There have been many technological advancements over the years that have been transformative layers for humans to build upon. From the motor car, trains and planes to electricity, computers and the internet. However, none have had the ability to transform the world at the scale and speed as AI.
Earlier technological advancements were often limited to the industries they would ultimately disrupt. But the very nature of AI means every industry will be affected. More importantly, AI is also the missing link that brings technologies together to create synergies that will allow automation to advance by an order of magnitude. For the past decade, we have been hearing about technologies such as the connected home, driverless cars, robots and virtual assistants like Siri and Alexa. But the incremental improvements have yet to embed these in our society. But as these technologies converge with AI, we will quickly see them emerge from novel to ubiquitous.
AI will improve every week and month from here. Don’t be fooled by the stories about AI fails and mistakes; the game changer is that this technology learns and improves on its own. I remember around 2005 trying to use the internet on my Nokia mobile phone. It would take 5-10 minutes for a page to load. It was useless. It was hard to see what practical use this had. Then in 2006, Apple brought out the iPhone, and the entire world changed forever. That was only 20 years ago. AI is going to be twice as big and happen in half the time. In 10 years, the way we live and work will be unrecognisable from today.
OpenAI recently introduced “Operator”, an AI agent designed to autonomously perform various web-based tasks such as booking flights, ordering groceries, and managing reservations. Operator interacts with websites by simulating human actions like clicking, typing and scrolling, enabling it to navigate websites and complete tasks. This is very early days and so it has delivered mixed results so far, but like the internet on the Nokia mobile once the technology catches up to the concept this will change rapidly. This is just one example of a technological change that will be revolutionary. Imagine the complex tasks that can be completed once robotics such as humanoid robots currently being developed by companies such as Tesla and Boston Dynamics are embedded with the ability to complete manual tasks such as lifting objects. Soon enough every home will have a robot worker doing the daily chores. It might sound far-fetched, but so was the idea of a TV or a computer in every home too once. This will happen faster than we think.
We are already starting to see the benefits of AI as large corporations invest heavily in incorporating it into their operations. Google CEO Sundar Pichel said in late 2024 that 25% of new code at the company is now written by AI. Mind blowing. Imagine that level of additional productivity in all businesses. But it’s not just tech companies gaining early benefits, insurance companies are seeing underwriting assessments that would take weeks completed in minutes. Banks are seeing similar results for home loan approvals. Fast food companies such as McDonald’s will soon enough be operating fully automated restaurants, drastically reducing costs and massively increasing productivity. It’s very early days but the potential here is unlimited.
While we understand that many workers are going to lose their jobs, it’s critical to understand that many companies and business models will become obsolete too. The difficulty for investors at this early stage is working out how this plays out. For example, once you can ask the Operator AI app to organise your next holiday and it automatically goes online, finds the best prices and books the entire trip exactly how you want it done, will we even need travel apps? Companies such as Flight Centre, Webjet and Booking.com may well see initial benefits in integrating AI but eventually, they are at risk when your own AI can do everything they can do for you. Businesses with a single sided online marketplace business model will struggle when AI can do everything they can do for a consumer. Companies operating a two-sided marketplace model such as Seek or Carsales will fare better as the underlying platform will be needed to match both sides.
Make no mistake though: AI is an arms race not just between companies but nations. When Chinese AI company Deep Seek recently announced it had developed a similar quality AI software for a significantly lower cost, it sent a shudder through markets and governments alike. Markets were concerned that the scale of the infrastructure spending and assumptions for future profit were overdone. Governments were alarmed at the prospect of a competing nation gaining the edge.
To be clear, I do not think any of this is a concern. If anything, it accelerates the timeline for the ultimate AI endgame. No one is spending less money on AI. It means that the arms race is well and truly on and that the pace of AI advancement will be even faster. The fact that China has advanced with Deep Seek only serves as a wakeup call for the USA, creating the urgency needed to move even faster.
The world dramatically underestimates the pace and impact of AI’s exponential growth in the next 5-10 years. This isn’t just about AI; it is also about AI as the catalyst for major advances as technologies converge. It catapults technology such as robotics and automation into the stratosphere. Businesses are obviously going to derive massive efficiencies, and global productivity will likely increase dramatically in the years ahead. This technology will evolve to become extremely intuitive, and anyone will be able to use it. There will be business winners and losers, but all of us as individuals will see the most benefit as it transforms and improves our daily lives.
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