AI Research
Find Out Whether AI Can Live Up to the Hype

A majority (54%) of hedge fund managers expected predictive insights and forecasting to be the main area affected, followed by data processing and analysis (52%), while a quarter thought AI would affect alpha generation. Fraud detection was an area where 45% of managers believed AI would have an impact.
The institutional investors surveyed for the report also believed that AI would impact a wide range of areas. Around 63% believed that data processing and analysis would be affected, while 51% thought that back-office operations would be most affected. A relatively small proportion – 12% – anticipated that it would most affect the generation of alpha.
The impact of AI can already be seen, with around 86% of fund managers now using generative AI tools in their work, according to Empaxis, which provides middle- and back-office operations, accounting and systems-integration solutions. The company points out that information is everything in hedge fund management, and access to quality data helps fund managers make more informed decisions, ‘a must in an industry where many funds fail to beat benchmarks’.1 However, Empaxis warns that AI is only as good as the data fed into it, so quality data is a prerequisite for AI to prove effective.
There are growing concerns that the excitement surrounding AI has gone too far, as we discussed in a recent article. The article pointed out that Goldman Sachs had issued a report in July 2024 arguing that the reality of AI may not match the hype. The asset manager said that ‘tech giants and beyond are set to spend over $1tn on AI capex in coming years, with so far little to show for it’. Goldman’s Jim Covello, head of global equity research, asked ‘What trillion-dollar problem will Al solve?’ and noted that ‘replacing low-wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions I’ve witnessed in my thirty years of closely following the tech industry’. Covello also questioned whether models trained on historical data would ever be able to replicate humans’ most valuable capabilities.2
AI certainly has significant potential in some areas. It can automate time-consuming and repetitive tasks, reducing manual labour and errors, and freeing analysts and managers to focus on strategic decisions. It can also continuously monitor portfolio performance and alert managers to significant changes or anomalies.
Whether it can help hedge fund managers generate performance-beating alpha is another question entirely. Our annual report reported the behaviour of the Eurekahedge AI Hedge Fund Index, which ‘is designed to provide a broad measure of the performance of underlying hedge fund managers who utilize artificial intelligence and machine learning theory in their trading processes’.
Between December 2009 and July 2024, the index produced a 9.8% annualised return, versus 13.7% for the S&P 500. Worryingly, the AI index posted better relative performance in the first half of the sample than the second. That would seem to give lie to the argument that AI gets better over time as it learns from its mistakes.
The underperformance may well reflect the significant cost of investing in and deploying AI. Active funds in general are already likely to underperform an index, given the burden of management fees and transaction costs.
Overall, therefore, while AI has huge potential across a range of hedge fund operations, from generating marketing content to swiftly analysing billions of data points and thereby assisting in portfolio construction, there do appear to be growing doubts about whether the costs involved will be justified.
Download our state of the hedge fund industry report
As part of our aim to be at the forefront of the hedge fund industry, IG Prime commissioned a survey into the attitudes of hedge funds and institutional investors to key issues facing the industry in 2024 and 2025. The results help inform our State of the Hedge Fund Industry 2025 report. The first of a forward-looking annual series, this year’s report seeks to explain why the industry may have reached a turning point, with returns and asset growth set to improve – possibly markedly – in the coming years. Click here to download the full report now.
Sources
1 https://www.empaxis.com/blog/hedge fund-trends
2 https://www.goldmansachs.com/images/migrated/insights/pages/gs-research/gen-ai–too-much-spend%2C-too-little-benefit-/TOM_AI%202.0_ForRedaction.pdf
AI Research
Pentagon research official wants to have AI on every desktop in 6 to 9 months

The Pentagon is angling to introduce artificial intelligence across its workforce within nine months following the reorganization of its key AI office.
Emil Michael, under secretary of defense for research and engineering at the Department of Defense, talked about the agency’s plans for introducing AI to its operations as it continues its modernization journey.
“We want to have an AI capability on every desktop — 3 million desktops — in six or nine months,” Michael said during a Politico event on Tuesday. “We want to have it focus on applications for corporate use cases like efficiency, like you would use in your own company … for intelligence and for warfighting.”
This announcement follows the recent shakeups and restructuring of the Pentagon’s main artificial intelligence office. A senior defense official said the Chief Digital and Artificial Intelligence Office will serve as a new addition to the department’s research portfolio.
Michael also said he is “excited” about the restructured CDAO, adding that its new role will pivot to a focus on research that is similar to the Defense Advanced Research Projects Agency and Missile Defense Agency. This change is intended to enhance research and engineering priorities that will help advance AI for use by the armed forces and not take agency focus away from AI deployment and innovation.
“To add AI to that portfolio means it gets a lot of muscle to it,” he said. “So I’m spending at least a third of my time –– maybe half –– rethinking how the AI deployment strategy is going to be at DOD.”
Applications coming out of the CDAO and related agencies will then be tailored to corporate workloads, such as efficiency-related work, according to Michael, along with intelligence and warfighting needs.
The Pentagon first stood up the CDAO and brought on its first chief digital and artificial intelligence officer in 2022 to advance the agency’s AI efforts.
The restructuring of the CDAO this year garnered attention due to its pivotal role in investigating the defense applications of emerging technologies and defense acquisition activities. Job cuts within the office added another layer of concern, with reports estimating a 60% reduction in the CDAO workforce.
AI Research
Pentagon CTO wants AI on every desktop in 6 to 9 months

The Pentagon aims to get AI tools to its entire workforce next year, the department’s chief technical officer said one month after being given control of its main AI office.
“We want to have an AI capability on every desktop — 3 million desktops — in six or nine months,” Emil Michael, defense undersecretary for research and engineering, said at a Politico event on Tuesday. “We want to have it focus on applications for corporate use cases like efficiency, like you would use in your own company…for intelligence and for warfighting.”
Four weeks ago, the Chief Digital and Artificial Intelligence Office was demoted from reporting to Deputy Defense Secretary Stephen Feinberg to Michael, a subordinate.
Michael said CDAO will become a research body like the Defense Advanced Research Projects Agency and Missile Defense Agency. He said the change is meant to boost research and engineering into AI for the military, but not reduce its efforts to deploy AI and make innovations.
“To add AI to that portfolio means it gets a lot of muscle to it,” he said. “So I’m spending at least a third of my time—maybe half—rethinking how the AI-deployment strategy is going to be at DOD.”
He said applications would emerge from the CDAO and related agencies that will be tailored to corporate workloads.
The Pentagon created the CDAO in 2022 to advance the agency’s AI efforts and look into defense applications for emerging technologies. The office’s restructuring earlier this year garnered attention. Job cuts within the office added another layer of concern, with reports estimating a 60% reduction in the CDAO workforce.
AI Research
Panelists Will Question Who Controls AI | ACS CC News
Artificial intelligence (AI) has become one of the fastest-growing technologies in the world today. In many industries, individuals and organizations are racing to better understand AI and incorporate it into their work. Surgery is no exception, and that is why Clinical Congress 2025 has made AI one of the six themes of its Opening Day Thematic Sessions.
The first full day of the conference, Sunday, October 5, will include two back-to-back Panel Sessions on AI. The first session, “Using ChatGPT and AI for Beginners” (PS104), offers a foundation for surgeons not yet well versed in AI. The second, “AI: Who Is In Control?” (PS 110), will offer insights into the potential upsides and drawbacks of AI use, as well as its limitations and possible future applications, so that surgeons can involve this technology in their clinical care safely and effectively.
“AI: Who Is In Control?” will be moderated by Anna N. Miller, MD, FACS, an orthopaedic surgeon at Dartmouth Hitchcock Medical Center in Lebanon, New Hampshire, and Gabriel Brat, MD, MPH, MSc, FACS, a trauma and acute care surgeon at Beth Israel Deaconess Medical Center and an assistant professor at Harvard Medical School, both in Boston, Massachusetts.
In an interview, Dr. Brat shared his view that the use of AI is not likely to replace surgeons or decrease the need for surgical skills or decision-making. “It’s not an algorithm that’s going to be throwing the stitch. It’s still the surgeon.”
Nonetheless, he said that the starting presumption of the session is that AI is likely to be highly transformative to the profession over time.
“Once it has significant uptake, it’ll really change elements of how we think about surgery,” he said, including creating meaningful opportunities for improvements.
The key question of the session, therefore, is not whether to engage with AI, but to do so in ways that ensure the best outcomes: “We as surgeons need to have a role in defining how to do so safely and effectively. Otherwise, people will start to use these tools, and we will be swept along with a movement as opposed to controlling it.”
To that end, Dr. Brat explained that the session will offer “a really strong translational focus by people who have been in the trenches working with these technologies.” He and Dr. Miller have specifically chosen an “all-star panel” designed to represent academia, healthcare associations, and industry.
The panelists include Rachael A. Callcut, MD, MSPH, FACS, who is the division chief of trauma, acute care surgery and surgical critical care as well as associate dean of data science and innovation at the University of California-Davis Health in Sacramento, California. She will share the perspective on AI from academic surgery.
Genevieve Melton-Meaux, MD, PhD, FACS, FACMI, the inaugural ACS Chief Health Informatics Officer, will present on AI usage in healthcare associations. She also is a colorectal surgeon and the senior associate dean for health informatics and data science at the University of Minnesota and chief health informatics and AI officer for Fairview Health Services, both in Minneapolis.
Finally, Khan Siddiqui, MD, a radiologist and serial entrepreneur who is the cofounder, chairman, and CEO of a company called HOPPR AI, will present the view from industry. HOPPR AI is a for-profit company focused on building AI apps for medical imaging. As a radiologist, Dr. Siddiqui represents a medical specialty that is thought to likely undergo sweeping change as AI is incorporated into image-reading and diagnosis. His comments will focus on professional insights relevant to surgeons.
Their presentations will provide insights on general usage of AI at present, as well as predictions on what the landscape for AI in healthcare will look like in approximately 5 years. The session will include advice on what approaches to AI may be most effective for surgeons interested in ensuring positive outcomes and avoiding negative ones.
Additional information on AI usage pervades Clinical Congress 2025. In addition to various sessions that will comment on AI throughout the 4 days of the conference, various researchers will present studies that involve AI in their methods, starting presumptions, and/or potential applications to practice.
Access the Interactive Program Planner for more details about Clinical Congress 2025 sessions.
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