitor.

Google has been hesitant to release a similar chatbot due to the reputational risks as the tools aren’t fully mature yet. Google also heavily relies on ad revenue for its business operations, and there are concerns that tools like ChatGPT could one day replace traditional search engines.

In response to the reaction to ChatGPT, it has been reported that Google plans on releasing about 20 new products in 2023 with the possibility of a similar feature being added to the search engine. As time goes on, the search engine business model and how we look for information will be drastically changed by the power of AI.

Customer service automation

IBM has been working on a customer service robot that sounds like a human. Lemonade, the insurance company that’s full-powered by AI, has a bot named Maya that handles everything from enrolling customers in a policy to filing an insurance claim, so you never have any human interaction. The tech industry has been relying heavily on AI to handle customer service, and there are rumors that one day many companies won’t even have any humans handling customer service inquiries.

Outsourcing and staffing

There are fears that major companies will replace more employees with machines as the tech layoff announcements keep coming in. A recent report from Semafor mentioned that OpenAI was investing money in training its AI to perform engineering tasks so that it could replace software engineers with AI. It was even revealed that Amazon coders were using ChatGPT to help with their work. It’s clear that AI will be impacting how the tech industry handles staffing needs moving forward.

What’s next for the AI space?

If the economy can avoid a recession, then there’s optimism that tech stocks can bounce back in 2023 from the disastrous year that was 2022. Here are some of the possibilities for what we can expect next in the field of AI.

Further advancements

What we know for certain is that the advancements in this field will continue changing the landscape. The way that updates have been coming out lately is surprising, and it’s impossible to even attempt to predict what’s next. Even as this article was being edited, it came out that Google found a way to turn text into music. Further advancements in AI are going to continue disrupting the tech industry in new ways.

Governance in the space

While AI is creating tools that allow you to create art from a text prompt and content from a simple question, there’s going to be some sort of governance required over this space. There’s going to be a fine line between using an AI-powered tool to assist with your work and blatant plagiarism, where one takes credit for work they don’t perform. There are also worries about AI replacing jobs that humans have traditionally done.

This means that AI will need governance because it will be difficult to determine who performed the work. Many school districts have already started to ban tools like ChatGPT on worries that students will plagiarize the work of bots. We will likely need government intervention with clear outlines as we make sense of handling these new AI-powered tools.

How should you be investing?

Even though the field of AI has been disruptive to the tech industry and numerous other industries, we can’t ignore the current macroeconomic environment. We saw many of the largest tech companies in the world lose significant market share in 2022 due to soaring inflation, aggressive rate hikes, and fears of a global recession. This makes it challenging to determine how to invest your money when you’re looking to add some AI exposure to your portfolio.

The good news is that Q.ai takes the guesswork out of investing if you’re looking to be hands-off with your investments. You don’t have to look any further to see the power of AI in action, as Q.ai uses AI to offer investment options for those who don’t want to be tracking the stock market daily. We urge you to check out our Emerging Tech Kit if you’re a proponent of innovative technology.

The bottom line

As you can see, the field of AI is rapidly advancing and changing how businesses operate. Whether we notice it or not, AI is also impacting our everyday environment. We need to pay attention to how much we rely on machine learning.

That said, it has still been a challenging period for tech companies that utilize AI due to the broader macroeconomic environment. We’ll continue to monitor the advancements in AI and how they impact us all.

Download Q.ai today for access to AI-powered investment strategies.