Over the last year, we have heard leading minds warning of the dangers of artificial intelligence (AI). We’ve since seen a robot that can take a beating and get back up unfazed, and borne witness to a computer that can best a Go master at his extremely complex game. Find and replace “Google” with a nefarious “Skynet” clone and you have yourself the start of a film franchise. Before it inevitably takes over the world, what impact will AI and robotics actually have in day-to-day business — and who might benefit?
When Arnold Schwarzenegger’s T-800 character drove his Chevrolet Nova through the police station window in response to the “unhelpful” duty officer, I suspect not many people thought he was after his job. It certainly would not have been considered the most orthodox of approaches, if so. But fast forward 30 years, and one might be forgiven for a dalliance with the idea — at least if not following the plot.
We have become used to automated cash machines and checkouts, those infuriating phone systems and driverless cars, so who might be replaced next? The reality is that workers and businesses will more likely be empowered rather than entirely replaced, but as they say, “anything is possible.” One area touted to receive some form of automation and AI is financial and insurance advisory. For example, Manulife Financial ($MFC) acquired Guide Financial in May 2015 to help advisors and customers make financial decisions, employing “behavioural finance and artificial intelligence” technology. If AI can analyze and “understand” a client’s investment needs or requests, perhaps in the future it will be a Siri or Cortana clone helping you plan your investments or retirement (although hopefully not forcing it ahead of time). Contenders are already emerging, such as the privately held Pefin.
Mining and Production
In the Industrials sector, ABB ($ABB) wrote in their latest annual report: “in the industry of the future, we will see factories, mines, mills and offshore platforms run entirely by machines and robots. Human beings will be alerted only when machines encounter problems or issues they cannot solve themselves.” This could open up exploration and production facilities in otherwise inhospitable regions. What if companies could move factories to where land was cheaper and sun (energy) was plentiful? You would still need security and distribution (both autonomous?) and to address other objections of course, but there could be major savings to be found.
Soon, we may all have our very own “Wall-E” to help clean our homes and businesses. Sealed Air ($SEE), a packaging company, used and trademarked the phrase “Internet of Clean” for their Diversey Care commercial cleaning business. In 2015, Sealed Air acquired Intellibot Robotics to “help accelerate the development of the robotic floor cleaning machines market.” Basic automated vacuums have been literally knocking around for some time now, but perhaps a fully automated “cleaner” is not light years away, starting in industry and moving to the home.
Look Who’s Talking
Overall, if you had to pick an industry that was discussing AI the most, Google ($GOOG) would probably spring to mind and you’d say Tech — and you’d be right (although Google isn’t actually top). But what would you say is the second most likely sector to be talking about AI? Industrials? Consumer? Financial Services? Using AlphaSense to search across all major filings and transcripts over the last ten years, I found that it is in fact the Healthcare sector that has both the most “hits” and most companies mentioning artificial intelligence — after the Tech sector.
So what are they saying? Well, by way of example: Johnson & Johnson ($JNJ) stated in an earnings call last year that “Artificial intelligence, machine learning and advanced sensors are creating new opportunities to take advantage of the best clinical and wellness expertise;” Progenics Pharamaceuticals ($PGNX) acquired EXINI Diagnostics AB, a “Swedish developer of artificial intelligence-based analytical tools to improve the management of prostate cancer;” Context Vision AB ($COVO.SE) refer to “a major leap in the automatization of ultrasound functionality” with their proprietary “Virtual Expert” platform; and Ergoresearch Ltd’s ($ERG.CA) claim that the “Power Knee” is “the world’s only motorized prosthesis with artificial intelligence designed for above-knee amputees.”
In addition to imaging, analytics and prosthetics, searching for “surgical robots” returns well over 100 companies — the most “relevant” of which are Intuitive Surgical ($ISRG), Titan Medical ($TMD.CA) and TransEnterix Inc ($TRXC), according to the AlphaSense relevance score. Intuitive Surgical claim to be, and are referenced by others as, the leader in this field with more than 100 companies referencing them in their own filings in the Healthcare sector alone. Clearly there is substantial interest and development in this area, and it could be one to watch. Ultimately don’t be surprised if we start seeing more robots holding the knife during operations of the future — although be wary if your name is Sarah Connor.
Whether the term “Artificial Intelligence” is legitimately used today is debatable, but what is very clear is that its usage is growing (see graph), and robotic complexity is increasing all the time. While we prepare to submit to our new robot overlords, those businesses who are at the forefront of development and adoption of these technological advances in AI could be significant beneficiaries — at least until the machines take over.
1. John Hancock Acquires Software Provider Guide Financial, Inc. As Part of Companywide Long-Term Innovation Plan, Press Release, May 26, 2015
2. The ABB Group Annual Report 2015, Annual Report, February 29, 2016
3. Sealed Air Acquires Assets from Intellibot Robotics, Press Release, April 15, 2015
4. Q2 2015 Johnson & Johnson Earnings Call, Earnings Call Transcript, July 15, 2015
5. Progenics Pharmaceuticals Announces Fourth Quarter and Full-Year 2015 Financial and Business Results, Press Release, March 11, 2016
6. ContextVision AB Fourth Quarter 2015 and Full Year 2015, Annual Report, February 18, 2016
7. Ergoresearch Ltd, Interim MD&A – Quarterly Highlights, Interim Report, February 29, 2016