White Paper

Productivity, Democracy, Power and Truth: The Influence of AI on Markets and Investing

10 October 2023

24 min read

What You Need to Know

This note considers the macro impact of artificial intelligence (AI), which raises profound questions about how knowledge is obtained, what we mean by “truth” and what counts as “explanation.”

AI is necessarily political—it would be a mistake to narrowly frame it as a quantitative topic. While there is a narrative of boosting growth, AI could also widen the distribution of wealth, which increases second-order social risks. It also raises questions about the future of democracy and introduces new types of geopolitical uncertainty. Moreover, AI might further entrench the power of corporations versus governments and labor.

The key strategic investment challenge is pricing the potential for higher growth and profit share versus the potential for greater fundamental macro uncertainty via societal pressures and geopolitics. Markets are quick to price the former but poor at the latter. AI also raises questions on the future of employment and retirement, the passivization of short-term investment strategies and who gets to control the development of new technologies.

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The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to change over time.

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