Kicking the Tires at CES 2025
Written by Senior Portfolio Manager, Michael Hakes, CFA, MBA.
At the start of January, MWG attended CES 2025 (The Consumer Electronic Show), the premier technology show featuring 4,500 exhibitors and 141,000 attendees. This event showcased the latest innovations across various technology sectors, including Augmented Reality, Virtual Reality, Digital Health, Fintech, Wearables, Smart Home, Robotics, Vehicle Tech, and Advanced Mobility (Autonomous Vehicles).
Many of the companies in our Global Growth portfolio were prominently featured, alongside their competitors. We attended numerous presentations by industry leaders such as Jensen Huang, CEO of Nvidia; Julia Sweet, CEO of Accenture, and Sir Martin Sorrell, Chairman of S4 Capital. Our focus at these conferences is always on technological change, disruption, competitive positioning and the potential long-term impact on our portfolio holdings.
A common theme across all these presentations, sectors and exhibitors was the transformative impact Generative Artificial Intelligence (AI) is having, specifically Agentic AI. Agentic AI refers to AI systems that can understand, reason, plan and act. These systems use various models and techniques, such as reinforcement learning and human feedback, to improve their performance. During its beta phase, Agentic AI has demonstrated its potential in several key areas. For example, Microsoft 365 now has Co-Pilot Agents that work as personal assistants, collaborators within teams, or tools that span organizational boundaries.
Agentic AI has the potential to significantly enhance company profitability by improving efficiency, customer interactions, and decision-making processes. These are some key ways, highlighted by Nvidia, Microsoft, Qualcomm, Broadcom, Accenture and others in which Agentic AI can contribute to profitability and revenue generation:
Increased Efficiency: By automating routine tasks and optimizing processes, Agentic AI can help businesses operate more efficiently. For example, AI agents can handle customer inquiries, process transactions, and manage data entry tasks, reducing the need for human intervention. This allows employees to focus on more strategic and value-added activities, leading to significant cost savings and increased productivity.
Enhanced Customer Interaction: AI agents can interact with customers more effectively, providing personalized and timely responses. By understanding and anticipating customer needs, AI agents can offer tailored solutions and recommendations, leading to increased sales and customer retention. This improved customer satisfaction and loyalty can have a direct positive impact on a company’s bottom line.
Improved Decision-Making: With the ability to understand, reason and plan, Agentic AI can assist in making more informed and strategic decisions. AI agents can analyze large volumes of data, identify patterns and trends, and provide actionable insights to support decision-making processes. This can help companies optimize their operations, reduce costs, and identify new business opportunities.
Scalability: The integration of AI microservices and digital employee onboarding systems allows businesses to scale their AI capabilities as needed. This means that companies can quickly adapt to changing market conditions and customer demands, ensuring they remain competitive and profitable. The ability to scale efficiently is crucial for businesses looking to grow and expand their operations.
Cost Reduction: By automating tasks and optimizing processes, Agentic AI can help companies reduce operational costs. For example, AI agents can streamline supply chain management, improve inventory control and enhance predictive maintenance, leading to cost savings and increased efficiency. These cost reductions can significantly improve a company’s profitability.
Revenue Generation: AI agents can identify new revenue streams and business opportunities by analyzing market trends and customer behaviour. By leveraging AI insights, companies can develop new products and services, enter new markets and create innovative business models. This proactive approach to revenue generation can drive growth and increase market share.
Agentic AI has proven its potential during the beta phase and is now ready for a broader rollout. This rollout is expected to revolutionize industries over the next decade. We are excited about the future of
This Focus Stock is written by Senior Portfolio Manager, Michael Hakes, CFA, MBA. The purpose of this is to provide insight into our portfolio construction and how our research shapes our investment decisions. As always, we welcome any feedback or questions you may have on these monthly commentaries. |