Artificial intelligence (AI) technologies are already popping up in many industries and across our daily lives, from driverless cars to smart-home speakers, and the AI market is expected to undergo rapid growth, expanding from about $4 billion in 2016 to $169 billion in 2025. The potential for this tech -- which includes everything from machine-learning microchips to smart assistants and smart speakers -- hasn't yet been realized, but a handful of companies are already making big moves.
If you're skeptical of AI, there's a growing list of reasons why you might want to reconsider your position. Here are some of the best predictions for the artificial intelligence market that should convince any investor that AI is worth monitoring.
- Artificial intelligence won't just change businesses -- it will transform the global economy. A PwC report estimates that artificial intelligence technologies will add $15.7 trillion to the global economy by 2030. China's economy is expected to reap the biggest benefit from AI, with an increase of 26% to its gross domestic product in 2030 while the U.S. could see a 14.5% increase to its GDP that year from AI.
- Autonomous vehicles are made possible by AI, and millions of these vehicles will be on our roads in the coming years. IHS Markit predicts that a pivotal year for AI will be 2021, when the number of driverless cars sold annually is expected to reach 51,000. But the number is predicted to skyrocket to 33 million autonomous vehicles sold worldwide in 2040, representing 26% of all vehicles sold that year.
NVIDIA's (NASDAQ:NVDA) self-driving computer, called Drive PX Pegasus, is already helping to make these vehicles a reality by allowing cars to process visual information in order to understand what's happening around them. NVIDIA believes its market potential in driverless vehicles will be $60 billion by 2030. Similarly, Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Waymo is using AI to power its self-driving vehicles, and is already leading the pack among automakers and tech companies. The company has completed 8 million miles of real-world autonomous-vehicle tests, it's building massive partnerships with traditional car makers Fiat Chrysler and Jaguar. Morgan Stanley believes Waymo's self-driving taxi service could eventually be worth $175 billion.
- AI could be a job creator, not a job killer. There's still a lot of debate about whether AI will take away more jobs than it brings, but some of the latest data estimates that by 2020 AI will create 2.3 million jobs, while eliminating 1.8 million of them, thus resulting in a net gain in jobs. The number of AI-created jobs is expected to continue growing through at least 2025.
Additionally, AI is being used to help make some people better at their jobs, instead of leaving them without one. For example, Harvard pathologists used AI to help diagnose breast cancer and found that their accuracy in diagnosing patients increased from 96% without AI to 99.5% when using AI.
- AI will continue to transform our homes. One of the most prolific uses of AI can be found in the humble smart speakers that nearly one-quarter of Americans have in their homes. Google Home and Amazon.com's (NASDAQ:AMZN) Echo speaker are the two most popular smart speakers on the market, and both are powered by voice-recognition AI systems (Google Assistant and Alexa, respectively) that field users' questions about the weather, online products, daily schedules, sports scores, etc.
It's become increasingly clear that tech companies look to these AI assistants to create new sources of revenue. For example, Amazon's Echo speakers allow people to easily buy products from its website through voice commands, and recent data shows that Amazon Prime members spend $400 more on the company's site if they own an Echo speaker than members who don't have one. Amazon could add $10 billion to its top line by 2020 thanks to the company's sales through its smart speakers, according to RBC Capital Market predictions.
Alphabet's Google could benefit from its assistant in a different way. By using voice searches made through a Google Home device to collect more information on what its users are looking for online, Google will be able to sell more targeted ads to them. Google's U.S. digital ad business is expected to reach $39.92 billion this year, and getting even more search information from its users will only help the company improve the ads it sells.
5. AI will become increasingly important to how businesses function and generate revenue. In his note to Amazon investors last year, CEO Jeff Bezos said this about machine learning, a type of AI:
"Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type -- quietly but meaningfully improving core operations."
Bezos' quote, and the use of AI in his e-commerce company, is the perfect example of how companies outside the tech world will benefit from artificial intelligence. AI algorithms and tech are expected to bring $3.9 trillion in global business value -- through better user experiences, new revenue steams, and cost reductions -- by 2022, according to Gartner.
The thing investors need to remember most about all of this is that artificial intelligence has already become a major part of some of the biggest and most innovative companies in the world, and those companies are only going to focus more of their attention on it in the coming years. That's why it's especially important to take note of how Google, NVIDIA, and Amazon are already benefiting from AI -- and how the technology will continue to transform their businesses for years to come.
Regardless whether some investors realize it, AI will be a driving force in how companies optimize their advertising, develop and market new products, and increase overall business efficiency. That means it is a great time to start understanding how AI works and how companies will benefit from it.