Raphael Stevens

Artificial intelligence has been one of the major Wall Street stories so far in 2023.
Tech players like Amazon, Meta, Nvidia and Intel are all benefiting from investor excitement.
But some companies nowhere near the tech vertical also think AI will help with their future.

A robot plays the piano at the Apsara Conference, a cloud computing and artificial intelligence conference, in China, on Oct. 19, 2021. While China revamps its rulebook for tech, the European Union is thrashing out its own regulatory framework to rein in AI but has yet to pass the finish line.
Str | Afp | Getty Images

The artificial intelligence craze has consumed Wall Street in 2023.
The madness found its roots in November of last year, when OpenAI launched the now infamous large-language model (LLM) ChatGPT. The tool touts some impressive capabilities, and spurred an AI race with rival Google announcing it’s own chat box – Bard AI – only a few months later.

But the enthusiasm went even further. Investors started flocking to stocks that could provide ample AI exposure, with names like C3.AI, chipmaker Nvidia, and even Tesla, posting impressive gains despite an overall tense macroeconomic environment.
Just like “blockchain” and “dotcom” before it, A.I. has become the buzzword companies want to grab a piece of.
Now some with little to no historical ties to artificial intelligence have touted the technology on conference calls to analysts and investors.
Supermarket chain Kroger touted itself as having a “rich history as a technology leader,” and chief executive officer Rodney McMullen cited this as a reason for the company is poised to take advantage of the rise of artificial intelligence. McMullen specifically pointed to how AI could help streamline customer surveys and help Kroger take the data and implement it into stores at a more speedy clip.

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Shares of the supermarket giant have ticked up just above 4% from the start of the year.

“We also believe robust, accurate and diverse first-party data is critical to maximizing the impact of innovation and data science and AI,” McMullen told investors on the company’s June 15 earnings call. “As a result, Kroger is well-positioned to successfully adopt these innovations and deliver a better customer and associate experience.”

Similarly, Tyson Foods, the second-largest global producer of chicken, beef and pork, thinks the company can benefit from the explosion of investment and excitement over artificial intelligence. However, chief executive Donnie King didn’t specify how AI would play into the company’s future, or what specific applications the technology would be applied to in the Tyson business.

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Tyson Foods stock has declined more than 20% from January.

“…And we continue to build our digital capabilities, operating at scale with digitally-enabled standard operating procedures and utilizing data, automation, and AI tech for decision-making,” King told investors on the company’s May 8 earnings call.
For heating, ventilation, and air conditioning (HVAC) equipment producer Johnson Controls, artificial intelligence can help the company ride a choppy macroeconomic environment, it proposes. Chief executive officer George Oliver did not elaborate last month on how AI would play a role in the company’s future beyond mentioning AI as a potentially helpful tool when asked about a decline in orders.

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Shares have gained 2.2% from January.

“…AI is going to continue to allow us to be able to expand services no matter what the [economic] cycle is that we ultimately experience,” Oliver told investors on the company’s May 5 earnings call.
The promise of artificial intelligence has kept stocks higher, as Wall Street heads into the second half of the year. The tech-heavy Nasdaq Composite, for comparison, has added roughly 16% from January.
But while the potential of AI upends a plethora of industries and threatens to automate hundreds of millions of jobs, investors will ultimately decide over time who are the legitimate beneficiaries and who is just trying to ride the hype. More

Goldman Sachs is likely to take a large writedown for its 2021 acquisition of fintech lender GreenSky after seeking to unload the business, CNBC has learned.
KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank were among the asset managers and lenders involved in the first round of bids, according to sources.
“Everybody’s been coming in low, and the Goldman team keeps pushing back, pounding the table about the value of it,” said one of the bidders.

Goldman Sachs CEO David Solomon speaks during the 2023 Forbes Iconoclast Summit at Pier 60 on June 12, 2023 in New York City. 
Taylor Hill | Getty Images

Goldman Sachs is likely to take a large writedown for its 2021 acquisition of fintech lender GreenSky after seeking to unload the business, CNBC has learned.
Bids for the installment-loan business are coming in well below what Goldman had hoped for, according to people with knowledge of the sale process.

Under CEO David Solomon, Goldman bought Atlanta-based GreenSky for $2.24 billion to help accelerate its push into consumer finance. But just 18 months after the bank’s September 2021 release announcing the deal, Solomon said he was selling the business after mounting losses and dysfunction in Goldman’s consumer division forced a strategic shift.
KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank were among the asset managers and lenders involved in the first round of bids, which began early June, according to the people, who declined to be identified speaking about the sale. The companies declined to comment.
“Everybody’s been coming in low, and the Goldman team keeps pushing back, pounding the table about the value of it,” said one of the bidders.
The bank is continuing negotiations with a smaller group of bidders this week with the hope of ratcheting up the ultimate price, according to the sources.

Dual-track process

Goldman has been pursuing offers for GreenSky’s loan origination business and its book of existing loans separately as well as offers for a single deal, according to the people familiar.

One bidder said the origination platform is worth roughly $300 million, while another said it was worth closer to $500 million.
If a deal closed at anywhere near that valuation, it would represent a steep discount to what Goldman paid for it, forcing the company to disclose a writedown hitting its bottom line in an upcoming quarter.
While the all-stock acquisition was announced with a $2.24 billion valuation, it was worth closer to $1.7 billion by the time the transaction closed six months later, according to a person with knowledge of the matter.
Goldman President John Waldron acknowledged the potential for “some noise” to the bank’s results as a result of the GreenSky sale. The transaction could wipe out $500 million in goodwill tied to buying the lender, and the sale of loans could trigger other one-time accounting hits, he told analysts at a June 1 conference.
The turbulence marks the latest fallout from Solomon’s decision to exit most of the bank’s consumer efforts after pushing hard for his vision to transform Goldman into a fintech disruptor.
“We’re pleased with the participation by bidders,” Goldman spokesman Tony Fratto said in a statement. “We’re in the middle of the process and we’ll learn more as we go forward.” More

Starbucks workers union advocates wears union shirts at the Senate Health, Education, Labor and Pensions Committee hearing on No Company is Above the Law: The Need to End Illegal Union Busting at Starbucks in the Dirksen Senate Office Building on Wednesday, March 29, 2023.
Bill Clark | Cq-roll Call, Inc. | Getty Images

Check out the companies making headlines in premarket trading.
Starbucks — The coffee shop chain slid 1.1% after a union representing workers said some stores will strike beginning Friday following claims that the company has not allowed Pride month decor in its cafes. The union said workers at more than 150 stories have agreed to join the strikes taking place over the next week, with more working on authorizations.

CarMax — The used car retailer gained 6.8% after beating Wall Street expectations on first-quarter revenue. CarMax reported $7.69 billion, ahead of the $7.49 billion expected by analysts polled by StreetAccount.
Virgin Galactic — Shares tumbled 12.4% in premarket trading after the space tourism company said it raised $300 million through a common stock offer. Virgin Galactic said it wants to raise another $400 million as the company looks to expand and improve its spacecraft fleet.
Under Armour — Shares shed nearly 3% in premarket trading following a downgrade by Wells Fargo to equal weight from overweight. The Wall Street bank said the athletic clothing company had overexposure to North America, excess inventory and a CEO at the helm for just six months. On Thursday, Under Armour cut 50 jobs at its Baltimore headquarters, The Baltimore Sun and Footwear News reported.
Wayfair — Shares of the home furnishings retailer rose more than 1% after MoffettNathanson upgraded Wayfair to market perform from underperform. The investment firm said Wayfair appears to be benefitting from the bankruptcy of Bed Bath & Beyond.
C3.AI — Shares shed 0.8% premarket after Deutsche Bank said the company did not differentiate itself from other artificial intelligence names at its investor day. The firm reiterated its sell rating.

Accenture — The consulting company lost 1.5%, adding to its decline from the previous session, as investors continued to take profit following its earnings report. On Thursday, Accenture reported earnings per share and revenue that beat analyst expectations. Despite the post earnings losses, Accenture shares are up 15% year to date.
— CNBC’s Jesse Pound and Michelle Fox contributed reporting More

Built by Tech Zity, an infrastructure project in Lithuania, the campus will span 55,000 square meters and house 5,000 digital workers.
That would make it larger than Paris’ Station F, currently the largest startup campus in all of Europe.
Vilnius, the second-largest city in the Baltic states, is home to a burgeoning tech industry, including major unicorns such as used clothing retailer Vinted and cybersecurity firm Nord. 

The development, from Lithuanian infrastructure firm Tech Zity, is inspired by British renovation projects like the Battersea Power Station and Tate Modern art gallery.

Lithuania is building a huge tech campus — Europe’s largest — in the capital of Vilnius, as it looks to become the new tech capital of the Baltics.
Built by Tech Zity, an infrastructure project in Lithuania, the campus is a 100 million euro ($109.6 million) development that will span 55,000 square meters and house 5,000 digital workers, the firm said Friday.

That would make it larger than Paris’ Station F, currently the largest startup campus in all of Europe.
The development is inspired by British renovation projects such as the Battersea Power Station and Tate Modern art gallery.
Tech Zity developers will renovate a number of sewing factories in a disused industrial space in Vilnius’ New Town, maintaining factory-like office floors with ceiling heights of at least 7 meters.

The campus is aimed at encouraging Vilnius’ tech workers to come back to the office post-pandemic.

The project aims to encourage Vilnius’ tech workers to return to the office after the pandemic. Tech companies have increasingly been pushing for their employees to go back to the office, in a reversal from the pandemic-era trend of working from home.

Lithuania’s growing tech scene

Lithuania’s tech ecosystem has grown dramatically over the past decade, Darius Zakaitis, Tech Zity’s founder, told CNBC.

“When I started 30 years ago, there were 200 people in the Lithuanian tech ecosystem,” Zakaitis said. “Now it’s 18,000 people.”

The development project is a restoration of old disused industrial space in Vilnius’ New Town, which is known as the hipster part of town.

“It’s a result of 10 years of active young people building new companies every day. Some of them are very successful,” he said.
“Lithuanians are very productive, very results-oriented, highly-skilled guys, very aggressively building their own companies,” he added.
Vilnius, the second-largest city in the Baltic states, is home to a burgeoning tech industry, including major unicorns such as used clothing retailer Vinted and cybersecurity firm Nord. 
Nord has its own 300-square-meter campus in Vilnius about 300 meters away from Tech Zity’s, while Vinted’s headquarters is roughly 200 meters away.
Tech Zity’s new campus will include co-living spaces, restaurants and bars, and cultural and educational facilities.

Tech Zity wants the campus to foster a buzzing night life as well as other socializing opportunities, incorporating co-living spaces, restaurants, and bars.

“Vilnius is maintaining a firm position within the European tech scene thanks to rapid innovations and visionary businesses such as Tech Zity,” Valdas Benkunskas, the mayor of Vilnius, said in a statement Friday. 
“Bursting with innovative entrepreneurs, multinational talents, and ambitious investors, the capital has grown to a modern tech hub that evokes bold ideas, successful collaborations, and  people-focused solutions.”
Lithuanian tech companies make roughly 99% of their revenues abroad, he said. He added that the country’s tech scene models itself after Israel’s, which has produced numerous global tech successes, including self-driving tech firm Mobileye and the mapping app Waze.
Tech Zity manages three tech campuses in Vilnius, including Tech Park, Tech Loft, and Tech Spa, which are home to companies like Google, Bored Panda and Kilo Health.

The project is a huge undertaking — at 55,000 square meters, it is expected to be the largest tech startup campus in all of Europe.

U.S. streaming platform Netflix has used Tech Zity locations for filming, including the docu-series “The Playlist” which focuses  on Spotify founder Daniel Ek.
Currently occupying 20,000 square meters, Tech Zity plans to reach 80,000 square meters over time, considering new campuses, existing locations, and other projects.

Long way to go

Despite its recent successes, Lithuania is far from becoming a major tech hub that rivals the likes of the U.K., France or Germany.
The country attracted 222 million euros of venture capital funding in 2022, paling in comparison to its Western European peers. By contrast, U.K. tech startups raised $30 billion, while their French counterparts raised 13.5 billion euros.
But the country has been drawing more interest from venture capitalists, according to local founders.
“All the top VC firms are now coming to Lithuania and talking with startups, angel investors, and anyone else,” Tom, CEO and co-founder of Nord Security, told CNBC on the sidelines of the Web Summit tech conference in Lisbon, Portugal, last November.
“The last raise for a Lithuanian startup called Kevin was from Accel, Vineted has Insight Parnters, EQT, Accel, and many others.”
WATCH: Russia sanctions must go further, Lithuania’s president says More

When it comes to banking and financial services, the problem of artificial intelligence amplifying existing human biases can be severe.
Deloitte notes that AI systems are ultimately only as good as the data they’re given: Incomplete or unrepresentative datasets could limit AI’s objectivity, while biases in development teams that train such systems could perpetuate that cycle of bias.
Lending is a prime example of where the risk of an AI system being biased against marginalized communities can rear its head, according to former Twitter executive Rumman Chowdhury.

Artificial intelligence algorithms are increasingly being used in financial services — but they come with some serious risks around discrimination.
Sadik Demiroz | Photodisc | Getty Images

AMSTERDAM — Artificial intelligence has a racial bias problem.
From biometric identification systems that disproportionately misidentify the faces of Black people and minorities, to applications of voice recognition software that fail to distinguish voices with distinct regional accents, AI has a lot to work on when it comes to discrimination.

And the problem of amplifying existing biases can be even more severe when it comes to banking and financial services.
Deloitte notes that AI systems are ultimately only as good as the data they’re given: Incomplete or unrepresentative datasets could limit AI’s objectivity, while biases in development teams that train such systems could perpetuate that cycle of bias.

A.I. can be dumb

Nabil Manji, head of crypto and Web3 at Worldpay by FIS, said a key thing to understand about AI products is that the strength of the technology depends a lot on the source material used to train it.
“The thing about how good an AI product is, there’s kind of two variables,” Manji told CNBC in an interview. “One is the data it has access to, and second is how good the large language model is. That’s why the data side, you see companies like Reddit and others, they’ve come out publicly and said we’re not going to allow companies to scrape our data, you’re going to have to pay us for that.”
As for financial services, Manji said a lot of the backend data systems are fragmented in different languages and formats.

“None of it is consolidated or harmonized,” he added. “That is going to cause AI-driven products to be a lot less effective in financial services than it might be in other verticals or other companies where they have uniformity and more modern systems or access to data.”

Manji suggested that blockchain, or distributed ledger technology, could serve as a way to get a clearer view of the disparate data tucked away in the cluttered systems of traditional banks.
However, he added that banks — being the heavily regulated, slow-moving institutions that they are — are unlikely to move with the same speed as their more nimble tech counterparts in adopting new AI tools.
“You’ve got Microsoft and Google, who like over the last decade or two have been seen as driving innovation. They can’t keep up with that speed. And then you think about financial services. Banks are not known for being fast,” Manji said.

Banking’s A.I. problem

Rumman Chowdhury, Twitter’s former head of machine learning ethics, transparency and accountability, said that lending is a prime example of how an AI system’s bias against marginalized communities can rear its head.
“Algorithmic discrimination is actually very tangible in lending,” Chowdhury said on a panel at Money20/20 in Amsterdam. “Chicago had a history of literally denying those [loans] to primarily Black neighborhoods.”
In the 1930s, Chicago was known for the discriminatory practice of “redlining,” in which the creditworthiness of properties was heavily determined by the racial demographics of a given neighborhood.
“There would be a giant map on the wall of all the districts in Chicago, and they would draw red lines through all of the districts that were primarily African American, and not give them loans,” she added.
“Fast forward a few decades later, and you are developing algorithms to determine the riskiness of different districts and individuals. And while you may not include the data point of someone’s race, it is implicitly picked up.”
Indeed, Angle Bush, founder of Black Women in Artificial Intelligence, an organization aiming to empower Black women in the AI sector, tells CNBC that when AI systems are specifically used for loan approval decisions, she has found that there is a risk of replicating existing biases present in historical data used to train the algorithms.
“This can result in automatic loan denials for individuals from marginalized communities, reinforcing racial or gender disparities,” Bush added.
“It is crucial for banks to acknowledge that implementing AI as a solution may inadvertently perpetuate discrimination,” she said.
Frost Li, a developer who has been working in AI and machine learning for over a decade, told CNBC that the “personalization” dimension of AI integration can also be problematic.
“What’s interesting in AI is how we select the ‘core features’ for training,” said Li, who founded and runs Loup, a company that helps online retailers integrate AI into their platforms. “Sometimes, we select features unrelated to the results we want to predict.”
When AI is applied to banking, Li says, it’s harder to identify the “culprit” in biases when everything is convoluted in the calculation.
“A good example is how many fintech startups are especially for foreigners, because a Tokyo University graduate won’t be able to get any credit cards even if he works at Google; yet a person can easily get one from community college credit union because bankers know the local schools better,” Li added.
Generative AI is not usually used for creating credit scores or in the risk-scoring of consumers.
“That is not what the tool was built for,” said Niklas Guske, chief operating officer at Taktile, a startup that helps fintechs automate decision-making.
Instead, Guske said the most powerful applications are in pre-processing unstructured data such as text files — like classifying transactions.
“Those signals can then be fed into a more traditional underwriting model,” said Guske. “Therefore, Generative AI will improve the underlying data quality for such decisions rather than replace common scoring processes.”

But it’s also difficult to prove. Apple and Goldman Sachs, for example, were accused of giving women lower limits for the Apple Card. But these claims were dismissed by the New York Department of Financial Services after the regulator found no evidence of discrimination based on sex. 
The problem, according to Kim Smouter, director of anti-racism group European Network Against Racism, is that it can be challenging to substantiate whether AI-based discrimination has actually taken place.
“One of the difficulties in the mass deployment of AI,” he said, “is the opacity in how these decisions come about and what redress mechanisms exist were a racialized individual to even notice that there is discrimination.”
“Individuals have little knowledge of how AI systems work and that their individual case may, in fact, be the tip of a systems-wide iceberg. Accordingly, it’s also difficult to detect specific instances where things have gone wrong,” he added.
Smouter cited the example of the Dutch child welfare scandal, in which thousands of benefit claims were wrongfully accused of being fraudulent. The Dutch government was forced to resign after a 2020 report found that victims were “treated with an institutional bias.”
This, Smouter said, “demonstrates how quickly such disfunctions can spread and how difficult it is to prove them and get redress once they are discovered and in the meantime significant, often irreversible damage is done.”

Policing A.I.’s biases

Chowdhury says there is a need for a global regulatory body, like the United Nations, to address some of the risks surrounding AI.
Though AI has proven to be an innovative tool, some technologists and ethicists have expressed doubts about the technology’s moral and ethical soundness. Among the top worries industry insiders expressed are misinformation; racial and gender bias embedded in AI algorithms; and “hallucinations” generated by ChatGPT-like tools.
“I worry quite a bit that, due to generative AI, we are entering this post-truth world where nothing we see online is trustworthy — not any of the text, not any of the video, not any of the audio, but then how do we get our information? And how do we ensure that information has a high amount of integrity?” Chowdhury said.
Now is the time for meaningful regulation of AI to come into force — but knowing the amount of time it will take regulatory proposals like the European Union’s AI Act to take effect, some are concerned this won’t happen fast enough.
“We call upon more transparency and accountability of algorithms and how they operate and a layman’s declaration that allows individuals who are not AI experts to judge for themselves, proof of testing and publication of results, independent complaints process, periodic audits and reporting, involvement of racialized communities when tech is being designed and considered for deployment,” Smouter said.
The AI Act, the first regulatory framework of its kind, has incorporated a fundamental rights approach and concepts like redress, according to Smouter, adding that the regulation will be enforced in approximately two years.
“It would be great if this period can be shortened to make sure transparency and accountability are in the core of innovation,” he said. More