AllianceBernstein's Chin on AI and the Investment Edge
Why judgment will matter as AI tools become standard. Plus: JPMorgan’s AI reshuffling and asset managers ramp up AI spending.
Hey, I’m Matt. I’m a former Bloomberg News reporter, and you’re reading AI Street, where I report on how Wall Street uses AI.
AI and Alpha: Why Technology Alone Won’t Be Enough
Andrew Chin, chief AI officer at AllianceBernstein, published a piece this week that goes through the history of technology in the investment process.
Chin highlights how spreadsheets, the web and alternative data each gave early adopters an edge before eventually becoming standard tools available to everyone. AI is on the same path.
Eventually, everyone will have access to roughly similar models. What separates firms will be the judgment they bring to them: what data they focus on, what questions they ask and the viewpoints they build into the technology. We highlighted this earlier this month when Bridgewater trained an AI model to think like one of its investors.
AI is an amplifier. If you’re bright, these tools make you that much more effective. You’re able to scale what you already do well. If you’re not so bright, or maybe just a bit careless, well, that scales too.
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JPM Moves AI Into Its Core Tech Stack
Last month, I wrote that responsibility for AI might eventually be absorbed into the CTO or CIO role. That appears to be happening at JPMorgan.
The bank is placing the office that led its AI push inside Global Technology, signaling that AI is becoming core technology rather than a standalone initiative. CTO Scot Baldry is taking over the firmwide AI program as Teresa Heitsenrether prepares to retire at year-end, according to Business Insider. The central team will continue setting strategy and governance, while individual businesses will increasingly be responsible for deploying AI and proving its value.
In other words, AI is becoming too central to remain siloed within a dedicated division. I suspect this shift from side project to core function will happen across companies as AI becomes more embedded in workflows.
Asset Managers’ AI Spending Surges
Asset managers are pouring money into AI without much agreement on how much is enough.
Clearwater Analytics commissioned a survey of 178 senior executives at hedge funds, private-markets firms, insurers and traditional asset managers across the US, Europe and Asia-Pacific.
Sixty-three percent said their firms increased AI spending by more than 50% during the past year. None reported a decrease. Yet 66% worried they were overinvesting, while 25% thought they were not spending enough.
AI is also moving closer to the portfolio. Forty-three percent said it is involved in between 25% and 49% of their investment decisions. Thirty-eight percent reported similar adoption in risk management and 34% in operations.
The survey does not identify the firms, their assets or what qualifies as AI involvement. It also combines generative AI with older machine-learning and automation systems.
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What Else I’m Reading
ICE puts fixed income pricing data on leading AI platforms | Finextra
OCBC Uses AI To Ease Wealthy Clients’ Onboarding Pain | WealthBriefingAsia
HSBC to open Singapore AI centre of excellence | Finextra
The Rise of Million-Dollar Companies With Just One Employee | WSJ
Situational Awareness Seeks to Raise Capital After AI Rout | FT
Bloomberg to Buy Private Markets Data Platform Canoe Intelligence | Yahoo
People Building AI Want Governments to Slow Down the AI Race | Euronews
Citadel spin-offs are favorites for hedge funds investing externally | BI
How Bridgewater Built an AI Analyst That Does Hours of Expert Research in Minutes | YouTube
CME’s Debut of 24/7 Gold Futures Trading Met With Strong Demand | BBG
Flow Traders Selects CoreWeave for Model Training | Press Release
BNY to adopt blockchain technology for records in new era for Wall Street | FT
This Week in AI Street
Thanks for those of you who joined yesterday for AI Street’s first Substack Live. It was a great chat with Ex-Millennium quant Arman Khaledian on the latest on AI adoption, changing research workflows and Wall Street’s growing compute arms race.
If you’d like to suggest a guest or a topic, please reply to this email or reach out at matt [at] ai-street.co.
How AI Runs $200 Million in Portfolios
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