US on Top: Investing in The Next Digital Frontier, Artificial Intelligence

Artificial intelligence is poised to unleash the next wave of digital disruption, suggests a new report, and companies are being advised to prepare for it now.

According to research from the McKinsey Global Institute, investment in AI reached upward of $39 billion last year, primarily in the form of research and development, and mostly from tech giants, as well as those outside the tech sphere, such as Toyota. And why not? Performance indicators point to higher profit margins.

“Evidence suggests that AI can deliver real value to serious adopters and can be a powerful force for disruption,” the report reads. “Early AI adopters that combine strong digital capability with proactive strategies have higher profit margins.”

Startups and tech titans alike are heavily interested in AI.

Spending on AI still pales in comparison to, say, oil, but it’s already surpassed other industries, such as Hollywood—which is significant, considering how young the technology remains.

Machine learning is the most popular AI technology, according to the report, followed by computer vision and natural language processing, although these technologies all possess some overlap with each other.

IT industry analysts concur that the market size for AI technology will experience strong growth over the next three years. 75% of the 203 executives queried in an Economist Intelligence Unit survey said AI would be “actively implemented” in their firms within three years.

The US leads investment in AI by a wide margin, but there are strongholds in Asia and Europe.

“Early adopters and case studies demonstrate AI’s potential to transform business processes, shake up entire sectors, increase profits, and create new sources of value,” the report reads. “AI is more than the sum of its parts: for truly impressive gains, companies are building their AI capability across the value chain, integrating it into core processes, and using it to enable their employees to be more productive.”

North America is by far the biggest investor in AI, responsible for roughly two-thirds of all investment; Asia (led by China) is in a distant second, accounting for less than one-fifth. Europe, in third, is falling behind.