AI Is Facing Various Ups and Downs

Artificial intelligence has been waxing and waning as of late due to many different factors.

Recently, Samsung Electronics’ share price has hit a three-year high, driven by strong expectations for second-quarter profits due to rising global demand for advanced computer chips, particularly for AI technologies. This milestone reflects Samsung’s recovery and strategic advantage in the semiconductor market, bolstered by the surge in AI-driven demand.

On Friday, Samsung’s shares rose 3% to 87,100 Korean won (about $63), the highest since January 2021, following positive profit forecasts. The company is set to release a detailed earnings report at the end of July, which will provide further insights into its financial performance and ability to sustain growth. Samsung projects around 60 trillion won ($43.5 billion) in sales for the second quarter, a nearly 25% increase from the previous year.

At the beginning of the year, an IBM survey found low satisfaction with both in-store (9%) and online (14%) shopping, despite interest in AI enhancements like virtual assistants and personalized offers. Many consumers find current virtual assistants unsatisfactory, with a third being satisfied and nearly 20% unwilling to use them again.

In-store, shoppers want more product variety (37%), better information (26%), and faster checkout (26%), while 65% use mobile apps to improve their experience. Online issues include product search difficulties (36%), lack of information (33%), and return challenges (33%). Economic factors like inflation drive store and brand switching, with 62% citing price as a main reason.

Currently, according to Bloomberg, a sevenfold increase in Nvidia Corp.’s shares since ChatGPT launched in late 2022 has fueled a megacap-led global rally. However, worries about the sustainability of these gains, along with geopolitical tensions and changes in global monetary policy, are prompting the market to broaden as investors seek new catalysts.

AI’s growing impact on power and real estate is causing concern and also simultaneously opening new investment avenues. Increased electricity demand from AI is boosting interest in utilities and power infrastructure, with transformer shortages benefiting companies like General Electric. Renewable energy stocks are rising due to higher power consumption, and copper, essential for electronics, is becoming crucial.

Data center investments are growing, especially in Southeast Asia. Companies leveraging AI for efficiency, such as Deere & Co., Paccar Inc., and biotech firms in drug development, are expected to see significant gains.