How to play the artificial intelligence boom – Investors Chronicle

A general-purpose technology is one that impacts the whole economy. The invention of the steam engine, for example, changed what people consumed, how they travelled and where they lived. Centuries later, after a variety of modern technologies have had significant impacts of their own, todayit is artificial intelligence (AI) for which the biggest promises are beingmade.

Strange as it may sound, there are potential parallels, in terms of both efficiency gains and investment maniasbetween steam power and AI. In 1698, the original steam pump was patented by Thomas Savery but it wasnt until James Watt patented the improved Boulton-Watt engine in 1769 that steam started to transform the economy.

Factories had previously been powered by horses, wind or water, which imposed physical restrictions on where they could be located. Theclustering enabled by the use of steam power, combined with the invention of the train, allowed the efficient transfer of materials, goodsand ideas between hubs. A flywheel effect was set in motion. Between 1800 and 1900, UK gross domestic product (GDP) per capita rose 109 per cent from 2,331 to 4,930 (the figures are adjusted for 2013 prices).

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How to play the artificial intelligence boom - Investors Chronicle