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BlackRock Spotlights AI's Expansive Investment Frontier Beyond Tech Giants

Word on the StreetThursday, Nov 28, 2024 8:00 pm ET
1min read

BlackRock has highlighted that investment opportunities within the AI development phase are no longer confined strictly to the tech sector. The scope of opportunities now extends broadly into the energy, infrastructure, and data center industries. Given the inherent uncertainties in AI advancement, BlackRock suggests a proactive investment strategy is crucial for accurately capturing future beneficiaries.

The investment scale in AI is likened to that of the industrial revolution, especially when viewed alongside energy infrastructure spendings, considered integral to data center construction and low-carbon transition investments. Such significant investments necessitate substantial financing, with capital and private markets playing pivotal roles. Major cloud service providers and chip manufacturers stand to gain the most, particularly the technology giants with competitive advantages in resources and expertise.

BlackRock acknowledges the valid concerns regarding potential overinvestment in AI. However, they believe AI holds the potential to introduce new income streams across the economy, warranting a holistic assessment. Currently, large technology firms are not deemed to be overextending. According to BlackRock's systematic active equity investment team, after analyzing hundreds of metrics around valuations and earnings, the market shows little resemblance to the dot-com bubble era. Besides the tech field, beneficiaries also encompass companies within utilities, energy, materials, and real estate sectors that provide critical inputs.

The subsequent phase of AI construction may pose further challenges. The promise AI offers hinges on considerable productivity enhancements. In the short term, BlackRock anticipates moderate productivity gains as AI transforms specific job models.

Looking further ahead, AI's role in accelerating the birth of new ideas and discoveries could critically influence innovation and economic growth. However, this impact largely depends on the adoption pace within industries. If AI is widely adopted, it could optimize economic structures by reallocating labor and resources and creating new jobs and sectors, benefitting early adopting industries like finance and IT. Conversely, if AI adoption outpaces the speed of resource reallocation and workforce retraining, inflation may accelerate. Nevertheless, visualizing all potential AI use cases remains challenging. To navigate these uncertainties, BlackRock advocates for a proactive investment strategy, with private markets offering potential opportunities before likely winners go public.

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11/29


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freekittykitty
11/29
Private markets hold keys to AI gold mines
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Puzzleheaded-Mood544
11/29
AI = new gold rush, but don't get FOMO'd
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caollero
11/29
AI's impact on utilities could be huge. Keeping an eye on $DUK and $XEL for those long-term gains.
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JimmyCheess
11/29
AI = new industrial revolution, big bucks incoming
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Orion_MacGregor
11/29
AI's the new oil, but watch out for bubbles. 🤔 Gotta diversify beyond tech giants, energy and infra are the new frontiers.
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joethemaker22
11/29
Real estate, utilities next AI beneficiaries, watch closely
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Senyorty12
11/29
Holding $AAPL, $MSFT long-term, AI future secure.
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shackofcards
11/29
Infrastructure investments = future-proofing, not just hype
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magenta_placenta
11/29
Energy sector's transformation is wild. Investing in green tech now feels like printing money later. 💰
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itsCblast
11/29
Tech giants still undervalued, not dot-com bubble vibes
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neurologique
11/29
AI's the new oil, but we ain't seen the peak yet. 🚀 BlackRock's on it, but watch those valuations, fam.
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psycho_psymantics
11/29
Diversify or die, folks, AI's everywhere now.
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CrimsonBrit
11/29
AI's impact on utilities and energy sectors is a game-changer. Time to rethink traditional plays.
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Euro347
11/29
Energy sector's AI role? Low-carbon game changer
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Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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