By Ross Kerber
Sept 13 (Reuters) - The common theme in all the stories about the artificial intelligence boom is that nobody seems able to forecast whether the robots will serve us like R2D2, turn on us like HAL, or fall somewhere in between. I learned a lot from several recent conversations on this topic with Beth Williamson, head of sustainable equity research at Calamos Investments, who helps run a fund that is a partnership with Giannis Antetokounmpo, star forward of the NBA's Milwaukee Bucks.
For years, Williamson has invested with an eye on risk. In this week's main story below she outlines opportunities and challenges posed by the rise of AI, and talks about the time she sold out of Facebook. One service that ESG-minded investors perform is to help markets price in the chance of something bad happening.
Also this week I've flagged strike news in Australia, the big Google antitrust case in Washington D.C., and the battle lines forming in California over a proposed new emissions-disclosure law.
I invite you to connect with me on LinkedIn where I welcome comments and feedback. Or if you have a news tip, potential content, or general thoughts please email me at ross.kerber@thomsonreuters.com This week's most read
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Some lessons on AI risk from an NBA player's fund While tech giants pour big money into artificial intelligence development, one fund manager points to smaller companies like tractor-maker John Deere and accounting software provider Intuit as more practical options to invest in the space.
"The names that are interesting to us are of companies that have taken AI for the betterment of their customers" said Beth Williamson, head of sustainable equity research at Calamos Investments, where she helps run funds including the Calamos Antetokounmpo Global Sustainable Equities ETF. With $10 million in assets, the young ETF is hardly a major force in tech investing, though it is well-known via its partnership with the two-time NBA Most Valuable Player. But as part of a management team that has considered ESG risks for decades, Williamson's views reflect how wary investors might play the emerging AI space.
The ETF's top holdings include Microsoft and Alphabet. In recent interviews Williamson said both have done a good job developing AI but she likes them mainly for their track records in areas like cloud computing and search.
In contrast, Deere's AI efforts are closer to being the main reason she has overweighted its shares. She mentioned Deere's fully autonomous tractor, building on its past investments in areas like global-positioning systems. "They're taking existing technologies and applying AI to them," Williamson said. Her firm keeps notes on how companies handle data privacy and security concerns. For instance, Deere has assigned cybersecurity responsibilities to a board committee.
Intuit, for its part, on Sept. 6 launched a generative AI tool to help customers with its TurboTax program and other products. "They've started to think, how can AI help our customers run their businesses better," Williamson said. She also noted steps by Intuit like appointing a chief privacy officer and taking requests from customers that it delete data.
Her message, in sum, is powerful AI tools should be guarded and managed with the same care companies have for dangers like data breaches and privacy problems.
As she wrote in a recent note to investors, "Companies that use AI responsibly will be rewarded over time, whereas businesses with poor AI reputations (e.g., due to misuse or breaches of customer data) will face a variety of risks to profitability—such as lost customers and regulatory fines."
Williamson said the fund hasn't yet sold out of a stock over AI misuse concerns, though it did trim a stake in chipmaker Nvidia because, she said, "its valuation seems extreme."
She also cited the case of Facebook, now known as Meta, where privacy practice failures led to a $5 billion settlement with the U.S. Federal Trade Commission and other legal actions. The flaws were the reason the stock was divested about five years ago from a previous portfolio she oversaw, at Trillium Asset Management.
Meta's share price is now higher than it was at any point in 2018, but Williamson says she doesn't regret the sale. "From a risk perspective the company continues to be at the center of numerous controversies around the world all pertaining to data breaches and data privacy controversies," she said.
Company News Alphabet's Google did not play by the rules in trying to keep its dominance in online search, the U.S. Justice Department said on Tuesday as part of its accusation the company stifled competition.
French power giant EDF said it set up a new subsidiary, Oklima, aiming to cut fossil fuel use. Oklima will focus on projects like carbon sequestration.
Shares in Alibaba lost more than 4% on Monday after the leader of its cloud computing unit abruptly quit, raising concern over the unit's spin-off plan and the possibility of discord at the top.
On my radar A California bill requiring emissions reporting by big companies could become law after winning backing from the likes of Apple and Google. The state law might outpace proposed federal requirements which have yet to be finalized.
Hiromichi Mizuno, a former Tesla director and onetime leader of Japan's Government Pension Investment Fund, was recently named a special adviser to MSCI CEO Henry Fernandez and will advise the company's new Sustainability Institute.
Not every panel at Climate Week NYC will make news but here's hoping speakers talk turkey on topics like banks' climate commitments, carbon pricing and emissions trends. (Reporting by Ross Kerber; Editing by David Gregorio)
