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Bank of America has identified global companies that are exposed to the demand for generative artificial intelligence solutions as "winners" in the software and IT services sectors. According to Bank of America, the opportunity for AI in the software industry is vast. French software company Dassault Systemes is ranked at the top of Bank of America's list, thanks to its acquisition of healthcare data platform Medidata. With access to drug trial information from millions of patients, Dassault Systemes is well positioned for AI use cases such as generative therapeutics design. German software firm SAP is also highly ranked by Bank of America, especially for its enterprise resource planning (ERP) software. ERP systems hold a wealth of data about a company's operations, making them essential for generative AI integration.
Bank of America sees generative AI as an opportunity for the software industry to not only increase revenue through enhanced value propositions and data monetization but also improve productivity. However, the impact of generative AI on the IT services industry is more polarized. While there are concerns about a potential decrease in sales due to automation, Bank of America believes that IT service companies can play a vital role in enabling the shift to generative AI for their customers. These companies can leverage their talent pool to provide services such as bespoke application development, data analytics, cloud migration, and cybersecurity.
Bank of America predicts that global revenues from AI will continue to grow, with a compound annual growth rate of 19% and reaching $900 billion by 2026, as reported by the International Data Corporation. In conclusion, companies like Dassault Systemes, SAP, Capgemini, Kainos, and Tietoevry are well positioned to benefit from the increasing demand for AI-related services in the software and IT services sectors.
Conclusion: Embracing Generative AI for New Businesses
The emergence of generative artificial intelligence (AI) presents a plethora of opportunities for businesses, especially in the software and IT services sectors. Bank of America's identification of global companies positioned as "winners" in this space reveals the potential for growth and innovation through AI adoption.
For a new business entering the market, leveraging generative AI can provide a competitive advantage. By implementing AI solutions, companies can enhance their value propositions, monetize data assets, and improve productivity. However, it's important to note that the impact of generative AI on the IT services industry is mixed. Automation concerns may initially raise fears of decreased sales, but new businesses can play a crucial role in enabling the transition to generative AI for their customers.
To capitalize on this opportunity, new businesses should consider the following strategies:
1. Embrace AI Integration
By actively incorporating generative AI into their products or services, new businesses can enhance customer experience and drive innovation. This may involve leveraging AI platforms and tools, partnering with established software companies, or acquiring AI-focused startups.
2. Focus on Specialized Services
While automation threatens certain IT services, businesses should carve out niches that require human expertise for generative AI integration. Offering bespoke application development, data analytics, cloud migration, and cybersecurity services can ensure continued demand and growth.
3. Stay Agile and Competitive
The AI landscape is rapidly evolving, making it essential for new businesses to monitor market trends and adapt quickly. By staying agile, embracing new technologies, and continuously upskilling employees, businesses can remain competitive in the dynamic environment of generative AI.
With global revenues from AI projected to reach $900 billion by 2026, new businesses have a unique opportunity to capitalize on this burgeoning market. By embracing generative AI, focusing on specialized services, and maintaining agility, they can position themselves as key players in the software and IT services sectors. The future of AI-driven growth and innovation awaits those bold enough to harness its potential.
Article First Published at: https://www.cnbc.com/2023/07/14/bank-of-america-names-generative-ai-related-stocks-to-buy-in-europe.html