AI adoption: ‘No other technology has been spreading so fast’ in four months, analyst says

Bank of America Head of Global Thematic Research Haim Israel joins Yahoo Finance Live to discuss AI adoption and the impact the technology will have on the job market.

Video Transcript

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- With seemingly every cornerstone company from Google, Microsoft to Meta and Amazon clamoring to enter the AI fray, one Bank of America analyst is upping the ante, saying artificial intelligence is the new electricity. Let's welcome in said analyst, Bank of America head of global thematic research, Haim Israel. Nice to see you, sir. Happy Friday to you.

In some regards though, we have heard this before. We've heard it with Bitcoin. We heard it with NFTs. We heard it with metaverse. What's different, in your opinion, this time around?

HAIM ISRAEL: Well, we need to remember one thing, that AI has been a technology that's been with us forever. But up until now, it was just a handful of people, was some kind of a black box. No one really know what it is. And some very fancy and sophisticated algorithms which we could not, anybody could use.

What happened last four months were really what we call the iPhone moment. Technology went mainstream. Technology became what we call the democratization of data.

Anyone can use it. You don't need to be an expert. You don't need a proper education, not need to be a scientist to start using AI now and proactively do everything with it.

As a result, we've seen that turning to, one estimate right now, 100 million users in less than four months. No other technology have been spreading so fast. Unprecedented amount of applications that can be based on the back of it. And the technology itself is just warp speed in terms of how fast is developing.

So I think that now it's just exactly where the iPhone was in 2007. We are about to start seeing more and more application, real value, which is coming on the back of that, with proper apps and ways to start using it, unlike some technologies we've seen in the past.

SEANA SMITH: Yeah, Haim, some figures here in your recent note just talking about that adoption rate unlike anything we've seen before. It took Netflix 3 and 1/2 years to reach a million users, Instagram three months. For ChatGPT, it just took five days. And, certainly, that trend has, if anything, accelerated here to the upside. If we're still in the early stages of AI, how do you see that then evolving over the next several years?

HAIM ISRAEL: Well, I think it's going to continue to be mass market, exactly. If we were looking-- and I'm using the example of the smartphone itself that no one understood it's going to be now there are more smartphones on the planet than people, actually, today. And I think that AI is hitting in the same way that, for now, we all can use it. And just any application, we can start mining data. We start using data. We can ask us the program to start doing stuff for us. I just think that the applications are unprecedented what's going to happen over here. And I cannot think about even one industry that will not be able to use it.

Again, like the smartphone, like the internet. Think about, did you believe that back in the '90s, there's not going to be even one industry, one company that will not be-- that will not use the internet, that will not operate on the internet, that is not using data with real value. This is exactly where AI is heading right now.

- Remarkable, you think it will touch every industry. Of course, all the focus initially was on one. And that was search. And that was Google versus Microsoft or Bing, if you will. How will it impact search in your estimation?

HAIM ISRAEL: Well, I think the thing about with the search right now is that we're using search, we're getting a list of sites that will start using and digesting the data ourselves. The fact that right now all the chat bots out there, ChatGPT and all the other applications we're starting to see, now start digesting the data for us and give the data for us.

As a result, this is why I think it's not just for me, just for you. Every industry can start using it. Think about every data industries like health care. The biggest database on the planet right now is actually around health care companies, genomics, and so on.

Think about materials, chemicals. We cannot even comprehend getting even close to start using all the data out there that will help us to build a better chemistry, better materials, and so on. Think about logistics. Think about commerce.

Think about all the stuff that we keep using data. There's so much value added over there. So it's not just for me and you that we start we're doing now. We're googling. We're using search engine.

It's actually getting data much more to fingertip right now without us digging, trying to go in and digesting it and asking the new chatbots to create stuff. We are all programmers. Now we can offer the chat bots to program for us. We can ask it to create art, videos, songs, everything. So think about the productivity that can come on the back of that. Think about the application. Think about we can just do everything with it.

SEANA SMITH: And Haim, you talk about the increased productivity. But what does it mean more specifically for jobs, whether or not it is a job killer. Is it or is that fear a little bit overblown?

HAIM ISRAEL: I think it's going to be a job transformator, rather than a job killer. Every time we see a development with technology, it actually helped to create more jobs. Some jobs will be under pressure. Think about the service industries, the heavy textile industries, like clothes and so on. Their jobs will have to change. But new jobs will be created.

For example, we believe that the total value add for global economy from using AI is up to, close to $16 trillion by the end of this decade. So think about how much value add we can have that. Give you two historical examples. In the '80s, everybody thought that ATMs will be the financial industry killers. You don't need to give money anymore. A lot of processes are going to be done automatically. What are all those bankers are going to do right now?

Guess what happened? The number of bankers increased dramatically, except with accountants and finance and finance and other things. So I do believe we're exactly the same moment that, yes, jobs are going to be under pressure and going to change dramatically, but the amount of value will create new jobs and different jobs than we have right now. We actually believe this is going to be a net positive for the job market.

- That's good news. Off the top, we mentioned C3.ai popping more than 30% shares today. Their CEO Tom Siebel was on the program earlier today. Listen to what he had to say about the future of AI.

TOM SIEBEL: I mean, AI is a-- you know, this soon will be a $600 billion addressable software market. Everyone will be using enterprise AI applications, just like they use PCs, just like they use relational databases, just like they use CRM.

- C3 is an early winner on this, as I mentioned popping-- there we go-- 33-plus%. Can you throw on some other names you think are investable winners in this space right now?

HAIM ISRAEL: Well, no, right, I suppose that every industry will be impacted. But I think the immediate winners over here as we had in a lot of probably going to be the picks and shovels, the basic industry, which is eventually processing power, hardware, data centers. A, the amount of processing power we need to train AI is unprecedented. Actually, the amount of, the amount that we use right now have outperformed the Moore's law by the factor of six and will still continue to go up on the amount of processing GPUs and so on. Big, big winners from all of this.

Data centers, we are generating so much data we need to store it. We need to analyze it. So center companies are definitely going to be big part of all of this together. Some software, as the CEO of Avant just highlighted over here they can start using it. Cybersecurity, for example, think about the amount of applications that could be used on the back of that. So I think those companies and those industries are definitely going to be big winners over here.