Ways artificial intelligence will be impacting business costs and productivity – in ways not yet reflected in their valuations


Danton Goei: There's companies like knowledge area companies, such as the financial services that can have a real benefit from AI. Capital One, JP Morgan, Wells Fargo, are certainly companies that have a lot of knowledge intensive businesses there, where AI can be a big driver. They have a huge white collar workforce, where also costs can be taken out of the business. There are other businesses like industrials that maybe might not be as much, but we really focused on companies where AI can be a big driver and where you're not paying for that. That's the big part, right? Where you don't want to be paying a big multiple for that potential and still getting that benefit.
Chris Davis: One of the big changes in financials is the scale advantages of the biggest companies. There didn't use to be scale advantages in financials. When I started our financial strategy back 30 years ago, smaller banks were more entrepreneurial. Now, the scale advantages of having the data, being able to apply AI both to reduce costs and to increase revenue, improve the customer service experience at much lower costs, we think that that really is going to be another concentrated risk in what are the most diversified and best capitalized sector within financial services. Absolutely we see that, whereas as Danton said, we own companies, we'll talk about some industrials, where AI is not going to be that relevant to the way that they do business, maybe some marginal help, but we do love having that free option on the enhanced competitive position that comes from having the scale to apply it, having the customer data, having the ability to use these tools to widen your moat, separating you from the competition.
I mean, technology and AI is really allowing the stronger to get stronger

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