At its Build conference this week, Microsoft (MSFT) announced Copilot+ PCs, which are 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 activities.
“I think the introduction of these AI PCs will really be a big game changer in getting generative AI into the hands of every knowledge worker,” Jaluria explains. He adds that users can use these small and medium language models locally, opening up more general-purpose AI uses. When it comes to large language models, Havemeyer says, “We are very clear that the technology of a generative AI model of large language models is something that will resonate with consumers over time. ChatGPT did that, and I think with the right interface and the right platform, we’ll find it over time.”
AI is percolating across industries as companies try to innovate and find efficiencies. “80% of CIOs tell us they are currently in production or expect to be in production with AI in the next twelve months, so the interest is real, the use cases are real,” Jaluria explains, adding that there are still There is always 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 transcription
Microsoft is going all-in on AI.
The company announced this week a new category of P CS called Copilot, plus their computers equipped with so-called AI PC chips and will now run on the open A is GP T +40 model.
As software technology continues to evolve, we explore how to navigate the big picture and the best ways to position your portfolio with the Yahoo Finance playbook.
Let’s welcome Rishi Juria R BC Capital Market, software equity analyst, as well as Frederick Havemeyer, head of USA I and software research at Macquarie.
Gentlemen.
Thank you so much for being here. I think first of all we’ll start with the Microsoft announcement itself and how we should think about it as investors, how big the deal will be, how incrementally it will add to revenue. and so on, R. I’ll start with you.
Yes absolutely.
And thank you so much for having us.
We were just in Seattle this week at Microsoft Build and look, I think the introduction of these AI PCs will actually be a really big game changer in getting generative AI into the hands of every knowledge worker out there.
Right.
Remember that using a GP T system today requires a fast internet connection and a lot of computing power.
Now, you know, it’s going to take time to, you know, get them light enough that everyone can use them, but you’ll be able to use some of these more small language and mid-language models locally without a high-speed Internet connection.
And so I think it will enable much more general purposes.
Uh AI use cases and workloads that didn’t exist before.
So 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 game changer, Fred, do you agree?
Over the past year, we have consistently called for AI to move to the edge, to the device.
And in many cases this requires hardware like the one Microsoft is rolling out for this.
And making this successful for consumers and knowledge workers, and driving the adoption of AI in a profitable way, is what would get us excited.
Because if you remember, I think one of the last times I was on Yahoo Finance, we had a lot of fun talking about what smaller language models mean. Large language models are still quite large, but nevertheless mean smaller margins.
And as we’ve found in the past, we think achieving 80% to 90% plus gross margins running generative AI models can be achieved by running small language models on specialized hardware or on local devices.
So I think it’s quite exciting, Fred just takes that further, you recently wrote a note about how consumers are going to determine the impact here.
And I keep trying to figure out if where we are in the AI cycle is still a push or if it’s starting to become a pull.
In other words, as all this stuff comes out, there are mostly customers on the retail side asking for this, or there are still companies that have to convince them that they want it.
I think when we look at products like chat GBT, we already see that there are well over 100 million users who in many cases I would qualify as consumers who are really interested in these types of products.
Now we commercialize it and turn it into something useful and interesting for consumers.
I really think there are technologies out there that may have been what you describe as a solution in search of a problem.
And at the same time, I think it’s very clear to us that the generative AI model technology of large language models is something that we will adapt to consumers over time.
Chat GP T did it.
And I think with the right interface and the right platform, we’ll find it over time.
I mean, I’m a user of Meta’s Rayban glasses, not here to discuss meta, just the glasses.
They are fascinating.
They are really good and I really enjoy working with this way of working, where these AI models are right in my glasses.
So we’ll see over time.
Richie.
Same question.
I mean, as you look at your, your coverage universe, Richie, what, what kind of customer adoption and engagement are you seeing when it comes to, you know, these new AI products and features?
Yes.
Um, absolutely.
And I’m glad you have me next to Fred, because I absolutely agree with him on a lot of what he says.
Look, what I would say is when we talk to companies, we talk to the heads of CIO S CTOs.
There is a real need for AI use within the enterprise.
Um. A lot of this, I would say maybe 70% of it is actually net new budget.
So it’s not even cannibalizing other parts of it.
It comes from other parts of the organization.
So real money is being earmarked.
Uh, we’re, we’re seeing uh, I would say 80% of Cio S are telling us that they are currently in production or expect to be in production with AI in the next twelve months.
So the appetite is real.
The usage scenarios are real.
And remember, we’re still in the very, very early stages.
If I draw the analogy to the Internet phases, you know, even though GP T 40 is incredibly powerful, this is probably 14 4 dial-up level, right?
We haven’t even reached high-speed broadband yet.
So I think there are many more opportunities to advance the technology from here, but I’m already seeing real interest from the business community and also from consumers.