Besides the conflict in the Middle East, another important topic that is currently occupying investors is artificial intelligence (AI). On one hand, the S&P 500 has recently rallied thanks to the strong performance of megacap AI leaders. On the other hand, the media is increasingly discussing the risk of a massive drop in employment due to AI. In mid-May, The Economist ran a cover story with the headline “Prepare for an AI jobs apocalypse.”
Where does Switzerland stand regarding AI?
UBS, together with market research institute Intervista, conducted a representative survey of around 2,500 Swiss companies from all sectors to find out how they are currently using AI and what impact this new technology is having on the corporate landscape and the labor market.
First things first: The fears that AI will lead to a massive reduction in employment are not shared by the companies surveyed. Around 30% of Swiss companies currently using AI do anticipate a decline in employment due to AI. However, more than half of the companies forecast unchanged employment, and around 10% even expect an increase in employment thanks to AI.
60% of Swiss companies use AI
According to the survey, AI is rapidly and broadly making its way into Swiss companies. Currently, AI is used in six out of 10 companies. Small firms mainly use it for analytical purposes, while in large companies, the most common application is the automation of business processes. However, only very few companies use AI systematically across all business processes. There is still room for growth. Three-quarters of the companies currently using AI also plan to expand its use in the coming years.
Swiss companies mostly see AI as an opportunity, especially in the automation of business processes, improved decision-making, and quality optimization. As a result, AI is ultimately expected to make Swiss companies more productive and competitive, benefiting not only the economy but also investors.
Investors can benefit from new technologies
The beneficiaries of productivity gains are not only the companies that apply AI, but also those that provide the products and services necessary for AI to be used in the first place. However, investment opportunities in Switzerland in this area are scarce. The share of information technology in the Swiss stock market index is less than 1%. Those who wish to seize opportunities here are forced to look beyond national borders. In this context, the US market remains central. However, for diversification reasons and due to strong technological progress, markets such as China and South Korea are also becoming more attractive.
Artificial intelligence is only one aspect of the innovations that can transform our economy and society in the coming years. This also includes electrification and longevity. The topic of longevity brings together companies that benefit from an aging society or make longer lives possible in the first place. Here, Switzerland is well positioned not only in application, but also in development, with companies in the pharmaceutical industry, medical technology, and wealth management. However, investors should not limit themselves to Swiss companies in this area either. In the fight against obesity, international companies are leading.
With a portfolio of shares in companies that benefit from new technologies, as well as those that develop these technologies, investors can take advantage of the opportunities described above. Good diversification is crucial: geographically—some opportunities arise in Switzerland, but many are global—across sectors and themes, and also within sectors. The Middle East crisis continues to have the potential to disrupt the global economy and markets. This means that investors should diversify beyond equities.
