Forget Big Tech: Industrial AI Applications Will Create the Next Market Leaders

"The winners that are unknown today are the companies that are going to figure out how to apply artificial intelligence into their businesses and make them better," reveals Brookfield CEO Bruce Flatt, offering a contrarian perspective on who will ultimately benefit most from the AI revolution.

End of Miles reports that while technology giants are receiving most of the attention in discussions about artificial intelligence, Flatt believes industrial and manufacturing companies that successfully implement AI could see unprecedented productivity gains and cost advantages that transform entire sectors.

Beyond the obvious tech winners

Flatt acknowledges the clear early leaders in the AI race: "The clear winners in this AI Revolution are going to be the major technology companies. That's sort of easy. They're very sophisticated, they have large balance sheets and capital to deploy. They've already developed models and they're going to win. They have the data and they have enormous amounts of data."

However, the Brookfield chief emphasizes that identifying tech giants as winners hardly qualifies as insightful investment analysis. "I'm not sure there's anything that's helpful to you or anyone listening to this if I tell you, 'Oh, you should buy Google.' These are going to be great companies and they're going to continue to be great."

"The winners that are unknown today are the companies that are going to figure out how to apply artificial intelligence into their businesses and make them better." Bruce Flatt, CEO of Brookfield

A manufacturing renaissance

The trillion-dollar asset manager points to labor shortages as one of the key drivers that will accelerate AI adoption in industrial settings. "There are many businesses today where you cannot get people to operate the businesses. There just aren't enough people," Flatt explains. "If you can therefore deploy robotics into businesses and shrink the amount of labor you need...many of those plants can come back to where the demand is."

This reshoring potential represents a significant competitive shift, particularly for American manufacturing. Plants that moved offshore primarily due to labor costs could return as AI-powered automation reduces the labor component of production.

"The productivity advances we see over the next 20 years probably will be unprecedented for a period of time, certainly one we haven't seen for a long time in business across America." Bruce Flatt

Brookfield's own AI implementation

Flatt's insights aren't merely theoretical—they're based on what Brookfield is already seeing within its own portfolio companies. The firm controls numerous industrial businesses, including one that produces nearly half of all car batteries in North America.

"We have 25,000 people in 20 plants. We do very repetitive processes, and as a result, we have $9 billion of costs within the business," Flatt explains. "If you can improve those by 30%, that's a lot of money to the bottom line, and it can be very significant for the company."

Beyond manufacturing, the investment leader described how Brookfield is implementing AI in its healthcare business that handles insurance authorizations. "The amount of information we can put up when you call in is incredible, even from two years ago," he notes.

Early innings for industrial AI

Despite these promising examples, Flatt emphasizes that industrial AI implementation is just beginning. "We're in the first inning of this," he stresses. "Anybody that hasn't started should start. It's not too late. We're in the early innings of the application."

This timing creates a unique window for companies to gain competitive advantages before AI applications in industrial processes become table stakes. While much media attention focuses on consumer applications like ChatGPT, Flatt suggests the real economic impact will come from behind-the-scenes process improvements.

"Everyone thinks of artificial intelligence as ChatGPT—'I'm going to get it to write my cooking class memorandum'—but really, where the money is going to be made is the application of artificial intelligence into business." Bruce Flatt, Brookfield CEO

For companies willing to embrace this industrial AI transformation, the Brookfield leader's message is clear: "Those that do it will win; those that don't, some will fall behind."