The real benefits of artificial intelligence

The pace of technological change never ceases to excite me – and I’ve been studying it for a while. I recently attended a Citigroup technology conference in New York with Thomas Rice, our technology expert, to examine the large strides Alphabet (Google) and IBM are making in artificial intelligence (AI) and cloud computing.

The artificial intelligence technology that Google and IBM have developed over the past decade is now being sold into a diverse range of industries including healthcare, insurance and agriculture Monsanto and BASF are using it to teach machines how to farm. Corn plants chosen with the help of computers are growing in the US this year and algorithms are sifting through weather data to anticipate crop threats such as pests and disease.

Thomas and I also attended a presentation by the head of Google Cloud, Diane Greene. She said that Larry Page was already developing the foundations of AI when he developed Google's search algorithms. Google is now working with all their customers on machine learning. To give a few more examples, she said that Ocado, the UK online retailer, is using it to detect customer sentiment so they manage customer calls more effectively. Family Mart in Japan is using Google’s analytics to predict how to stock product onto their supermarket shelves.

“I propose to consider the question, can machines think?”

- Alan Turing, (1912-1954) British Computer Scientist

Mental health

IBM has been developing their cognitive technology, Watson, for close to a decade now and its uses continue to expand. Watson’s health application already has 65 artificial intelligence services with natural language processing that reads health records and deep learning technology that reads images.

In the past year Watson has been applied in 89 hospitals across 25,000 oncology patients, sourcing data externally as well as from the hospitals themselves. IBM has invested significant amount of money in this initiative and now have data from 400,000 providers – some 100 million health records and 200 million claims that get refreshed daily. 

The system can read five million clinical trials and go through journals picking out relevant information that helps treat patients. We are now at the point where Watson can predict ahead of time if a patient is going to have a medical episode. Soon you might not go to see your GP – you’ll plug into it.

No more drivers, baby

While we are excited about the leading technology that IBM has developed in AI, we think it’s Google and the Chinese company Baidu that are at the forefront of AI in the development of autonomous driving cars. In five years’ time your car might be more like a railway carriage where you sit, read and (legally) tap at your mobile than the constant-attention, wheel and pedal contraption it is today.

“If you say you want to automate cars and save people's lives, the skills you need for that aren't taught in any particular discipline. I know - I was interested in working on automating cars when I was a Ph.D. student in 1995.”

- Larry Page, co-founder of Google
 

The point about all these AI innovations is that they are being built into the fabric of big profitable companies – and making them more competitive. They’re growth-creating innovations, not crazy experiments like some we saw in the tech boom of the late 90s.

We have a pool of exceptional analysts at Perpetual working hard to monitor how these businesses are evolving in this world of rapid change. Over the next few months I will be sharing more insights from our analysts and reporting on the conversation they’ve had with the management teams of the companies we own on our investors’ behalf.

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