Jefferies analysts noted that 2024 is a transition year from dreaming of AI’s potential to implementing and monetizing it, which will pave the way for creating new products in 2025. Microsoft and Amazon are seen as best positioned for enterprise adoption, while Meta Platforms and Alphabet are uniquely geared towards serving consumer needs. Microsoft’s early investments in OpenAI and product offerings like Copilot AI assistants have made it a clear leader in the AI space. On the other hand, Alphabet has been designated as the most underrated despite concerns about management and maintaining Search dominance.
Alphabet, despite its missteps, has a wealth of experience in AI research and development, which has contributed to the success of products like Gemini and ChatGPT. The company’s expertise in AI, combined with its consumer data and financial resources, make it a strong player in the AI market. While we decided to trim some shares of Alphabet, considering its potential and valuation of less than 23 times 2024 earnings estimates, we retained some exposure to the stock. Apple’s potential partnership with Google for its AI initiatives could further boost both companies’ AI capabilities and offerings.
Amazon, with its recent investment in AI startup Anthropic and its upcoming LLM codenamed Olympus, is betting big on generative AI. The company’s dominance in e-commerce, cloud computing, and consumer data presents significant opportunities for AI implementation and revenue generation. Although Amazon’s valuation is on the higher side, its position in the enterprise and consumer markets make it a compelling AI investment. Meta Platforms, on the other hand, has been focusing on cost-cutting and AI investments to drive user engagement and advertiser ROI. The company’s decision to make its AI models open-source should further enhance its AI capabilities and tools over time.
Overall, the AI trade is still in its early stages, with plenty of potential for growth and innovation. Companies like Microsoft, Amazon, Alphabet, and Meta Platforms are well-positioned to capitalize on the increasing adoption of AI across industries. While there may be challenges and concerns, such as management issues or competition, the benefits of AI investments and developments far outweigh the risks. With continued research, product offerings, and partnerships, these companies are likely to drive further advancements in AI technology and create new opportunities for revenue generation and market leadership.
