Page 5 - FWP Wealth Adviser Newsletter - February 2025

ISSUE 105
FEBRUARY 2025

AI’S GLOBAL SHAKE-UP

Navigating Market Disruption and

Strategic Resilience in Tech and Finance Cottonbro studio/Pexels

BY WEALTH ADVISER echoing the space race of the 1960s. Just as Sputnik spurred
massive investment in aerospace and computing, the AI race
he rapid advancement of artificial intelligence (AI) is is driving unprecedented levels of funding and innovation in
reshaping the global economic landscape, creating rip- both nations. However, this time, the stakes extend beyond
Tples that extend far beyond Silicon Valley. This techno- national pride to encompass global economic dominance
logical revolution is not just a matter of improved algorithms and technological supremacy.
or faster computing; it represents a fundamental shift in how Amidst this high-stakes competition, a nuanced approach
businesses operate, how markets behave, and how wealth is emerging in the financial sector. Russell Investments has
is created and preserved. As we stand on the cusp of this introduced the concept of “augmented intelligence” in asset
AI-driven era, it’s crucial to understand the dual nature of AI management, which emphasises the symbiotic relationship
disruption—its potential to drive unprecedented growth and between human expertise and AI capabilities. This approach
its capacity to create volatility and uncertainty. recognises that while AI can process vast amounts of data
and identify patterns at superhuman speeds, the nuanced
The Dual Nature of AI Disruption decision-making and ethical considerations that are crucial
The adoption of AI technologies is following what econ- in finance still require human oversight.
omists call an “S-curve”—a pattern of slow initial uptake, The Gartner 2024 hype cycle projections for generative
followed by rapid acceleration, and eventually, a plateau as AI suggest that we are approaching the “Peak of Inflated
the technology matures. We are currently witnessing the Expectations,” where enthusiasm for the technology may
early stages of this curve, where expectations often outpace outstrip its current capabilities. This creates a challenging
reality, creating a volatile environment for investors and environment for investors and businesses, who must navi-
businesses alike. gate between the promise of transformative innovation and
This moment in AI development has been likened to a the realities of market volatility.
“Sputnik moment” in the context of US-China competition,

5