Data centres and finance companies to benefit most from AI: Moody’s

Data centre operators, banks and insurance companies will likely see benefits from AI more than other industries, according to Moody’s 2024 outlook for artificial intelligence (AI).

Franco Leung, associate managing director of Moody’s Investors Service told Digital Nation, that these sectors will most likely find advantages first. 

“Among Moody’s-rated Australian issuers, data centre operators, banks and insurance companies will likely see benefits more than other industries,” Leung said.

“We do not expect AI to significantly affect credit quality over the next 12 months. But as use cases gradually broaden across industries, many issuers will start feeling the effects over the next two to three years,” he added. 

Widening the reach to its APAC issuers, Moody’s found it doesn’t expect AI to significantly affect credit quality over the next 12 months. 

“But as use cases gradually broaden across industries, many issuers will start feeling the effects over the next two to three years,” Leung said.  

“Firms need time to identify use cases, build expertise, test new technologies and grapple with evolving regulations.” 

He said in the APAC region it's expected “that over the next two years semiconductor manufacturers, internet service providers, logistics operators and data centre companies will see increasing benefits in their credit quality from AI adoption and implementation.”

Leung added that “a small number of firms” across other industries may also be affected. 

“Beyond 2026, the impact will be much broader,” Leung added. 

“Banking is one of the non-tech industries that will benefit the most, although the gains will not be immediate. 

“Over the course of the next two to five years, as AI use-cases build out, efficiency gains will likely be substantial for this highly digitalized, data-driven industry,” Leung said

He explained many banks, “particularly the largest ones located in markets with high penetration of smartphones” are started exploring AI “years ago and already make some use of the technology.”

Leung said insurance companies have also already started incorporating this technology into their business models. 

“AI is particularly useful in processing insurance claims and in fraud detection, where AI algorithms can quickly analyse vast quantities of data to detect anomalies,” Leung said. 

Global AI Impact for 2024

The report found on a global scale, advances in AI are still at an early stage and will not significantly affect credit quality over the next 12 months.

The report stated some industries, however, “are already feeling the effects and the impact will broaden to many more issuers over the next two to three years.”

“AI innovation will develop rapidly in 2024, drawing more users and fostering a vibrant network of hardware suppliers and app developers. Risks will increase, too, as organizations start rolling out AI applications at scale for the first time,” the report said.

Key takeaways revealed in the report include AI spending, model improvement and edge computing will speed up adoption and banking, insurance and manufacturing sectors will accelerate. 

“Over the next two years, we expect a material impact only on certain software and semiconductor firms. From 2026, the effects will be far broader,” the report stated.

It also found that “certain businesses already face disruption” with technology risks rising, stating, “Some media and business service firms could suffer as models start competing with their offering, although the overall effects of AI on these industries will be positive”. 

“In a banner election year, AI may be used to disrupt elections” with “AI could enable electoral disruptions by blurring the lines between real and fake content.”

The outlook also said another takeaway was, “Regulators and policymakers will aim to balance risk mitigation with innovation”. 

“China's AI rules are the most comprehensive, although government oversight may hold back its AI industry,” the report said.