There’s a Problem in AI Trading Jamie Dimon: The Morning Brief

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Ask anyone in the investment world how important AI will be to their business, and few can answer better than what JPMorgan ( JPM ) CEO Jamie Dimon said Monday.

“While we don’t know the full impact or the exact rate at which AI will change our business — or how it will affect society at large — we are absolutely certain that the results will be extraordinary and potentially something “There will be as transformative as the major technological innovations of the past several hundred years,” Dimon wrote in his annual letter to shareholders. “Think printing presses, steam engines, electricity, computing and the Internet, among others.”

Some analysts have called AI the start of the “fourth industrial revolution”. Dimon’s comparisons make the same point, in particular.

That’s great for JP Morgan.

JPMorgan Chase CEO Jamie Dimon poses with news photographers as he arrives to testify at a Senate Banking Committee hearing at the Hart Senate Office Building on December 6, 2023 in Washington, DC (Win McNamee/Getty Images) (Win McNamee via Getty Images)

The benefits of this technology have helped the nation’s largest bank to address its wide web of customers and business lines. Given the interconnectedness of the global financial system, we can be confident that the firm is not alone.

But the AI ​​trade that swept investors off their feet in early 2023 wasn’t the sudden realization that mass adoption of AI applications was, or would be, big business.

Rather, as Yahoo Finance’s Dan Hawley argued last year, OpenAI’s launch of ChatGPT made the abstraction of enterprise-level data management technology concrete for consumers.

No longer was AI “just” helping engineers or developers wade through thousands of lines of code or hundreds of commands to find a problem, a malfunction, a bug.

Now, you or I can call up an interface and ask it to write a song for us, say, a business journalist trying to write a newsletter on deadline about Jamie Damon’s opinion on AI. doing.

Making AI concrete for consumers led to a profitable search business for Big Tech. And the search business is display ads.

Combine the economics of the targeted digital ad business with an investment cycle that has reshaped the income statements of companies like Nvidia (NVDA), and it’s not hard to see why the stock market has latched onto that theme.

As we move further from this initial burst of excitement, however, the AI ​​boom looks less like a revolution and more like the grip of executive orders for years to come.

AI is the start of a “fourth industrial revolution” is exciting. But Marc Benioff used this framing back in 2017 — the same year Dimon himself first referred to AI.

“Since the firm first began using AI over a decade ago, and was first mentioned in my 2017 letter to shareholders, we have materially expanded our AI organization,” Dimon wrote, adding that the firm It now employs over 2,000 people focused on this area.

“We are actively using predictive AI and ML. [machine learning] Over the years—and now have more than 400 use cases in production in areas such as marketing, fraud and risk—and they are rapidly adding real business value to our businesses and functions,” added Damon.

The AI ​​hype cycle pushing its coverage doesn’t make the technology a vaporware for the consulting class. Rather, it means the opposite.

Investors are less interested in what is happening today and more excited about tomorrow’s prospects. To suggest a crackdown on the AI ​​trade at this point, perhaps, says less about the perceived limits of the technology’s potential and more about its benefits today.

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