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“Many of these companies (including AAPL) are about to get dwarfed by generative AI, in our view,” they wrote in a report to clients.
Companies that integrate generative AI into their business practices can benefit from faster product and content introductions, leading to higher revenues and 20-30% lower costs, according to the analysts.
“In the US, where capitalism reigns supreme, tech-enhanced competitors will put companies out of business that aren’t equally tech-first, in our view. Using generative AI to drive higher ROICs in media and internet will become table stakes within 3-5 years, we estimate. Use it or lose it (via bankruptcy) is our key investment conclusion,” they added.
While the analysts say it’s hard to pick winners and losers now, they believe that clear winners could prove to be “the arms dealers that house large language models (LLMs).”
“Today, the 3 LLM front-runners are AMZN, GOOGL and MSFT. We believe these 3 companies will grow their market caps to be larger than AAPL’s $3T.”
The analysts argue that Apple (NASDAQ:AAPL) is “not a core beneficiary of the trend toward generative AI because it is not an arms dealer.”
“We assume AAPL can protect its best-in-class ecosystem from defections, but we believe Android/GOOGL will grow to be a larger company driven by its Cloud business, generative AI capabilities, and best in class 1st-party global consumer data,” they concluded.
