AI acceleration of metaverse driving investment opportunities amid hurdles

Generative artificial intelligence is accelerating the development of the metaverse, which will change the way people live and work and drive more investment opportunities, according to Pauline Llandric, portfolio manager at Axa Investors.

Llandric said while AI has been a cornerstone of the development of the metaverse, GenAI is going a significant step further.

She added: “This is a crucial shift for companies and for investors. For example, gaming companies can design increasingly sophisticated and lifelike games and worlds, broadening their appeal to consumers and bringing in new revenue.”

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Healthcare is another sector harnessing the possibilities of the metaverse, with virtual reality headsets being used by doctors, for example.

“GenAI can also help update patient notes faster, saving doctors time, while digital twins – a digital representation of a physical object, person, or process, contextualised in a digital version of its environment – can help diagnose illnesses or allow surgeons to practice operating,” Llandric said.

Companies are also using AI in the metaverse to analyse and respond to customer behaviour, creating more personalised experiences and developing existing offerings. 

The growing complexity of the metaverse requires increasingly sophisticated chips and tools for chip design, creating demand and potential new investment opportunities.

Llandric said: “The growing industry also needs more infrastructure than is currently available, leading to significant capital expenditure expectations on facilities such as data centres and house computer servers.”

Another area of growth is the increased crossover of firms that previously were experts in other markets, but are now taking a stake in developing metaverse. 

“Companies are increasingly crossing the boundaries between gaming, socialising and working, as the metaverse becomes more integrated and holistic rather than a collection of silos,” added Llandric.

But concerns remain over the pace at which the technology is expanding.

According to a paper by data analytics and consulting company Global Data, big tech pursuit of GenAI excellence faces ethical, legal, and economic hurdles.

The big players in GenAI include Alphabet (Google), Amazon, Apple, Meta, and Microsoft. 

Saurabh Daga, associate project manager of disruptive tech at Global Data, said: “AI-generated content faces intense scrutiny, especially concerning intellectual property rights. This necessitates ‘big tech’ to adeptly manoeuvre through a nuanced legal framework. 

“They must align their operations and strategies with the fluctuating regulatory climate, all while managing risks and ensuring stakeholder trust. Such a scenario can influence their developmental methods, product range, and strategic integration of AI within their ecosystems.”