The boom in AI is just beginning, with more than $5.9 trillion in AI revenue opportunities in the Internet industry, according to Morgan Stanley. The company anticipates that ramping up AI-driven innovation will lead to new and improved search tools, AI assistants, stronger social and e-commerce recommendation engines and more. “We see growing and emerging adoption of artificial intelligence for consumers driving increased digital behavior, increased multiyear digital revenue, and free cash flow growth across the industry,” the analyst team wrote in a note Thursday. “In fact, our AI bull case shows how rapid digitization can change $200 billion+ of US internet spending over the next 3 years.” The AI craze began last year when OpenAI’s ChatGPT was launched. Microsoft, which has invested billions in the company, uses the software to run updates for the Bing search engine and Edge browser. In February, Alphabet subsidiary Google announced competing chatbot technology Bard. Google is one of several companies that Morgan Stanley sees as best suited to seize an opportunity worth nearly $6 trillion. The company said the names it selects could see anywhere from 6% to 38% an AI-driven upside to Morgan Stanley’s underlying state price targets. Here are some of those who made the cut. Alphabet already has about a 50% upside from Morgan Stanley’s price target and could see another 12% driven by AI. The company expects continued AI-driven platform-wide innovation in search, YouTube, and other offerings and is confident in the company’s long-term growth. “Our critical work shows how AI-based improvements can drive 10%+ of GOOGL’s incremental annual revenue ($50 billion+) by 2025,” the analysts wrote. Investors weren’t impressed when Google unveiled the Bard, sending shares down 7% on the day of the event. Amid criticism of the company’s slow response to ChatGPT, Google CEO Sundar Pichai asked employees to test Bard and reminded them that some of Google’s most successful products weren’t firsts to market. “I know this moment is uncomfortably exciting, and it’s to be expected: core technology is rapidly evolving with a lot of potential,” Pichai wrote in a company-wide email, seen by CNBC. Alphabet shares are up about 6% year-to-date. Meanwhile, Amazon will be the biggest beneficiary of the impact of AI on e-commerce, according to Morgan Stanley. The company has about 65% upwards of Morgan Stanley’s price target and roughly another 9% driven by AI. “Our sensitive business on AMZN shows the upside here, with faster and more profitable growth in our e-commerce and public cloud business together adding about 16%+ (~$8 billion) to our “25 EBIT,” the company said. Now this year ad tech company The Trade Desk has a 5.5% upside from Morgan Stanley’s price target and another 21.4% driven by AI.”We believe AI can help TTD build more performing and efficient tools for DSP [demand side platform] business, improving results for advertisers and driving incremental spending,” the company writes. Shares have gained 27% year-to-date. Finally, Shutterstock stock is up 13.2% above Morgan Stanley’s price target and largest AI-driven rally, at 38%. We see AI benefiting SSTK as it profits from growing computer vision revenue by a cumulative EBITDA margin while bringing text-to-image AI capabilities to its platform.” The creative platform, which provides products like licensed images, illustrations, and videos to marketing agencies And media organizations, reported earnings and revenue for the fourth quarter last month.” “We’ve forged key partnerships in the AI ecosystem to leverage our massive content library,” CEO Paul Hennessey said in the earnings announcement. The stock is up 42% so far this year authorized. — CNBC’s Jennifer Elias contributed to this report.
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