For those who have not watched or heard of the movie, “2001: A Space Odyssey,” it is a film made in 1968 and HAL 9000 is the intelligent supercomputer antagonist. In the creative mind of director Stanley Kubrick and screenwriter Arthur C. Clarke, artificial intelligence (AI) was already being used in 2001 for a trip to the moon.
We are only in the first phases of the AI progression in 2019. As we approach the next decade, what can we expect from it over the next 20-plus years?
Phase one is also called narrow AI, which is automation of a single activity that outperforms human efficiency. A perfect example of this use of AI is intelligent cruise control and emergency braking. Sensors on newer cars are used to avoid accidents by doing one single activity for the driver (brake when it gets too close to a car or object in front of them).
Predictive maintenance is the most widely used AI today. Before AI, equipment was serviced on a fixed schedule. With AI, maintenance and service is now determined using sensors and analytics. McKinsey & Company, a global management consulting firm, found that predictive maintenance involving AI can produce a 10% reduction in annual maintenance costs, up to 20% downtime reduction and 25% reduction in inspection costs. So, AI can not only reduce accidents but decrease costs for manufacturers and airlines.
On a recent trip, I came in close contact with the use of facial recognition technology. When I returned on an international flight to JFK, I had to scan my passport and then have my picture taken at a kiosk. The kiosk matches my face with my passport photo. Eventually, all airports will use facial recognition to match the face of a traveler to a stored picture of their passport photo at a separate facility. This technology will be used for bag drops and AI assistants can help travelers with which gate or baggage claim area to use.
The second phase of artificial intelligence is general AI, which performs any intellectual task a human can and is “human-level” AI. In the airline industry, the start of AI is automated check-ins and baggage check. The next step is one pilot per plane with eventually a pilotless plane. The military has used pilotless flights for surveillance and missile-carrying drones for decades. It will be many years before this will evolve for commercial flights, but estimates put the cost savings for pilotless planes at $35 billion dollars a year.
Second phase AI will affect every industry from finance to fashion. Artificial intelligence will recognize fashion trends quickly, allowing for retailers to make swift changes, and AI will also be predictive of the next trend. Smart farming will create more efficient planting and production. AI will help find qualified hires and help employees find the right jobs. “Lights-out” manufacturing will permit whole factories to run without human intervention. In other words, manufacturing will occur with machines and no human jobs, so no lights, HVAC and increased productivity. Currently, FANUC, in Japan, is the most well-known lights-out facility, where robots produce other robots without the presence of humans.
For manufacturers, retailers, airlines and other businesses that get the first and second phase of AI right, this can be a game changer and a great investment opportunity.
The final phase is a long way off and is super IA, which is super-intelligence. This is also called “singularity.” This is achieved when AI becomes smarter than humans and where most science fiction writers have things go horribly wrong. The definition of technological singularity on Wikipedia is frightening: “a hypothetical future point in time when technological growth becomes uncontrollable and irreversible, resulting in unfathomable changes to human civilization.” Vernor Vinge, a science fiction author and retired professor, coined the term singularity in 1983. Singularity will come when AI software enables deep learning using neural networks (computer systems modeled after the human brain and nervous system) that can replicate and eventually surpass human cognition.
What will this mean for us and when will it occur? The answer is no one really knows other than that the existence of superhuman intelligence has moved from an idea from science fiction to a real possibility.
Nothing contained in this article should be interpreted as a promise or guarantee of earnings or investment results nor a recommendation for the purchase or sale of any security or sector. Investing involves risk. Most of the information in this article is taken from “Imagine 2025: Gearing Up for the Next Industrial Revolution, “equity research from RBC Capital Markets’ Directors of Global Research, September 5, 2019.