Nvidia and Tesla to mark the beginning of the Ai era.

Nvidia and Tesla to mark the beginning of the Ai era.

- AI Revolution: A Polymath in Every Pocket <BOA>

"AI bubble? It's just starting!"

The third major technology cycle of the past 50 years has begun. In our first AI report, we mentioned that GenAI can facilitate the evolution of corporate efficiency faster than the disruptive technologies of the past, but we now think that by elaborating our views, this evolution can become a revolution.

AI capital expenditures are likely to exceed $1 trillion in the short term, but they are still in their infancy compared to 1996 on the internet.

GenAI applications and the basic model supporting them have evolved quickly over the past 18 months, but over the next 5-10 years GenAI is expected to transform the global economy and our lives.

Currently GenAI has the intelligence of a college graduate, but it's likely to have polymath in everyone's pocket within a few years.

Survey – Financial and economic turmoil will accelerate

We surveyed about 3,400 companies, 130 of our stock analysts with a total market capitalization of about $90 trillion, on the status of AI. The responses from analysts will take some time to adopt,

The beneficiaries of AI have reinforced our view that they are likely to expand from Nvidia to semiconductor and cloud service providers in the first wave, to tech hardware, software and capital goods in the second wave, and ultimately to all sectors worldwide.

While companies may integrate GenAI applications as a natural extension of their current operational efficiency strategies over the next 1-3 years, incremental returns over the next 3-5 years could drive transformation. Despite the consensus view that AI will result in massive job losses, our strategists are divided on net job creation versus migration, but 70% expect corporate AI adoption to result in deflation.

Focusing on killer apps or use cases misses the bigger picture

The companion bot emerged as the first mainstream GenAI consumer use case, but it reminds readers that far more important than the internet's initial consumer use case are the thousands of use cases and companies that have emerged due to the internet. GenAI applications for writing, research, and coding, as well as applications for photography, video, and music generation and editing, are also gaining attention. The professional and creative pursuit of the future may be vastly different from what it is today. Corporate AI strategies are more complex than typing questions into ChatGPT, but adoption is expected to accelerate in 2025 as 44% of S&P companies who mentioned "AI" in their second quarter 2024 earnings call transitioned from pilot to real-world operations. Corporate implementation could increase S&P operating margins by 200 basis points over the next five years, enabling annual savings of around $55 billion.

Beneficiaries - Nvidia is just the tip of the iceberg

Skeptics argue that the reality of AI does not justify exaggerated expectations (or infrastructure investments), but investors often overestimate and underestimate the scale of technological innovation in the short term. Since a strong base model operating system is a prerequisite for profitable applications, we expect the time gap between AI infrastructure investment and monetization to be relatively short. With the transition of non-scalable businesses to software products, AI startups that can hold market share in the service industry are just beginning to emerge.