Video: The Edge of AI - Agentic AI
In the first episode of our series, Portfolio Manager Patrick Kelly's AI avatar explains why we believe we’re just entering the era of AI agents, with physical AI and robotics likely the next biggest wave.
The Edge of AI is a new series exploring and explaining the latest innovations and breakthroughs in artificial intelligence. This episode covers agentic AI.
AI Patrick Kelly: Artificial Intelligence has advanced from perception-based AI such as image and speech recognition to generative AI, such as content creation. The next leap, agentic AI, is even more powerful. Agentic systems are capable of perceiving, reasoning, planning and acting autonomously. We believe this advancement will unlock significant productivity gains, and for investors, represent a once-in-a-generation change in the addressable market in compute.
At CES 2025, Nvidia CEO Jensen Huang declared that the age of AI agentics is here. He called AI agents the new digital workforce, predicting that corporate IT departments will evolve into HR-like functions, managing and onboarding agents to run company-wide workflows. Similarly, Salesforce CEO Marc Benioff estimates one billion AI agents in service by the end of fiscal year 2026, with each potentially handling multiple workloads.
In addition to enterprise use cases, consumer agents who plan trips, book hotels, and streamline online shopping experiences are being introduced by leading AI development companies.
The rise of agentic AI has profound implications for computational requirements. Agentic AI models typically require 10-100x more compute than traditional generative AI. At CES 2025, Jensen Huang drove this point home, noting that the compute amount his team observes on agentic workloads is already a hundred-fold more than we expected a year ago.
We believe we’re just entering the era of AI agents, with physical AI and robotics likely the next biggest wave. As artificial intelligence reshapes the technology landscape, we believe agentic AI will be a multi-trillion-dollar opportunity that can transform industries and unlock new potential across all sectors and the global economy.
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of July 2025. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
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Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. Investing in innovation is not without risk and there is no guarantee that investments in research and development will result in a company gaining market share or achieving enhanced revenue. Companies exploring new technologies may face regulatory, political or legal challenges that may adversely impact their competitive positioning and financial prospects. Developing technologies to displace older technologies or create new markets may not in fact do so, and there may be sector-specific risks. There will be winners and losers that emerge, and investors need to conduct a significant amount of due diligence on individual companies to assess these risks and opportunities.
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For the period ending April 30, 2025, the following represents firm wide assets under management: NVIDIA, Corporation,7.81%; Salesforce, Inc., 0.01%.
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