Unveil new prospects as AI outgrows the tech sector

Executive highlights:
• AI will continue to drive tech-sector growth for the foreseeable future.
• The impact will stretch far beyond traditional tech companies.
• BNP Paribas Disruptive Technology fund has been consistently ahead of the curve on AI adoption.

Artificial intelligence (AI) holds the promise of fundamentally changing the way we work and live, as well as the products and services we consume – across every sector of the economy. As such, it presents a significant opportunity for those seeking to gain exposure to key structural trends reshaping our society.

Room to grow with AI

AI is spilling across all sectors of the global economy, creating a new wave of value both for the developers who design and build the technology and the companies that embrace its potential to make their operations more efficient and deliver increased value for customers.

And there is significant room for growth. Although the use of AI is increasing rapidly, a recent survey by McKinsey found that 45% of respondents were still not using generative AI regularly either at work or at home¹ – and, as many commentators have pointed out, AI’s ‘killer app’ has yet to emerge.

Adopting a multi-sector, multi-theme approach

BNP Paribas Disruptive Technology is designed to capture the growth generated by the digital transformation as it emerges across key themes, including AI, cloud computing, the Internet of Things (IoT), automation, foundational technologies such as semiconductors and cybersecurity, and emerging themes such as autonomous vehicles and blockchain.

Many of the fund’s holdings often embody more than one theme, ticking multiple boxes of the opportunity set.

Indeed, these themes are very much interrelated, with AI as the centrepiece. As a case in point, AI cannot run large language models without cloud computing, cybersecurity, semiconductors or the collection of data through the IoT.

As AI has extended its reach and has been adopted by a growing number of companies, the fund’s exposure to the technology has risen from under 25% of assets under management (AUM) in 2017 to almost 91% in 2024.²

Currently, 76% of our holdings are in companies that develop AI technology or provide the data and infrastructure required to run AI, while 15% are in companies that use AI to improve their products and services.³ The fund’s holdings span industries including healthcare, financials, consumer products, energy, industrials and communication services.

AI’s ‘ripple effect’ into other sectors

The case for using generative AI and machine learning to improve efficiency is increasingly compelling. Chatbots trained on company-specific data sets are automating interactions in customer-service requests, resulting in productivity improvements of 30% or more in some cases. ⁴ One multinational, for example, saved USD 50 million a year by using AI to streamline processes in its sales and marketing operations.⁵ Looking forward, a report by Deloitte estimates that AI could save as many as 400,000 lives a year – and EUR 200 billion a year in Europe alone – as wearable AI, AI monitoring and AI imaging develop.⁶

Moreover, the impact of AI is expanding to less obvious parts of the economy. Within our portfolio, we hold a biotech company that is using AI to mine petabytes of genomic data to generate new therapies. The fund owns shares in another company that is developing robotic surgical systems and is using AI to determine best practices to improve long-term outcomes. And a reseller of car parts is adopting AI to help insurance carriers make optimal real-time decisions about whether to write off cars that have been involved in accidents.

Today, close to 40% of the fund’s AUM is devoted to stocks that are outside the traditional technology sector. ⁷ The fund’s inquisitive, go-anywhere approach has helped it significantly outperform its Morningstar peer group on a one-year, three-year and five-year basis, ⁸ while its value-driven approach – investing in stable, growth-compounding companies – reduces drawdown during market downturns.

The AI revolution gathers pace

There is an inherent degree of uncertainty when trying to divine the direction of travel for relatively new technologies such as AI, but some pointers are becoming clearer. AI is becoming more user-friendly and more accurate, expanding the pool of potential users. Meanwhile, companies are using proprietary data sets and machine learning to train the technology to their specific needs, making it more relevant.

These advances are unlocking new use cases and giving companies outside the tech sector the confidence to incorporate AI into critical business functions. In the near future, AI may become as versatile, and as commonplace, as the internet.

From an investor perspective, AI’s impact is starting to spread beyond the narrow confines of the technology sector to the broader corporate and consumer field. BNP Paribas Disruptive Technology is set up to capture these opportunities across themes and sectors.

The above-mentioned securities are for illustrative purpose only, are not intended as solicitation of the purchase of such securities, and does not constitute any investment advice or recommendation.