AI Underestimated: Software is the True Power Player, Says HSBC
In a landscape where tech stocks are experiencing significant fluctuations, from Wall Street to Dalal Street, concerns surrounding the potential upheaval instigated by artificial intelligence (AI) are rampant.
Analysts at global brokerage firm HSBC assert that the tide is shifting; software is already appropriating the capabilities of AI.
HSBC’s analysis posits that AI is, at its core, entwined with the sophisticated analysis and generation of intelligent data, which subsequently feeds into the software stack for systematic processing, storage, validation, formatting, presentation, or execution.
The firm contends that AI will ultimately exist subordinate to the broader software platforms utilized in comprehensive enterprise applications.
Within substantial enterprise application frameworks, we perceive subordinate AI—characteristically non-deterministic, prone to errors, and varying responses—as merely a component of a larger solution.
It is likely to be strategically integrated into multiple applications through the incorporation of intelligent agents, the analysts detailed in a report.
“These entities will probably be designated for high-value domain-specific tasks, which are complex to codify and are optimally managed by a cognitive entity.”
HSBC’s assertions imply that the myriad of enterprise software solutions is unlikely to face annihilation from AI.
Instead, the integration will see AI being effectively encapsulated within application stacks, fostering significant value creation.
Industry titans such as Salesforce, Oracle, ServiceNow, and Microsoft have undertaken the crucial endeavors of architecting, coding, and rigorously testing these embedded agents.
“We believe the majority of this work commenced around 2024 and has progressed to a maturity level where these agents are being deployed to their vast global clientele.
This marks the principal avenue through which colossal enterprises will harness AI, consequently enhancing the demand for AI inference and vindicating the extensive development of AI data centers globally,” the report elaborated.
Furthermore, HSBC’s analysts expressed skepticism regarding the practicality of companies leveraging AI to design their own applications, deeming it neither realistic nor economically viable.
Nevertheless, we have pinpointed the entities best positioned to employ AI for crafting software that surpasses offerings from legacy vendors: the software vendors themselves.
These entities possess domain acumen, strong sales networks, trusted partnerships, and vast coder resources—now considerably more capable of generating new code through innovative AI tools.
However, multiple facets contribute to a successful software enterprise, of which coding is merely one. Displacing established vendors remains exceptionally challenging, even with superior or less expensive alternatives, the brokerage noted.
HSBC analysts anticipate that legacy enterprise software vendors will be instrumental in unlocking the value creation potential of AI within the expansive context of the USD 100 trillion global GDP ecosystem.
“Current sector valuations dwell at historical lows; however, we believe that this sector is on the brink of significant expansion, with robust demand momentum expected to sustain well into the future,” they concluded.
Source link: M.economictimes.com.
