Is the year 2025 the ground floor to a Stocks and Shares ISA golden age? One reason to think so is the impact of artificial intelligence on the economy and world as a whole. One recent report predicted yearly economic GDP growth of up to 5.4%. That’s more than double some of the strongest years last century. Developed countries grow at less than 1% a year these days.
The rapid adoption of this technology could lead to challenges, especially regarding fewer jobs being needed. But it may lead to stock market returns higher than we have seen in the past. This could mean a faster-growing Stocks and Shares ISA and all the benefits it can bring, like passive income or an early retirement.
Possibilities
At this point, artificial intelligence is in something of a strange place. The technology is undoubtedly a wonder that’s reminiscent of science fiction (it took Star Trek until the 2400s to invent a speaking AI), but its true utility has yet to be realised.
It’s similar to the early days of the internet. The potential for instant worldwide communication was right before our eyes, but it took decades for some of its most amazing possibilities to come true.
Take $200bn company ride-hailing company Uber. When I was fiddling about on internet chatrooms in the 1990s and learning what this new acronym ‘LOL’ stood for, I couldn’t have predicted it would be used to call a taxi at the touch of a button.
It’s also worth bearing in mind that while the possibilities are amazing, there are no guarantees. Early efforts to produce economic output from AI do not seem fruitful. That might never change. The AI golden age and its impact on stocks and shares might never come at all in fact.
Investments
One of the sectors mooted to be able to use artificial intelligence pharmaceuticals with firms like AstraZeneca (LSE: AZN). The basic idea is that AI’s ability to synthesise and analyse vast quantities of data could lead to new drug discoveries. A number of possible drugs have already been discovered with the technology and are undergoing clinical trials.
Has the promise of AI-discovered treatments boosted AstraZeneca yet? The valuation hasn’t changed too much. The firm trades at 29 times earnings, which isn’t a huge jump from where it has been in the last few years. That could mean AI might not be the game-changer that some think.
And whether they are AI-related or not, a pharma firm lives and dies by its treatments. Therefore a downturn in the uncovering of new drugs and the like is always a risk for this stock.
I think there’s plenty to like about the stock in general though. The company has been flying under its superstar CEO Pascal Soriot, the share price up five-fold since 2012. The research and development pipeline looks strong too with billions of dollars being invested into hundreds of therapies. I think it’s one to consider for a Stocks and Shares ISA.
