BlackRock believes AI is a powerful force that will drive macro trends.

BlackRock Inc, a multinational investment company based in New York City, has joined a group of advocates for artificial intelligence (AI), stating that AI will have a significant impact on major market trends in the near future. According to the BlackRock Investment Institute, shares of companies focused on AI will drive returns in developed markets, even in a challenging economic environment.

The report published by BlackRock reveals that more and more companies are discussing AI and seeking highly skilled workers with AI expertise. AI is also playing an increasing role in revenue reports, with over 14,000 mentions of AI so far in 2023.

In addition, the BlackRock Investment Institute emphasizes the growing weight of technology stocks in the S&P 500 index. Jean Bovin, the Head of the BlackRock Investment Institute, states that this trend “is going to persist.”

The BlackRock Investment Institute team states:

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“We believe that this unique equity market demonstrates that a mega force like AI can drive returns even when the macro environment is not favorable.”

Importantly, the Institute has allocated an overweight position to AI-related shares in developed markets. BlackRock currently owns over 7% of Nvidia Corp’s stock. As of the latest transaction, BlackRock holds 183,689,801 NVDA shares, valued at $75.5 billion. Nvidia is a leader in the rise and adoption of artificial intelligence, with the company providing the most powerful GPUs for AI. Therefore, BlackRock sees significant potential in Nvidia’s future and has made substantial investments in NVDA shares. BlackRock is currently the second-largest institutional investor in Nvidia.

BlackRock’s AI Vision

According to BlackRock, the new macro regime is already presenting numerous opportunities for investors. Investors simply need to be selective within asset classes and take advantage of structural shifts, such as the rise of AI, decarbonization, and the growth of private direct lending.

Wei Li, BlackRock’s Global Chief Investment Strategist, commented:

“We are not advocating entering the AI market at this point because we already have exposure to these types of forces. We are simply advocating staying invested because we believe that the demand for semiconductor chips is very real. The growth in sales and revenues is very real.”

Many are comparing the AI boom to the metaverse hype of 2021. However, BlackRock believes that investing in AI is different from investing in the metaverse.

Tony DeSpirito, BlackRock’s CIO for Global Fundamental Equities, explained that “the demand is truly real. I think that contrasts with what was happening with AI compared to the metaverse a year ago or virtual reality. The orders are there… The earnings growth is just beginning.”

For BlackRock, the AI strategy extends beyond investing in Nvidia. The company has established a research and development unit called the AI Labs, which is dedicated to AI. The unit conducts research at the intersection of AI and finance, applying statistical expertise, machine learning, optimization, stochastic control, and decision theory to various challenges within the company, including retirement, trading, alternatives, and ETFs.

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