AI and 5G: the positive feedback loop
Summary
When Mount Tambora erupted in 1815, the ash blacked out the sun. Temperatures fell across the globe. Food prices soared. Horses starved and were put down. There was a transportation crisis. So, Karl von Drais invented the Laufmachine. It was supposed to be faster than a trotting horse and it was at the time, an incredible innovation. Today, we call this device, the bicycle.
5G and AI could disrupt our lives in unimaginable ways
Disruptive technology often appears in a crisis. This is the case even two centuries later, as the world finds itself in the grips of one of the worst pandemics in more than a hundred years.
Yet, two technologies offer hope: 5G and artificial intelligence (AI).
Both helped improve diagnosing, monitoring and tracking the Coronavirus from the beginning. A Chinese internet company, for instance, used its RNA prediction algorithm to significantly accelerate the prediction time of the Covid-19 virus’s RNA secondary structure, from 55 minutes to 27 seconds, giving front-line researchers the opportunity to better understand the virus.
Meanwhile, 5G robots assisted in checking body temperatures in China because it proved faster and safer than doing it manually. Automated disinfection robots were also used to disinfect areas of between 20,000 to 36,000 sqm in just one hour autonomously, reducing the need for people to carry out this work and to potentially expose themselves to Covid-19.
However, the longer-term consequences are far more interesting. Together, these technologies could increase economic productivity to previously unimaginable levels. Consequently, it could put an end to sluggish economic growth as the world enters a new digital age.
5G and AI is set to dramatically improve our lives
Imagine this! You’re having a meal with friends and you’ve had a couple of glasses of wine. Afterwards, you get into your car, tap your address into the GPS and hit autopilot. Your car then drives you home, while you close your eyes and relax.
Ten years ago, this would have seemed like science fiction. Yet today, we are close to turning this into reality. Companies already offer basic autonomous driving in their electric vehicles. In the next 10-15 years we could see a completely autonomous service as standard in all cars. For this to work, however, requires both 5G connectivity and the processing ability of AI.
Drink driving could become a thing of the past. Human errors could be eliminated from the roads. Lives could be saved! However, it is not just about self-driving vehicles.
5G and AI support each other
These two technologies will benefit each other. 5G is expected to provide the infrastructure and the massive amounts of data that AI requires. Meanwhile, AI provides the ability to make sense of the complexity of our 5G networks and make them more efficient.
Both technologies are therefore needed to support a future ‘internet of things’ which by 2025, is expected to support more than 41.6 billion devices1.
These technologies will usher in brand-new internet technologies. For instance, augmented and virtual reality (AR and VR) could become part of daily life. Although versions of these technologies are now being slowly introduced to smartphones today, 5G and AI could allow massive advances in these technologies.
The 5G and AI revolution
Although it is still early on, there are many companies that are enabling 5G development. A communications infrastructure provider in the US is building 5G towers that US cellular carriers need. A data infrastructure provider is also constructing 5G towers, plus it manages data centres. Further afield, there are companies, which manufacture chipsets for 5G devices. The company already sells wireless parts to a number of smartphone manufacturers.
It could be fair to say, that in the future, most sectors and companies would be affected positively by 5G and AI. Therefore, patient investors would be rewarded for actively investing in companies that already have a sound business model and strong fundamentals to support it. These companies would likely benefit from the 5G and AI revolution, regardless of which industries they sit in.
Reshaping our global economy and beyond
New industries will emerge. New jobs will be created. The way we live our lives today will be radically different. What is intriguing is that these two technologies will need each other. There is a positive feedback loop between them: 5G enhances AI, and then AI enhances 5G and so on.
It is this combination that makes them so explosively powerful. Although we currently live in an era of low economic growth and falling productivity, both these technologies could reverse this trend, delivering high levels of growth and altering our lives forever.
Allianz Global Artificial Intelligence
Artificial intelligence has been transforming our lives and disrupting industries for years and yet we are only at the beginning of this vast scope of opportunity. Our Allianz Global Artificial Intelligence fund offers investors global and diversified exposure to the Artificial Intelligence theme. It is not built to be a technology fund.
The fund invests across the full market capitalisation. However, our focus is on on mid-cap and large-cap instead of primarily on mega-cap companies. Most importantly, we are investing along the full value chain from technology companies that develop infrastructure and enable the application of AI, to the companies across many sectors and industries adopting AI in their products, solutions and business processes. Artificial Intelligence will disrupt every industry in future and so offers plenty of diverse investment opportunities for those with the right knowledge and expertise.
Our portfolio management team is based in San Francisco, providing them unique access to many of the key players in this space. This results in a continuous dialogue with both established players and start-ups, plus a better understanding of how AI is developing and proliferating. In addition, the Allianz Global Investors Global Research platform provides a global, cross-sector perspective. With a comprehensive understanding of the underlying technology and businesses, our team is placed to understand the opportunities that Artificial Intelligence presents for all areas of the global economy.
Sources:
1 Thales Group, “Using artificial intelligence to shape 5G”. Data as of February 2020.
2 Venturescanner, “Artificial Intelligence Annual Review”. Data as of December 2019.
3 PwC, “What’s the real value of AI for your business and how can you capitalise?”. Estimated values are expressed in real terms at 2016 prices (i.e. excluding the impact of general price inflation when looking ahead to 2030)
