The Cambrian explosion of AI-driven life forms has begun. Under the collective label of artificial intelligence, an ecosystem is emerging that is evolving faster than many people realize. Its impact is still often underestimated, both in scale and in speed, but it will permanently shape the second half of the twenty twenties as a structural force.
Five years ago, I wrote a book titled “Investing at the tipping point”. The trigger was an annual outlook presented as a slideshow for Auréus Vermogensbeheer. Instead of the usual outlook, I chose to focus on the coming ten years. First, because accurately predicting the level of an index in combination with the factor of time is risky. More importantly, structural technological developments were underway that would determine how the economy, markets, and society would truly evolve over the longer term.
The biggest news of a given year is not always the event with the greatest long-term consequences. Take 1994. The biggest headline that year was the Republican Revolution, when the Grand Old Party captured the House of Representatives for the first time in forty years. But the birth of e-commerce with the first web browser in that same year is far more relevant today. Of course, the attacks of September 11 dominated the news in 2001, and rightly so. But do September 11 and its aftermath define our current world more than the extraordinary rise of China, made possible by China’s accession to the World Trade Organization in that same year? The mortgage crisis was the biggest news story in 2007, but the launch of the first iPhone has had a much longer tail. In 2020, our collective attention was focused on the coronavirus pandemic, but the Cambrian digital explosion partly triggered by that same pandemic is far greater.
When we look back in 2050, we may view the convergence of breakthroughs in the twenty twenties as more important than the pandemic. These technologies, with artificial intelligence at the core of digital life forms, reinforce one another and integrate into every sector. Just last week, the Dutch central bank warned about an excessive share of artificial intelligence in investment portfolios. Before long, even supervisors will have to acknowledge the transformative effect of artificial intelligence. This will lead to leaps in productivity, health, sustainability, and access to knowledge, rather than incremental improvements. They redefine how we work, live, play, learn, fight, heal, build, govern, and supervise.
By 2050, biology will be programmable, just like software is today, dramatically improving life expectancy and healthspan through preventive and personalized medicine. Ongoing innovations in diagnostics, such as genetic sequencing, wearables, and AI, combined with delivery systems like mRNA, CRISPR, and nanoparticles, and bioproduction such as lab-grown organs, synthetic biology, and programmable cells, are leading to breakthrough health solutions. Over the past 25 years, we have seen extraordinary progress in the cost and capacity of genetic sequencing. The next 25 years could be even more impactful, driven by AI, which identifies patterns that humans miss.
By 2050, transportation will be increasingly autonomous, electrified, and software-defined, fundamentally changing safety, efficiency, and urban design. Advances in AI perception, vehicle-to-vehicle and vehicle-to-infrastructure coordination, and autonomous logistics will deliver an order-of-magnitude reduction in traffic fatalities, congestion, and emissions, while freeing up billions of hours of human time. Driving is still the most common occupation among men worldwide, but for how long?
Autonomous mobility will also shape the physical layout of society. Today, accessibility is still a key value driver in real estate, but that distinction will disappear. Rural areas will suddenly gain an advantage over cities. By 2050, energy will also be far more abundant, cleaner, and more reliable. Ultra-cheap solar power is scaling globally and is being paired with major advances in energy storage. Nuclear power is regaining momentum through smaller, standardized reactors that are safer and faster to build and suitable for industrial heat.
The debate continues over whether artificial intelligence will be our savior or our downfall. Every previous introduction of new technology ultimately created more jobs rather than fewer. Artificial intelligence seems to challenge that pattern, but at the same time human needs are endless, if only to find meaningful ways to spend all that free time. Many professions that today’s schoolchildren will eventually hold probably do not yet exist, but that was no different fifty years ago. The impact of artificial intelligence on productivity and economic growth will make the era of the roaring twenties pale by comparison.
Back to my 2019 book, which described the tipping points that were dramatically accelerated by the coronavirus pandemic. The exponential growth of technology, such as Moore’s law, is giving rise to digital life forms that transform our lives. Artificial intelligence is not just a tool. It is a new life form that is disrupting investing, the economy, and society. Investors must adapt to this reality. The pandemic was big news, but the real impact comes from this AI explosion. Let us remain optimistic. Technology solves the problems it creates and offers opportunities for sustainable growth. The second half of this decade will prove it.
Han Dieperink is chief investment officer at Auréus Vermogensbeheer. Earlier in his career, he was chief investment officer at Rabobank and Schretlen & Co.