Tech
AI Boosts Amazon, Nvidia; JPMorgan Cuts Work 90%
AI boosts JPMorgan's manual work efficiency by 90% and L’Oreal's customer conversion rate by 60%.
Key Takeaway
- AI is significantly boosting productivity in major tech companies like Amazon, Nvidia, Meta, and Microsoft, according to Liontrust's Clare Pleydell-Bouverie.
- JPMorgan Chase has reduced manual work by 90% with AI tools and its stock has risen 15% YTD; analysts see a 9% upside.
- L’Oreal’s AI beauty assistant increased customer conversion rates by 60%, though shares have only risen 0.2% YTD.
AI Adoption in Big Tech
Artificial intelligence (AI) continues to be a significant driver in the tech industry, with major players like Amazon, Nvidia, Meta, and Microsoft leading the charge. According to Clare Pleydell-Bouverie of Liontrust Asset Management, AI is poised to revolutionize productivity by eliminating inefficiencies in various job roles. "It really means that people can be focused on what is going to drive and service business for these companies without having to ... go into [the] administrative burden that takes up so much of our time," she told CNBC’s Pro Talk on May 29.
Pleydell-Bouverie co-manages Liontrust’s global tech, innovation, and dividend funds, all of which have outperformed their benchmark indexes for the year ending in March. The Liontrust Global Technology Fund, for instance, rose 51.9%, compared to the MSCI World Information Technology Index’s 39.1%.
JPMorgan's AI Integration
Investment bank JPMorgan Chase is among the companies benefiting from AI, as highlighted by Pleydell-Bouverie. The bank has reportedly achieved a 90% reduction in manual work through an AI-powered cash flow management tool. Additionally, JPMorgan is developing a ChatGPT-like AI service called IndexGPT, designed to tailor securities according to customer needs.
JPMorgan shares have risen approximately 15% year-to-date and nearly 40% over the last 12 months. According to FactSet data, 20 out of 28 analysts covering the stock rate it as a buy or overweight, with an average price target of $213.09, indicating around 9% potential upside.
AI's Impact on Consumer-Facing Companies
Consumer-facing companies like French beauty and cosmetics giant L’Oreal are also leveraging AI to enhance customer engagement. L’Oreal’s generative AI beauty assistant, Beauty Genius, has shown a 60% higher customer conversion rate compared to in-store advisors. The AI system can answer questions, create personalized routines, and recommend products based on user preferences.
L’Oreal shares, listed on the Euronext Paris, have seen a modest increase of around 0.2% year-to-date and 12% over the last 12 months. Of the 26 analysts covering the stock, 11 rate it as a buy or overweight, 11 have a hold rating, and four recommend selling. The average price target is $450.25, suggesting slight downside potential.
Street Views
Clare Pleydell-Bouverie, Liontrust Asset Management (Bullish on AI adoption):
"AI is set to remove a lot of waste out of people’s jobs and bring about a phenomenal productivity uplift. It really means that people can be focused on what is going to drive and service business for these companies without having to ... go into [the] administrative burden that takes up so much of our time."
Clare Pleydell-Bouverie, Liontrust Asset Management (Bullish on JPMorgan Chase):
"Among the companies benefitting from AI is investment bank JPMorgan Chase, which can reportedly cut manual work by 90% with an AI-powered cash flow management tool."
Clare Pleydell-Bouverie, Liontrust Asset Management (Bullish on L’Oreal):
"They’ve pioneered beauty tech as an industry... The company’s generative AI beauty assistant system has a 60% higher customer conversion than in-store advisors."
