Forget the Red Wedding, Battle of the Bastards and the Battle of the Blackwater. The Game of Thrones-sized battle for AI raging in Big Tech will make them seem like mere punch-ups among Westerosi peasants.
Google may have initially taken an Eddark Stark-level butchering after its botched Bard unveiling, but the race for the AI-ron throne (sorry) will be a long one, and Google as well as Apple, Meta, and other tech stalwarts are “all too willing to spend billions in this AI arms race over the coming years”, according to Wedbush analysts Daniel Ives and John Katsingris.
Given these firm’s massive war chests, they’re unlikely to need the help of the Iron Bank of Braavos to shore up funds.
“For Microsoft, the monetisation opportunity is real, as every percentage share that moves from Google search to Bing is billions of advertising dollars in (Microsoft corporate headquarters) Redmond's pocket”, said Ives and Katsingris.
Wedbush’s analysts clearly see Microsoft as the reigning champion for now.
“The past few weeks have been a massive success story for Nadella and ChatGPT integrated into Bing, while Google on the other hand is left with more questions than answers with an underwhelming Paris preso for Bard and an AI mistake that was an absolute near-term gut punch to Google's AI credibility,” they said.
While analysts expect there to be short-term issues with Bing and ChatGPT, brut for them, it is clear Microsoft has an opportunity to expand its AI capabilities into a number of areas around the consumer and enterprise ecosystem.
Overall, the AI story and ChatGPT monetisation opportunity “could add roughly US$20 per share to the Microsoft sum of-the-parts story,” as the battle heats up in the coming 12 to 18 months.
Wedbush maintains its outperform rating and US$280 price target on Microsoft, with an upside target of US$300.
But be warned: Microsoft boss Satya Nadella may have usurped the throne early through his tie-up with killer app ChatGPT, but just as the Mad King Aerys II Targaryen discovered, nothing is written in dragonstone.