AI Will Reshape the Business World — Here’s Where It’s Hitting First: The Weekly Chart

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This is an extract from today’s Morning Brief, which you can take. Sign up To receive in your inbox every morning with:

There seems little doubt that the transformative power of artificial intelligence will significantly change the world — but it’s not going to happen all at once, and it looks like it’s going to be the first for the ad business. Comes.

This week, Google ( GOOG ) announced a chip that could compete with Nvidia’s ( NVDA ) tech. And of course, Meta ( META ) also announced a chip of its own, giving the two companies vertical integration to meet their goals. You know what they are.

As Bank of America’s Justin Post wrote in a research note on the move, Meta’s key AI benefits are getting people to use the product more, with better video recommendations driving ad spend for better ads. to increase through which are better measured.

In April 2024, it is at the forefront of AI.

Much has been made about where our physics PhDs go after graduating. From Zachary Quinto’s Rocket Scientist to Banking Analyst role Margin Call Explained to his boss’s boss: “Money is much more attractive here.”

Big tech has long held an economic pole position with higher profits, salaries and prestige than other industries (such as banking). Look at the “Magnificent Seven” and it’s not hard to see how they can pay for both top talent and more R&D than the talent can handle.

People thought that if Allen Ginsberg had lived back in 1997, he would have said something like, “I saw the best minds of my generation being hired by Google to sell programmatic advertising.” Or, as early Facebook investor Peter Thiel said in 2013, “We wanted flying cars, we got 140 characters instead.” If you can’t beat ’em, join ’em.

But beyond the grief of our ancestors’ “kids of the day”—those who landed men on the moon, laid telecommunications cables across the oceans, and made medical breakthroughs—it’s a simple fact that the latest in technology. Often happens in companies that are trying. Serve you more personalized ads based on your interests.

It remains to be seen whether Meta has ambitions to roll out its cutting-edge AI technology across the industry. But as Mark Zuckerberg once described his business, “Senator, we run ads.”

For Google, the journey from a core product of ad sales (Search and Gmail) to cloud computing will be an interesting one. Likewise for Microsoft, whose OpenAI ChatGPT alliance can be considered a marketing tool for its computers.

All of this goes into a theory that we have written about in these pages. Last year, Myles Udland wrote that we are either thinking too small or too big about AI. And it’s difficult because the technology will thread the needle through a specific industry before spreading throughout the economy.

As Alkeesh Shah, another Bank of America analyst, wrote this week, “Investors often overestimate the magnitude of technological disruption in the near term and underestimate it in the long term.”

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