The AI investment thesis rapidly evolved from emphasis on companies considered to be enablers to adoption of services and technology purveyed by those firms. Analysts and investors are paying increasing attention to which industries are credible long-term adopters of AI.
Healthcare and industrials are making significant strides in terms of artificial intelligence adoption. The same is true of financial services. In fact, financial services is proving to be one of the prime industry-level adopters of artificial intelligence. That indicates the potential for positive long-term trends for shares of firms residing in ETFs like the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ).
The status of QQQ and QQQM is ETF proxies on the mega-cap AI trade is pertinent because Nvidia’s (NVDA) recently released State of AI in Financial Services report confirms that AI adoption among financial services providers is soaring.
Artificial Intelligence Adoption Paying Dividends
Market participants often take short-term views of long-term trends. That’s just human nature. And it’s at play regarding artificial intelligence adoption. Put simply, many QQQ/QQQM investors want to see artificial intelligence adoption increase now.
Regarding the intersection of financial services and artificial intelligence, QQQ/QQQM investors can take heart. That’s because companies in the space that are using artificial intelligence are already reaping rewards. That could be a sign they’re more apt to continue embracing artificial intelligence in the years to come.
“Nearly 70% of respondents report that AI has driven a revenue increase of 5% or more, with a dramatic rise in those seeing a 10-20% revenue boost. In addition, more than 60% of respondents say AI has helped reduce annual costs by 5% or more. Nearly a quarter of respondents are planning to use AI to create new business opportunities and revenue streams,” noted Nvidia.
Financial companies are already using AI for tasks such as credit approvals and risk assessment. But there are higher margin use cases. That’s particularly so in the worlds of investment banking and wealth management.
“The top generative AI use cases in terms of return on investment (ROI) are trading and portfolio optimization, which account for 25% of responses, followed by customer experience and engagement at 21%. These figures highlight the practical, measurable benefits of AI as it transforms key business areas and drives financial gains,” added Nvidia.
Adding to the potential long-term allure of QQQ and QQQM is the point that the number of financial services principals embracing generative AI is trending higher. That will continue as return on investment increases.
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