Jamie Dimon annual shareholder letter highlights AI potential

Jamie Dimon, the veteran CEO and chairman of JPMorgan Chase, mentioned he was satisfied that synthetic intelligence could have a profound influence on society.

In his annual letter to shareholders launched Monday, Dimon selected AI as the primary subject in his replace of points going through the largest U.S. financial institution by belongings — forward of geopolitical dangers, latest acquisitions and regulatory issues.

“Whereas we have no idea the total impact or the exact price at which AI will change our enterprise — or the way it will have an effect on society at giant — we’re utterly satisfied the implications will probably be extraordinary,” Dimon mentioned.

The influence will probably be “presumably as transformational as a few of the main technological innovations of the previous a number of hundred years: Assume the printing press, the steam engine, electrical energy, computing and the Web.”

Dimon’s letter, learn extensively within the enterprise world due to his standing as one of the profitable leaders in finance, hit all kinds of subjects. The CEO mentioned that he had ongoing issues about inflationary pressures and reiterated his warning that the world could also be getting into the riskiest period in geopolitics since World Warfare II.

However his concentrate on AI, first talked about in Dimon’s annual letter in 2017, stood out. The know-how, which has gained in prominence since OpenAI’s ChatGPT grew to become a viral sensation in late 2022, can generate human-sounding responses to queries. Enthusiasm for AI has fueled the meteoric rise of chipmaker Nvidia and helped propel tech names to new heights.  

JPMorgan now has greater than 2,000 AI and machine studying staff and knowledge scientists engaged on 400 functions together with fraud detection, advertising and threat controls, Dimon mentioned. The financial institution can be exploring the usage of generative AI in software program engineering, customer support and methods to spice up worker productiveness, he mentioned.

The know-how might finally contact the entire financial institution’s roughly 310,000 staff, aiding some employees whereas changing others, and forcing the corporate to retrain employees for brand spanking new roles.

“Over time, we anticipate that our use of AI has the potential to reinforce just about each job, in addition to influence our workforce composition,” Dimon mentioned. “It might scale back sure job classes or roles, however it could create others as effectively.”

Listed below are excerpts from Dimon’s letter:

“Many key financial indicators at the moment proceed to be good and presumably bettering, together with inflation. However when waiting for tomorrow, circumstances that may have an effect on the longer term needs to be thought-about… The entire following elements look like inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of worldwide commerce, capital wants of the brand new inexperienced economic system, and presumably increased vitality prices sooner or later (regardless that there at present is an oversupply of gasoline and plentiful spare capability in oil) on account of a scarcity of wanted funding within the vitality infrastructure.”

“Fairness values, by most measures, are on the excessive finish of the valuation vary, and credit score spreads are extraordinarily tight. These markets appear to be pricing in at a 70% to 80% probability of a mushy touchdown — modest progress together with declining inflation and rates of interest. I imagine the percentages are quite a bit decrease than that.”

“If long-end charges go up over 6% and this improve is accompanied by a recession, there will probably be loads of stress — not simply within the banking system however with leveraged firms and others. Keep in mind, a easy 2 proportion level improve in charges primarily lowered the worth of most monetary belongings by 20%, and sure actual property belongings, particularly workplace actual property, could also be value even much less because of the results of recession and better vacancies. Additionally do not forget that credit score spreads are likely to widen, generally dramatically, in a recession.”

“There’s little actual collaboration between practitioners — the banks — and regulators, who usually haven’t been practitioners in enterprise…. Sadly, with out collaboration and enough evaluation, it’s laborious to be assured that regulation will accomplish desired outcomes with out undesirable penalties. As a substitute of regularly bettering the system, we could also be making it worse.”

“Russia’s invasion of Ukraine and the next abhorrent assault on Israel and ongoing violence within the Center East ought to have punctured many assumptions concerning the course of future security and safety, bringing us to this pivotal time in historical past. America and the free Western world can now not keep a false sense of safety based mostly on the phantasm that dictatorships and oppressive nations will not use their financial and army powers to advance their goals — significantly in opposition to what they understand as weak, incompetent and disorganized Western democracies. In a troubled world, we’re reminded that nationwide safety is and all the time will probably be paramount, even when its significance appears to recede in tranquil occasions.”

“One widespread sense and modest step could be for social media firms to additional empower platform customers’ management over what they see and the way it’s introduced, leveraging present instruments and options — like the choice feed algorithm settings some provide at the moment. I imagine many customers (not simply dad and mom) would recognize a better skill to extra fastidiously curate their feeds; for instance, prioritizing instructional content material for his or her kids.”

“The acquisition of a significant firm entails loads of complexity. Folks are likely to concentrate on the monetary and financial outcomes, which is an affordable factor to do. And within the case of First Republic, the numbers look quite good. We recorded an accounting acquire of $3 billion on the acquisition, and we informed the world we anticipated so as to add greater than $500 million to earnings yearly, which we now imagine will probably be nearer to $2 billion.”

JPMorgan acquired a lot of the belongings of First Republic final 12 months for greater than $10 billion after regulators seized the agency amid the regional banking disaster.