Yahoo Finance AI hype is both a punchline and the real deal: Morning Brief
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The business world's obsession with artificial intelligence has, in just a few short months, become a punchline of sorts.
AI also has the potential to be everything its biggest boosters believe it to be. And more.
Over the last few days, consumer companies including Coca-Cola (KO) and Pepsi (PEP) have talked about the role AI could play in their business.
As purveyors of soft drinks, salty snacks, and burritos, it is hard to see where AI enhancements to workflows and best practices might really shake things up for these businesses.
Other than, of course, lowering costs in businesses that are already relentlessly managed to maximize profits.
Results from Microsoft (MSFT) and Google parent Alphabet (GOOGL), however, more concretely brought home the reason AI's potential ought to be taken seriously as matching the runaway hype.
And as readers may likely anticipate, it is because of how AI has changed the thinking companies have around search that profound impacts may come to pass.
As Yahoo Finance's Josh Schafer noted Wednesday, Microsoft CEO Satya Nadella said Tuesday on a call with investors, "As we look towards a future where chat becomes a new way for people to seek information, consumers have real choice in business model and modalities with Azure-powered chat entry points across Bing, Edge, Windows and OpenAI's ChatGPT. We look forward to continuing this journey in what is a generational shift in the largest software category, search."
Last week, we argued tech's obsession with AI was actually about a war happening in search. This view was and continues to be fueled by simply reading the comments of the CEO of the most powerful enterprise tech company in the world.
But if we broaden the notion of "search" beyond the walls of consumers looking for restaurants or new running sneakers, what we're really talking about is how data is collated, warehoused, and searched.
Many investors will hear consumer goods companies talk about AI and recall the days when every company felt compelled to comment on "blockchain." Which has, to some extent, still not worn off — just on Wednesday, economic commentator Larry Summers said he is long blockchain and short bitcoin (BTC-USD).
As Julie Hyman wrote Wednesday, some Wall Street strategists have tabbed hype around AI as boosting the stock market this year.
But to invoke another investing cliché from years gone by, if data really is the new oil, then how companies extract and understand that data will determine which earn the outsized returns promised by tech's latest revolution.
In its most recent quarters, Alphabet earned $17.4 billion in operating income; Microsoft recognized $18.3 billion in net income over the same period.
The opportunity AI presents is to grow these winnings many times over.
And that's no punchline for investors.
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