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• Latest survey points to rising AI adoption. The US Census Bureau’s latest report that tracks AI adoption across 1.2 million firms in the US showed another step-up in companies’ use of the technology. AI adoption rates rose to 9.2% in the second quarter of this year, from 7.4% in the previous three-month period and 5.7% in the December 2024 quarter. This means AI adoption is likely to soon cross the 10% threshold that took US e-commerce 24 years to reach.

• Rising use cases across industries suggest overall AI adoption is far from a peak. The Census Bureau survey showed that the improvement in AI adoption rates is broad-based, and some industries are reporting adoption rates of 25-30% with tangible use cases. Based on company reports, Amazon Q is saving around USD 260mn every year through coding assistants, while Microsoft relies on AI to complete 20-30% of its coding work. In addition, about 80% of PayPal’s customer support interactions are handled by AI, and two-thirds of subtitle creation at leading online video platforms for global streaming are created by AI. The technology has also been used to assist colonoscopies, which have shown to be twice as effective at catching abnormal tissues that might otherwise be overlooked. Without taking any single-name views, the Chief Investment Office (CIO) believes a peak in overall AI adoption is still a long way off, and accelerating AI use is set to drive further monetization across industries.

• US dollar weakness serves as a tailwind amid solid fundamentals. The US dollar has depreciated sharply this year, and CIO thinks the dollar weakness will persist as US growth slows and interest rates fall. Such a backdrop will serve as a tailwind for tech stocks, as overseas sales account for over 50% of US tech companies’ revenue. This means profits earned abroad would translate into a direct boost in bottom lines, supporting a strong earnings outlook driven by rising AI spending. CIO estimates global AI capex will grow a further 33% next year to USD 480bn after a 60% jump this year, and they expect earnings growth of 12% for global tech this year.

So, the Chief Investment Office continues to recommend a more balanced exposure across the AI value chain, including leading internet and software companies as well as names along the AI semiconductor supply chain globally.

CIO thinks investors can also gain access to breakthrough innovation and long-term opportunities in AI through private markets. Investors should, of course, consider the risks associated with private markets before investing.

Original report -