S&P Global — 7 June 2024
Daily Update: June 7, 2024
You Can’t Spell Monetization Without AI
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Money talks. While there has been a great deal of talk about AI, the true measure of commitment to any technology is investment. According to S&P Global Market Intelligence 451 Research, the software part of the generative AI market is forecast to reach $52.2 billion by 2028 with a compound annual growth rate of 59% from 2023. By any measure, this is a significant commitment. Rapid advancements in generative AI technology have been matched by an equally quick adoption of the technology by businesses. The Generative AI Market Monitor report, published by 451 Research, highlights the scale of the investment, the drivers accelerating adoption and the generative AI applications that are exciting business leaders.
The Generative AI Market Monitor has adjusted market revenue projections significantly over the past year. In June 2023, the estimated spend on generative AI products was expected to reach $36 billion by 2028. Now, that projection has been revised upward to $52.2 billion. This rapid and accelerated adoption curve can be attributed to three main drivers: expedited enterprise roadmaps for generative AI, an influx of new providers in the market and intensified focus on monetization as demands for tangible financial results rise.
Regionally, North America remains the leading market for generative AI products and services. Given North America’s traditional leading role in technology, it is not surprising that 64% of 2023 generative AI revenue went to AI providers headquartered in the region. However, all other regions are experiencing growth rates for generative AI that will eventually erode North America’s dominant position.
Generative AI business models are becoming more complex as the market grows. Multimodal models that process and generate different types of data, such as text and images, have grown more popular. However, generative AI code generators are forecast to have the highest growth rate, jumping to 10% of the market for AI products by 2028 from 6% now. According to S&P Global Market Intelligence’s Voice of the Enterprise: AI & Machine Learning, Use Cases 2024 survey, process automation, customer interaction and employee training are considered the most promising applications of generative AI technology.
In a recent interview with S&P Global Market Intelligence, Rick McCathron, CEO of insurance company Hippo Holdings Inc., offered his thoughts on the growing market for AI products and services: “My view is that AI is still in the early stages. Companies must continue to identify what works well for them and their customer segment. In fairly short order, I would say in the next two to three years, this will be table stakes in which everybody will need to utilize some form of AI to remain competitive.”
Today is Friday, June 7, 2024, and here is today’s essential intelligence.
Sustainability Insights: Decarbonizing Metals Part Two: Financial Strength Mitigates Rising Credit Risk
The metals sector faces a technologically complex and lengthy transition to low carbon-emitting practices, due to a lack of tested, cost-efficient technology and the scarcity of raw materials. This will leave it exposed for longer to the risk of materially higher carbon costs that could prove negative for metals companies' credit quality.
—Read the article from S&P Global Ratings
The Quantitative Metrics for Identifying an Economic Moat
In a previous blog, S&P Dow Jones Indices introduced the newly launched S&P 500® Economic Moat Index by reviewing its methodology, index characteristics and historical performance. In this blog, it will examine the specific quantitative metrics used to identify the companies with the widest economic moats. Furthermore, it will discuss the complementary nature of the metrics, which has historically led to strong performance when combining the metrics into a multi-factor score.
—Read the article from S&P Dow Jones Indices
Credit FAQ: Funded Reinsurance Deserves The Heightened Regulatory Scrutiny
Record surplus positions at defined benefit pension schemes have given many companies an opportunity to reduce their pension risk exposure. Trustees are now able to negotiate for an insurance solution from a position of relative strength. In the UK alone, the annual premium for bulk purchase annuities (BPA) was about £50 billion in 2023 and lucrative growth prospects have attracted new players to the market. To harness the market's growth potential, some insurers are choosing to cede both the longevity and asset risk obtained via these BPA transactions to reinsurers through funded reinsurance (Funded Re) transactions.
—Read the article from S&P Global Ratings
Floods In Brazil’s Rio Grande Do Sul State Disrupt Supply Chain
Floods caused by record heavy rains in May have severely impacted Brazil's state of Rio Grande do Sul, an agribusiness and industrial powerhouse. Hundreds of people have died and hundreds of thousands have been displaced. The floods and subsequent clean-up will have a major impact on domestic industry, both in terms of ongoing operations, sourcing materials and sales to export markets and within Brazil.
—Read the article from S&P Global Market Intelligence
Oil Product Stocks Climb To Six-Week High Amid Subdued Demand
Stockpiles of oil products at the UAE's Port of Fujairah climbed to a six-week high as of June 3 amid signs of slow demand for fuel oil from the shipping sector and power plants, according to data from the Fujairah Oil Industry Zone and latest ship tracking data. Total inventories rose 5.9% to 21.573 million barrels in the week ended June 3, the highest since April 22, the FOIZ data published June 5 showed. Stockpiles have increased 24% since the end of 2023.
—Read the article from S&P Global Commodity Insights
Listen: Next In Tech | Episode 170: Corporate Language Analysis In Pride Month
Sentiment analysis is a common use case for large language models in generative AI and we’re kicking off Pride Month with a discussion of a recent study that examined the way firms are talking about LGBTQ+ issues in public statements. Returning guest Emily Sandler and Ilan Attar of Pronto NLP, who led the analysis, join host Eric Hanselman to look at what the study explored, how they trained the model used for the analysis and some of the results.
—Listen and subscribe to the podcast from S&P Global Market Intelligence