Outlook 2024: Johannes Jacobi (Allianz Global Investors)

20 december 2023

 

What are the main opportunities and threats for 2024? What about AI?

‘Recent economic data reinforced the view that US economic growth remains resilient as the labour market remains tight and consumer spending continues to demonstrate resiliency. Inflation around the world remains on a downward trajectory and needs to stay on this trend in order to meet the targeted levels for central banks. After the strong year-to-date equity market returns in 2023, especially for technology stocks, volatility may increase over the coming quarters as interest rates may stay higher for longer, while restrictive financial conditions slow economic growth.

In a recent study where 300 key decision makers in IT were asked, ‘What technologies do you see having the greatest impact on your company in the next five years?’, the top answer was AI and machine learning (Source: Voya Investment Management, 2023). However, outside of the technology sector, some companies have started to see slower end demand as the economy slows, so it is still unclear if positive momentum from AI can carry over into the broader equity markets over an extended period.

If we are in fact, entering a global economic slowdown, AI-related investments in areas such as productivity enhancement and automation, should help companies better navigate such an environment. The developments around generative AI and GPT technology are a further demonstration that long term demand for companies within AI infrastructure should remain strong, given the computing requirements for training complex AI models.’

 

It is unclear if positive momentum from AI can carry over into the broader equity markets.