Happy Monday!

In Today’s Email:

• Is the S.E.C. concerned about AI? 🚨

• Palantir is Soaring 🚀

• How banks are using AI 🏦

Is the S.E.C. concerned about AI? 🚨

Gary Gensler, chairman of the S.E.C. has been studying the potential consequences of AI for years.

DealBook’s Ephrat Livni recently interviewed Gensler, where he outlined some of his biggest concerns about AI. He made it clear, AI could be the next big systemic risk to the financial system. This builds on a 2020 paper Gensler co-wrote in which he concluded just a few A.I. companies will build the foundational models that businesses will rely on.

Gensler thinks AI models may prioritize companies’ interests ahead of investors. The S.E.C. recently proposed a rule that was designed to eliminate conflicts of interest regarding platforms and their technology. “You’re not supposed to put the adviser ahead of the investor, your’re not supposed to put the broker ahead of the investor”, Gensler said.

Gensler stated, “Investment advisers under the law have a fiduciary duty, a duty of care, and a duty of loyalty to their clients, and whether you’re using an algorithm, you have the same duty of care.” Who is responsible if AI gives faulty advice? Gensler and others at the S.E.C. think it’s fair for companies to create parameters that prevent such instances from happening.

Palantir is Soaring 🚀

Companies that have pursued advancements in AI have had a breakthrough year, and Palantir is no stranger.

In 2023, the drastically changing AI landscape has been driven by revolutionary generative AI. Chatbots like ChatGPT breathed new opportunities into the industry. Certain companies that have been pushing for advancements in AI are finally reaping the rewards.

Palantir, a company that empowers organizations to create AI using its cutting-edge AI platform has seen accelerated demand for its products. This is reflected in the company’s stock price, which is up by a staggering 185% since the start of the year.

The company has added roughly $4.5 billion in market cap over the past 30-day period. Over the past week alone, Palantir gained over 5.7% and nearly 19% on the month. A Wedbush analyst recently regarded Palantir as the “Messi of AI” stating, “We believe Palantir has built an AI fortress that is unmatched and poised to be a major player in this AI revolution over the next decade.”

What do you think of the Palantir push?

How banks are using AI 🏦

Banks have openly embraced AI, and some companies in particular are winning the race.

A recent report from banking data provider Evident. The evidence is clear, banks are using AI to be more competitive in markets and to improve performance in various fields of business. In particular, North American banks are leading the way. The top five banks, which are predominantly North American, have published 67% of AI research, made 51% of AI investments in the sector, and filed 94% of AI patents.

JPMorgan Chase leads the field in regard to the number of AI research papers published from 2017-2023. Capital One has filed the most AI patents, however, Bank of America is hot on their heels. Wells Fargo is leading the charge with the most AI investments made in the past 6 years.

India is emerging as an AI research powerhouse, second to the US. The four main markets include the United States, India, Canada, and the UK. Interestingly, nearly 15% of all AI patents filed by banks are focused on trading. What’s the main takeaway? North American banks are winning the AI race, and European banks are playing catch-up.

Read the full report here.

That’s it for today, we’ll see you back here Wednesday!