- Video
- Global Research
- Data science
- Disruptive technology
- General Research Insights
Artificial Intelligence
The good, the bad, and the ugly
The AI revolution is upon us. As with the internet in the late 1990s, AI technology has the potential to lead to significant productivity improvements. However, these benefits are unlikely to be evenly distributed. To help investors understand the impact that AI is likely to have on the economy, we look at the good, the bad, and the ugly of AI.
Exciting times
AI has been productively employed in many areas of the economy now for several years, but in the past 18 months, public interest has boomed. In financial markets, the technology has gone from being the specialist subject of a handful of analysts to one of the most widely discussed themes, with announcements on the topic capable of precipitating major market moves.
Why the excitement now? What’s changed, of course, is Generative AI. Before the release of ChatGPT in late 2022, most people believed there was something uniquely human about the act of being creative. ChatGPT (and other models since) have clearly shown that AI is also very capable at this skill.
0.1-1.0%
Estimates of potential increases in labour productivity from AI by McKinsey and PwC
This has been a psychological shock for some. The response has been a significant degree of polarisation. We see lots of hype from those who are excited about this technology and its potential to drive productivity. Others worry about the potential side-effects, such as jobs being displaced. The more pessimistic fear the scope for significant harm or even an existential threat to humanity.
15%
Of tasks could be impacted by AI, based on estimate from OpenAI
Who to believe? Well, in our view, the most likely outcome is probably somewhat more prosaic than the arguments at either end of the spectrum. Broadly speaking, we see grounds to be optimistic about the wider economic impact of AI, though not all companies, markets and people will benefit equally. But while we are not necessarily convinced by some of the arguments about the perceived threat of AI, we think it is useful for investors to understand them, given that they have the potential to shape opinions towards a technology already driving huge shifts in asset prices.
The full note, available to clients of HSBC Global Research, explores the arguments and evidence about the good, the bad, and the ugly aspects of AI, from aggregate productivity (good), to a look at capital vs labour (bad), to what the nature of “truth” is (the ugly) – and so much more.
It is still relatively early days for AI. Its impact in the areas above and others besides will become clear in time. But there are already more than enough potential consequences for economists, businesses, regulators – and of course investors – to weigh up.
Would you like to find out more? Click here* to read a free-to-view version of the report.
To find out more about HSBC Global Research and how to subscribe, please email us at askresearch@hsbc.com
*Please note that by clicking on this link you are leaving the HSBC Global Banking & Markets Website, therefore please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.
Global Research
HSBC Global Research provides information, insights and thought-provoking ideas.
The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: James Pomeroy and Mark McDonald
This document has been issued by the Research Department of HSBC.
HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or liquidity provider in the securities/instruments mentioned in this report.
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.
Whether, or in what time frame, an update of this analysis will be published is not determined in advance.
For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research.
Additional disclosures
- This report is dated as at 21 May 2024.
- All market data included in this report are dated as at close 17 May 2024, unless a different date and/or a specific time of day is indicated in the report.
- HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.
- You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund.
This document has been issued by HSBC Bank plc, which has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. Neither HSBC Bank plc nor any member of its group companies (“HSBC”) make any guarantee, representation or warranty nor accept any responsibility or liability as to the accuracy or completeness of this document and is not responsible for errors of transmission of factual or analytical data, nor is HSBC liable for damages arising out of any person’s reliance on this information. The information and opinions contained within the report are based upon publicly available information at the time of publication, represent the present judgment of HSBC and are subject to change without notice.
This document is not and should not be construed as an offer to sell or solicitation of an offer to purchase or subscribe for any investment or other investment products mentioned in it and/or to participate in any trading strategy. It does not constitute a prospectus or other offering document. Information in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on it, consider the appropriateness of the information, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice.
The decision and responsibility on whether or not to purchase, subscribe or sell (as applicable) must be taken by the investor. In no event will any member of the HSBC group be liable to the recipient for any direct or indirect or any other damages of any kind arising from or in connection with reliance on any information and materials herein.
Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors.
This document is for information purposes only and may not be redistributed or passed on, directly or indirectly, to any other person, in whole or in part, for any purpose. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this report, you agree to be bound by the foregoing instructions. If this report is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document.
Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document.
HSBC and/or its officers, directors and employees may have positions in any securities in companies mentioned in this document. HSBC may act as market maker or may have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell or buy securities and may also perform or seek to perform investment banking or underwriting services for or relating to those companies and may also be represented on the supervisory board or any other committee of those companies.
From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits.
HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange. (070905)
© Copyright 2024, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of insert issuing entity name. MCI (P) 061/09/2023, MCI (P) 073/10/2023, MCI (P) 007/10/2023, MCI (P) 008/01/2024
Issuer of report
HSBC Bank plc
