by At its Build conference this week, Microsoft (MSFT) announced Copilot+ PCs, designed to integrate artificial intelligence capabilities into its computers. RBC Capital Markets Software Equity Analyst Rishi Jaluria and Macquarie Head of US AI & Software Research Frederick Havemeyer join Market Domination to discuss the company’s latest AI play.
“I think the introduction of these AI personal computers is going to be a really big game changer in getting generative AI into the hands of every knowledge worker out there,” Jaluria explains. He also says that users will be able to use these small and medium-sized language models locally, which will generate more general-purpose AI use. When it comes to large language models, Havemeyer says, “It’s very clear to us that the technology around AI model generation of large language models is something that will suit consumers over time. ChatGPT did, and I think the right interface and the right platform, we’ll get it over time.”
AI is entering all sectors as companies seek to innovate and find efficiencies. “80% of CIOs are telling us that they are currently in production or expect to be in production with AI over the next 12 months, so the appetite is real, the use cases are real,” explains Jaluria, adding that it is still there. plenty of room for technology to grow.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Melanie Riehl
Video transcript
Microsoft is going all in on AI.
The company announced this week a new PC CS category called Copilot plus their computers equipped with so-called AI PC chips and they will now run on the open model A is GP T +40.
So as software technology continues to advance, we’re looking at how to navigate the big picture and the best ways to position your portfolio with the Yahoo Finance playbook.
We will welcome in Rishi Juria R BC Capital Market, software equity analyst, as well as Frederick Havemeyer, head of USA I and software research at Macquarie.
Ladies and gentlemen.
Thank you very much for being here, I think we’ll start first with Microsoft’s own announcement and how we should think about it as investors, how big it will be, how incremental it will add the income, etcetera, R. I will start with you.
Yes, absolutely.
And thank you very much for being with us.
We were just out in Seattle building Microsoft this week and I, I think the introduction of this PC AI is going to be a really big game changer for getting generative AI in the hands of every knowledge worker out there.
Right.
Recall when you use any type of GP T system today, it requires a fast internet connection, a lot of computing power.
Now, you know, it’s going, it’s going to take time, you know, they become quite light, that everybody can use them, but you’ll be able to some of these small language and medium language models use locally without a super fast internet connection.
And so I think it will enable much more of a general purpose type.
Uh AI uses scenarios and workloads that didn’t exist before.
So I think this is a very exciting announcement for Microsoft, Fred.
We’ll get you in here too.
Same question Fred.
So you know your reaction to that Microsoft event, you know, Rishi says this new A IP CS game changer, Fred, do you agree?
So over the last year, we’ve been making the call consistently that AI has to move to the edge, it has to move to the device.
And in many cases, this requires hardware like what Microsoft is rolling out to do it.
And making this successful for consumers and knowledge workers, as well as being able to drive AI adoption in a profitable way, is what excites us both.
Because if you remember, I think one of the last time I was on Yahoo Finance, we had a great time talking about what smaller language models mean than large language models that are still quite large but nevertheless, a smaller medium to the margins.
And as we’ve explored in the past, we think that running generative AI models can achieve uh 80% to 90% plus gross margins using small language models on specialized hardware or local devices .
So I think it’s quite exciting, Fred just following on from that, you recently wrote a note about how consumers determine influence here.
And I keep trying to figure out if where we are in the AI cycle is still under pressure or if it’s starting to drag.
Which is to say, how all this stuff is coming down is that customers especially on the retail side want this or these companies are still faced with what they have to convince them that they want it.
I think when we look at products out there like G BT chat, I think we’re already seeing north of 100 million users that I would call in many cases consumers who are very interested in these types of products.
Now to commercialize it and make it useful and interesting for consumers.
I think there are technologies out there that are probably a solution in pursuit of the problem.
And at the same time, I think it’s very clear to us that the technology of the AI generation model of large language models is something that suits us with consumers over time.
A conversation by GP T.
And I think with the right interface and the right platform uh, we’ll get it over time.
I mean, I am a user of Rayban meta glasses, not here to discuss meta but only the glasses.
They are fascinating.
They are very good and I really enjoy having such a way of working, with these AI models sitting right in my glasses.
So we’ll see over time.
Richie.
Same question.
I mean, when you look across uh your, your coverage universe, Richie, what, what kind of customer adoption and engagement do you see when it comes to, you know, these new AI products and features ?
Yes.
Um A completely.
And I’m glad you’re with me on Fred’s side because I certainly agree with him on a lot of what he’s saying.
Uh Look the, the, what I would say when we’re talking to companies, we’re talking to CIO S CTO S leaders.
There is a real appetite for the use of AI within the enterprise.
U A lot of this, I’d say maybe 70% of it is net new budget.
So it’s not even cannibalizing other parts of it.
It is coming out of other parts of the organization.
U So real money is being booked.
Uh We’re, we’re, we’re seeing uh I’d say 80% of Cio S are telling us they’re currently in production or they expect to be in production with AI in the next 12 months.
So the appetite is real.
The use cases are real.
And remember we are still in the very early stages of this.
If I draw an analogy to the internet steps, you know, although GP T 40 is extremely powerful, this is probably a dial-up level 14 4, right?
We haven’t even reached high speed broadband.
So I think there’s still a lot more way for the technology to progress from here, but we’re already seeing real interest from the enterprise and consumers as well.
