Artificial Intelligence (AI) has been one of the best-performing investment themes in the US stock market in 2023. From AI chatbots and search to AI enterprise optimization software and generative AI applications, there has been a global AI craze. Wall Street has also caught a whiff of money, and analysts have predicted that the wave of AI investment will continue for a long time.
However, AI technology is still in its infancy, and it's unknown which companies will become long-term leaders. Most ultra-high market value tech companies have already invested heavily in developing AI software and integrating it into their businesses, with sufficient resources to continue investing in AI technology. Among these tech giants, whoever breaks through strong artificial general intelligence (AGI) technology first will gain a significant first-mover advantage or even eliminate most of the competition.
Jay Jacobs, head of BlackRock's US Thematic and Active Equity ETFs, said that AI will be one of the biggest investment themes in 2024, and the AI market is just getting started.
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He stated that AI entered our field of vision in 2023, but the application of AI has just began. Enterprise-level AI applications and product integration will achieve leaps in the coming year, and multimodal AI will gradually become a reality. At the same time, hardware opportunities will no longer be limited to graphics processors (GPU).
Seth Carpenter, Morgan Stanley's global chief economist, said that generative AI will be one of the most disruptive technologies since the advent of smartphones.
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According to Carpenter's predictions, current generative AI technology will affect one-quarter of existing occupations, with related labor costs potentially reaching up to $2.1 trillion.With in three years,the proportion of affected occupations may rise to $4.1 trillion.
Artificial intelligence is a winner-takes-all game, and it's too early to talk about who will be the ultimate winner in the AGI arms race. However, in Morgan Stanley's view, the following four technology giants possess sufficient AI capabilities and resources, so they have the best opportunity to dominate the AI market.
1. $Microsoft(MSFT)$
Microsoft is the world's largest software company, and a market leader in enterprise software applications and public cloud services. In addition, the company actively invests in AI technology, and holds a 49% stake in OpenAI, the creator of ChatGPT.
Recently, Microsoft announced that its daily AI partner Microsoft Copilot has been integrated into Windows 11, Bing, Edge and Microsoft 365. Meanwhile, OpenAI staged a drama in which CEO Sam Altman ran away but soon returned, but analyst Keith Weiss said the farce had little impact on Microsoft's finances.
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2. $Alphabet(GOOGL)$
Alphabet, the parent company of Google and YouTube, is the world's leading online search and advertising company. In 2023, Google released its chat robot Bard and has begun to integrate AI features into Google Cloud and Workspace products.
Google's AI-enabled advertising products, such as Video View and Demand Gen, help customers optimize advertising to ensure the best results. Analyst Brian Nowak said Alphabet's AI investment would eventually drive sustained growth in revenue and free cash flow.
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3. $NVIDIA Corp(NVDA)$
The training and operation of AI applications are inseparable from the high-end semiconductors designed by Nvidia and the powerful processing power it provides. As more and more companies expand their AI-related computing infrastructure, the company's data center revenue is growing rapidly.
No matter which big technology company makes an AGI breakthrough first, it will most likely need Nvidia's chips and other technologies to support it. Analyst Joseph Moore said Nvidia will be the main beneficiary of the "astonishing" growth in supply and demand in AI data centers.
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4. $Meta Platforms, Inc.(META)$
Meta Platforms is the leader in online advertising and is the parent company of Facebook, Instagram and other well-known social media and messaging platforms.
The company has launched a Meta AI Assistant and integrated AI functions into its information streams, advertising and Reels, and it is reportedly developing an AI system that can rival OpenAI's state-of-the-art models. Nowak says Meta's next-generation AI products may drive long-term user engagement and monetization growth.
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