AI agents propel industry development, enhance investment potential

"AI Agent" is the new driving force in the field of artificial intelligence
Capital expenditures in the field of AI continue to increase, which is beneficial to the industry outlook
AI drives the rapid development of the entire supply chain and various industries

Technological development has undergone waves of major breakthroughs since the 1990s: from the rise of personal computers, to the popularity of laptops, to the rapid growth of smart phones and IoT powered by the internet, and then to the emergence of electric vehicles -- culminating in the AI era where we are today. Each time, these technological revolutions have fostered a wealth of successful companies, generating considerable returns for investors along the value chain.

The investable areas across AI are proliferating. One of the new drivers gathering steam that should not to be overlooked is the AI agent.

To many people, the term AI agent may still be relatively unfamiliar. But the truth is, it has already permeated our daily lives, improving the way we live and work by mimicking the decision-making capabilities of human beings. For instance, robot vacuum cleaners first map the room layout before planning an optimal route and avoiding areas that have already been cleaned. Automated vehicles can analyse road conditions and activate the automatic emergency braking system when an obstruction is detected. The application of AI agents has also expanded to sectors such as logistics and finance. A major US e-commerce player employs more than 750,000 robots to classify and move packages by autonomously determining the most efficient routes, while banks use AI agent to help identify fraud through data analysis.

An AI agent is a software programme with autonomous decision-making capabilities. Through environment perception, learning, analysis, and the use of new information and experience, it adjusts its behaviour with the aim of enhancing automation, streamlining processes, and optimising decision-making. A Large Language Model (LLM), being a critical driver of the AI agent, has a relationship with it that resembles that of the brain and executor. LLM is responsible for understanding the task and providing information, while the AI agent conducts analysis and executes actions.

AI capex remains robust

Global capital markets remain zealous about AI investments. Saudi Arabia has recently established its first state-owned AI startup, focusing on the research and development of AI technology, setting up AI infrastructure and cloud capabilities, and building an Arabic LLM. A Swiss investment bank estimated that global AI capital expenditure will rise by 60% from the previous year, followed by another 33% increase in 2026. Rising investment is conducive to the industry outlook. That, coupled with the ability to monetise the technology, supports the re-rating of company earnings. At present, the AI investable universe has broadened across various sectors along the supply chain, including cloud service providers (CSPs), semiconductors, cloud infrastructure and data centres, software developers and cooling equipment.

While technology shares are highly sought after, one ought to have a good understanding of the sector and be selective about individual stocks before investing. Take the semiconductor sector as an example. Share price of a Taiwanese high-end chip manufacturer surged 82% from 2024 to mid-June, compared to a 3% decline in share price of another Taiwanese chip maker that focuses on already matured technology. Meanwhile, a US high-end chip designer saw share price skyrocket nearly 200%, in contrast to a 37% slump in another firm that primarily designs chips for electric vehicles.

AI is progressing at an astounding pace, benefiting not only tech firms, but also companies across the supply chain and various industries. To properly identify the areas and companies with a competitive edge, one must remain proactive to stay abreast of technological breakthroughs and market trends in order to seize opportunities in an era where only the strong survive.