Fidelity International’s annual Analyst Survey, which explored the views of more than 100 analysts worldwide, found that a large majority (72 per cent) expect AI will have no impact on companies’ profitability this year.
“Will 2025 be the year AI takes over the world? The word from our analysts is: Don’t get too excited. At least, not yet,” Fidelity director of research Viral Patel said.
Evan Delaney, a telecoms, media and technology fixed income analyst focusing on North America, believes that AI could have a moderately positive impact on the profitability of companies he covers in 2025, thanks largely to the automation of call centres and other customer service activity.
However, he noted that the full impact of new technologies remains to be seen.
“AI remains more of a buzz word than a profit driver at the moment,” Delaney said.
The survey showed that far more analysts expect AI to have a positive impact over a five-year horizon, compared to their more neutral expectations for the next 12 months.
As for how the technology will be used, Fidelity said the biggest potential over the next five years will likely stem from the healthcare and financial sectors, via use cases like medical imaging, sales processes, originating loans, software improvements, and ubiquitous back office and call centre applications.
“In the meantime, investors waiting to see big breakthroughs in AI adoption and killer use cases will need to wait. The question is, will they have the patience?” Patel added.
This comes as AI hype has fuelled a surge in tech share performance over the past year, and while analysts agree that a failure of the sector’s next big thing to deliver on its promises would hurt further gains, “for now”, there seems to be “juice left in the tech orange”.
Equity analyst Clare Coleman, who covers software and internet companies across Asia-Pacific ex Japan and China, said: “Tech has had a strong year and at this stage, I don’t see a strong valuation de-rating catalyst.”
But Coleman noted that maintaining current earnings momentum and delivery on consensus expectations will be key.
“The sector is expensive as a whole but there are still companies with such strong structural growth that they will outpace more modest market growth and the risk-reward is still fair.”
As such, Fidelity warns investors to be highly selective when targeting sectors with long-term AI potential, noting that over a quarter of analysts (28 per cent) see significant valuation gaps, especially in healthcare and tech.
Ultimately, according to the survey, more analysts expect their companies will spend more on AI this year than expect them to materially increase their use of the technology.
Analysts found that the tech, financials, and communications services sectors have the highest expectations for increased spending.
“One interpretation is that software vendors are bundling unloved AI features into existing products and then using the extra features to justify a price hike,” Patel said.
“The cliché about picks and shovels comes to mind, when many gold rush prospectors came away empty handed no matter how impressive their newly bought tools might have been.
“Perhaps the most successful AI use case so far is channelling money into the coffers of tech companies,” he said.
