At its Build conference this week, Microsoft (MSFT) announced Copilot+ computers designed to integrate artificial intelligence capabilities into its computers. RBC Capital Markets Software Equity Analyst Rishi Jaluria and Macquarie US Head of AI and Software Research Frederick Havemeyer join Market Domination to discuss the company’s latest AI play.
“I think the introduction of these AI computers will be a really big game changer in getting productive AI into the hands of every knowledge worker,” Jaluria explains. He adds that users will be able to use these small and medium language models natively, thus creating greater use of AI for general purposes. When it comes to large language models, Havemeyer says, “It’s very clear to us that large language models are something that generative AI model technology will find suitable for consumers over time. ChatGPT has done that, and I think in the right way. The interface and the right platform, we will find over time.”
AI is infiltrating all industries as companies seek to innovate and find efficiencies. “80% of CIOs tell us they are either currently in production or expect to be in production with AI within the next 12 months, so the appetite is real, the use cases are real,” Jaluria said. explains Jaluria and adds: there is a lot of room for the technology to grow.
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This article was written by Melanie Riehl.
video transcript
Microsoft is going all-in on artificial intelligence.
The company this week announced a new category of PC CS called Copilot, as well as so-called AI PC chips, that computers will now run on the open A, GP T+40 model.
As software technology continues to advance, we’re figuring out how to navigate the big picture and the best ways to position your portfolio with the Yahoo Finance playbook.
Let’s welcome software equity analyst Rishi Juria R BC Capital Market, as well as Frederick Havemeyer, head of US I and software research at Macquarie.
Gentlemen.
Thank you so much for being here, I think let’s start with the Microsoft announcement first and talk about how we should be thinking about this as investors, how big of a deal this will be, how much of an incremental contribution to revenue it will be. etc., R. I’ll start with you.
Yes definitely.
And thank you very much for having us.
We were at Microsoft’s installation in Seattle this week, and look, I think the introduction of these AI computers will actually be a really big game changer in getting productive AI into the hands of every knowledge worker.
Right.
When you use any GP T system today, remember that it requires a fast internet connection and a lot of computing power.
Now, you know, it’s going to take time for them to be lightweight enough for anyone to use, but you’ll be able to use some of these smaller language and medium language models natively. A super fast internet connection.
And so I think it will enable a lot more general purposes.
AI is leveraging use cases and workloads that were not available before.
I think this is a very exciting announcement for Microsoft, Fred.
Let’s take you here too.
Same question, Fred.
So you know your reaction to that Microsoft event, you know, Rishi says this new A IP CS is a game changer Fred, do you agree?
Over the past year, we’ve been constantly calling for AI to move towards the edge, towards the device.
In most cases, this requires hardware similar to what Microsoft offers to accomplish this.
That’s what excites us about both making this successful for consumers and knowledge workers and driving profitable adoption of AI.
Because if you remember, I think the last time I was on Yahoo Finance, we had a great time talking about what smaller language models mean, big language models still mean smaller margins, even though they’re still quite large.
As we have researched in the past, we think achieving 80% to 90% plus gross margins by running generative AI models can be done using small language models on dedicated hardware or native devices.
So I think it’s pretty exciting, Fred followed up on this, you recently wrote a note on how consumers will determine the impact here.
I’m trying to understand whether where we are in the AI cycle is still a driving force or is it starting to become attractive?
In other words, like all these emerging things, customers, especially on the retail side, want it, or these companies are still in a position where they have to convince them that they want it.
I think when we look at products like chat G BT, we see that there are already over 100 million users, which I would describe in most cases as consumers who are really interested in these types of products.
Now we’re commercializing it and making it something useful and interesting for consumers.
I think maybe there are technologies that you define as a solution in search of a problem.
At the same time, I think it’s been very clear to us that the generative AI model technology of large language models is something that we find consumer-friendly over time.
GP T chatted.
And with the right interface and the right platform, I think we’ll find it over time.
So I’m a Rayban glasses user of meta, I’m not here to discuss meta, I’m just here to discuss glasses.
They are fascinating.
They’re really good, and I really enjoy having that kind of way of working, with these AI models sitting right in front of my glasses.
So we will see over time.
Richie.
Same question.
I mean, when you look across the coverage universe, Richie, what kind of customer adoption and engagement are you seeing when it comes to these new AI products and features?
Yes.
Definitely.
And I’m glad you saw me with Fred because I absolutely agree with him on most of what he said.
Look, I would say when we talk to companies, we talk to the heads of CIO S CTO S.
There is a real appetite for the use of AI within the enterprise.
I would say most of these, maybe 70%, are actually net new budget.
So it doesn’t even cannibalize its other parts.
It comes from other parts of the organization.
So there is real money allocated.
We’re, we’re seeing, 80% of Cio S are telling us that they’re either currently in production or expect to be in production with AI within the next 12 months.
So the appetite is real.
The use cases are real.
And remember, we’re still in the very, very early stages of this.
If I use the analogy to internet stages, even though GP T 40 is incredibly powerful, that’s probably 14 4 dial-up levels, right?
We couldn’t even get access to high-speed broadband.
So I think there’s still a lot more for the technology to progress from here, but we’re already seeing real interest from businesses and consumers as well.