Investment Themes 2025: Digitalisation & AI

Having previously spoken of the deeper components of the artificial intelligence value chain, we now draw to your attention the potential benefits of investing in Generative AI (Gen-AI) itself. Not only is demand for Gen-AI services exploding but also demand for related services such as Cybersecurity and Digital Advertising.

Generative Artificial Intelligence (Gen-AI)

Gen-AI has taken the world by storm over the last couple of years, captivating industry leaders’ attention from the board room to the break room in its promised commercial benefits of reducing costs of service by improving efficiency.

It’s tearing through industries today as products and services are reimagined. Leading analysts to estimate that global Gen-AI revenues derived by the providers of these services could reach a whopping USD$1.3 trillion by 2032 and breach 12% of all technology spending.

Companies like Accenture and ServiceNow are set to benefit from Gen-AI rollouts across industries. An estimated USD$113 billion could be added to sector wide sales as companies look for new products to drive revenue growth and trim unnecessary costs.

Cybersecurity

The rise of Gen-AI has led to a surge in sophisticated cyberattacks, leading to the need for more automation and efficiency in defence.

Amazon Web Services has recently partnered with CrowdStrike, one of the world’s largest cybersecurity firms, which has launched a Gen-AI driven security product.

Bank of America is using Gen-AI to detect fraudulent credit card transactions by analysing billions of transactions every day to identify patterns that are indicative of fraud.

Cisco Systems is a significant player in the cybersecurity market, ranking among the top global cybersecurity providers. The company has made significant investments in its cybersecurity services offering and notably, the acquisition of Robust Intelligence in 2024, which broadened the company’s range into Gen-AI.

Visa’s Gen- AI system is also constantly scanning the global payments network for signs of fraud and blocking transactions it deemed to be fraudulent.

Generative AI Digital Advertising

Gen-AI can help marketers through improvement of targeted ads on the internet, as well as spurring the creation of new advertising formats to drive user engagement. In turn, this can help to increase conversion of ad views into sales.

Large companies like Alphabet, Disney, and Meta have enormous amounts of data at their disposal (along with robust balance sheets) and are positioned to take advantage of Gen-AI in this respect.

Ad spending derived from Gen-AI is estimated to add up to USD$207 billion by 2032.

While Digitalisation and Generative AI services are perhaps the most exciting areas of the AI narrative, we believe that investing along the broader AI value chain can bring diversification and value-add benefits to the portfolios.

We continue to invest along long-term structural investment themes with strong tailwinds, while also considering defensive positioning.

This marks the end of our Investment Themes 2025 segment, and we will resume our regular Basis Points programme next month!

What we're reading: What Is Generative AI in Cybersecurity? - Palo Alto Networks