Generative artificial intelligence (AI) didn’t just capture the hearts and minds of scores of investors this year. It also popped on the radar screens of policymakers, both in the U.S. and abroad. From that, it can reasonably be inferred that artificial intelligence regulations could be front-and-center in 2024.
Some analysts view new artificial intelligence policy and regulations as almost guaranteed to arrive in 2024. Bhat doesn’t mean headwinds for AI-related equities and ETFs such as the WisdomTree Artificial Intelligence and innovation Fund (WTAI). The fund, which recently turned two years old, has reaped the rewards of AI adjacency this year. It has soared 44% year to date, including a 12.72% jump over the past month.
That performance may not be replicated to a tee next year, but WTAI, which follows the WisdomTree Artificial Intelligence & Innovation Index, could offer further upside due to expectations that AI growth will continue and amid a regulatory environment that’s largely expected to be palatable to market participants.
AI Regulations Might Not Hinder WTAI
Not surprisingly, more than 75% of WTAI’s 80 holdings hail from the technology sector – a group that’s had its bouts with regulatory risk. However, artificial intelligence firms are likely to be mostly unscathed by 2024 AI regulations. That’s assuming those policies become law.
“Given generative AIs transformative and disruptive potential, regulation is a near given. At this early stage, we’re anticipating an overall manageable policy trajectory for leading tech companies to continue commercializing generative AI. However, competition policy in 2024 could influence long-term generative AI market structure,” according to TD Cowen research.
The research firm adds that it’s unlikely Congress will pass wide-ranging AI legislation next year, indicating that regulatory risk for many of WTAI’s U.S.-based holdings may be slight. It’s possible that the White House looks to play a more active role in AI policy. But with 2024 being a presidential election year, it’s possible that AI policy could be a low priority for the Biden administration.
On that note, the results of that election and the possibility that majorities in both houses of Congress could change, WTAI investors would do well to at least monitor the results of next November’s elections.
“The November 2024 election could be particularly important. A Biden win likely continues policies aimed at restraining the U.S. tech platforms from dominating generative AI. A Trump win probably lets U.S. platforms more fully leverage their considerable natural advantages (compute, data, financial resources) via M&A/partnerships — with less risk of disruptive antitrust or consumer protection rulings,” added TD Cowen.
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