Artificial intelligence is creeping into factories, design labs and defence projects across the industrial world.
UBS has taken the pulse of its global analysts, and while enthusiasm is high, the profit impact is still some way off.
The bank is bullish on the outlook for adoption, noting that mentions of AI on earnings calls by industrial companies have doubled in the past two years.
Venture capital tells a similar story: investment in artificial intelligence and machine learning now accounts for nearly 40% of industrials’ private market spend, up from about 14% between 2020 and 2022.
Aerospace and defence have been a particular growth driver, but use is widening across subsectors.
Automotive is at the sharp end. UBS points to opportunities in higher levels of automated driving, such as robotaxis, which could be monetised at scale.
Lower levels of automation are harder to turn into profits but are already essential for competitiveness.
Manufacturers are also using artificial intelligence to improve plant productivity and cut costs. Looking further ahead, some are exploring humanoid robots, a field that could open new streams of revenue and efficiency.
Defence is another hotbed. Companies are racing to develop artificial intelligence-enabled systems, from autonomous drones to predictive analytics, to keep pace with rivals. The surge in private investment shows how hard technology is reshaping competition in the sector.
Elsewhere, industrial groups are applying artificial intelligence to design, automation, predictive maintenance and even dynamic pricing.
But UBS stresses that evidence of real financial benefit is still scarce. There has been little impact yet on profit and loss statements, nor much sign of workforce reductions linked directly to automation.
The longer-term potential, however, is harder to ignore. UBS expects artificial intelligence to become central both in sharpening products and in improving efficiency, with first movers likely to benefit most.
Even so, the bank cautions that cost savings in areas with low barriers to entry will quickly be competed away.
For now, then, investors are betting on promise rather than delivery. But with the technology moving deeper into everyday operations, the industrials sector is unlikely to stand still for long.