Energy, healthcare and utilities: how to tap into AI in the real economy

AI has the potential to boost the profitability and productivity of a large portion of the economy outside of technology

To use AI in the actual economy, consider these two themes.

Throughout the stock market, artificial intelligence (AI) is the common theme.

The majority of the largest companies in the SandP 500 are heavily involved in developing the software and hardware that support artificial intelligence.

However, the potential of AI in the long run cannot be limited to capital transactions between large tech firms. AI must provide practical advantages in order to justify the sums of money being spent on AI data centers.

James Flintoft, head of investment solutions at AJ Bell, stated that last year "brought significant progress in the technology sector from AI implementation, with coding becoming increasingly accessible." "These advantages are now being felt in other industries, where processing and filing paperwork takes a lot less time.

"As many markets, from the US to Taiwan and Korea, continue to focus heavily on the obvious AI supply chain exposure, we are tilting towards sectors that stand to benefit from the continued roll-out of AI in the real economy," he continued.

Which real-world industries are most likely to benefit from AI as its influence extends beyond technology, and how can investors best get involved with them?

AI in healthcare.

It has long been said that the biotech and healthcare industries are well-positioned to profit from AI.

They are labor-constrained and data-intensive, two things that AI thrives on.

Drug discovery is currently one of the major bottlenecks in the industry. AI-discovered treatments have the potential to speed up drug development timelines, but the clinical trial process can take years for new drugs and has a high failure rate at every stage.

Flintoft stated, "Healthcare providers are shifting to better diagnostics and providing more coordinated care to patients, while major healthcare companies are beginning to report reductions in the time taken to carry out data processing, including regulatory filings and drug testing procedure documents."

In terms of healthcare, these kinds of advancements might be just the beginning. Elon Musk's brain interface start-up Neuralink offers the astounding potential of computer-brain interfaces in the near future, while companies like Intuitive Surgical (NASDAQ:ISRG) are already introducing robotics advancements into operating rooms.

According to the Association of Investment Companies, investors seeking an investment trust to capitalize on AI-driven healthcare trends can choose between the Worldwide Healthcare Trust (LON:WWH) and Polar Capital Global Healthcare Trust (LON:PCGH). Both trusts trade below the sector average discount and have produced share price returns of 133% and 176%, respectively, in the ten years ending January 29.

Utilities and energy.

Energy demand is another real-world issue that AI is expected to boost. In a way, this is the opposite end of the healthcare value chain; although AI firms are expected to supply healthcare firms, doing so requires them to use more energy.

Flintoft stated that as the construction of AI data centers continues at a rapid pace, utilities and the energy sector are expected to benefit from the growing global energy demands. Both the longevity and strategic significance of conventional oil and gas assets, as well as growing geopolitical risks and potential supply chain disruption, do not appear to be well valued in energy sector valuations. The "

The iShares S&P 500 Energy Sector ETF (LON:IESU) and the iShares S&P 500 Utilities Sector ETF (LON:IUSU) are vehicles to access this theme, according to Flintoft.

In our article, you can learn more about how to access AI energy assets.