INVESTING
Investing in AI is not without risks . Companies must ensure data privacy and navigate regulatory scrutiny and ethical concerns . That is why active management is crucial in this evolving landscape .
er relationship management systems , while Oracle embeds AI into its enterprise software to optimize business operations . A company ’ s ability to integrate the technology ’ s features seamlessly into its existing workflows will enjoy a sticky product ecosystem and recurring revenue streams .
Adopters : Companies in this category use AI to transform their business models . For instance , Deere & Co . employs AI-powered tractors to improve farming efficiency , while Bank of America ’ s virtual AI assistant , Erica , streamlines its customer interactions . The chatbot handles millions of daily customer interactions and allows human staff to focus on higher-value tasks .
While these companies are only in the early stages of their adoption of the technology ( and their ability to grow and build meaningful scale with it ), when they eventually integrate their own proprietary data into the technology they should expect to see cost savings and revenue growth over the next decade .
Enablers , particularly semiconductor companies and cloud providers , are going to see the opportunities most immediately ( consider Nvidia ’ s record growth as demand for GPUs accelerates ). There are also companies supporting the development of data centers — the backbone of AI applications . Industrial player Ferguson Enterprises , which supplies the building materials and cooling systems necessary to support these facilities , is one such example .
While technology companies are at the forefront of AI , other sectors are also ripe for disruption . Financial companies , for example , are using it to detect fraud , streamline loan processing , and improve customer service . In health- care , pharmaceutical companies such as Eli Lilly are accelerating drug discovery , while Intuitive Surgical uses AI for robotic-assisted surgeries , enhancing patient outcomes and reducing costs .
The consumer discretionary sector has been transformed as well , as e-commerce players like Mercado Libre deliver personalized shopping experiences , and hospitality companies like Airbnb refine pricing strategies and enhance guest services using AI . Industrial companies are integrating AI and advanced robotics into production lines for predictive maintenance , productivity boosts and increased cost efficiency across manufacturing processes .
Make no mistake — investing in AI is not without risks . Companies must ensure data privacy and navigate regulatory scrutiny and ethical concerns . That is why active management is crucial in this evolving landscape . It allows investors to pinpoint companies with robust governance practices , innovative capabilities and a thoughtful approach to AI ’ s adoption .
The AI revolution is unfolding rapidly , creating opportunities that demand immediate attention from investors . Over time , the technology will transform industries and create entirely new business models .
For investors , the key is identifying companies that are leaders in their fields today and have the vision to harness AI for future growth . The pace of AI innovation will continue to accelerate , and competition will intensify . By focusing on enablers , providers and adopters — and understanding how AI is reshaping different sectors — investors can position themselves to capture the long-term value of this transformative trend .
It is still in the early innings . The window of opportunity to invest in highquality AI leaders is open , but it won ’ t last forever . But taking a thoughtful and proactive approach today can set the stage for significant returns tomorrow .
TODD AHLSTEN is chief investment officer at Parnassus Investments .
42 | FINANCIAL ADVISOR MAGAZINE | JANUARY / FEBRUARY 2025 WWW . FA-MAG . COM