September 24, 2023

Personal assistants like Alexa and Siri are being offered by the biggest names in technology, and one company should be favored to take a bigger share of that market as artificial intelligence grows in their capabilities, Morgan Stanley analysts said Wednesday. Does

Morgan Stanley analysts believe that Alphabet Inc. of GOOG,

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+0.81% Inc. As AMZN, Google is best positioned on the hardware, data and AI technology fronts,
and Meta Platforms Inc. meta,
AI has been called “behavior change…to lead” and Apple Inc. K AAPL is required.
AI play still faces “uncertainty”.

Analysts said existing assistants such as Amazon’s Alexa, Google’s Assistant and Apple’s Siri have seen “limited” commercial and consumer adoption, but they see assistants driven by the larger language model, or LLM, “changing this … With these tools of structural acceleration in online consumer spending and online advertising growth we are seeing coming from AI.

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“We see the transformer model and large language model (LLM) leading to the development of next-generation AI assistants with increased personalization, incremental use cases (cross-sector online shopping with follow-up search and follow-up, improved personalization and recommendations, calendar management/scheduling, automated actions/task completion, monitoring of health status and financial status, improved education/tuition, and more) and higher consumer utility,” Morgan Stanley analysts Brian Novak said in a note on Amazon, Alphabet and covered Meta, while Eric Woodring covered Apple – wrote in the note.

The analyst views AI as a “$6 trillion opportunity,” but believes that competing and winning in the assistant category will require three essentials: hardware, proprietary data, and AI investments/capabilities. Here’s how the Big Four tech companies break down in this regard, according to analysts.

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Google has about 3 billion users on an estimated 2.6 billion Android devices and 350 million from other devices, but the data shows “a significant gap,” analysts said.

“Productivity tools like YouTube, Google Maps and Gmail are industry leaders,” Morgan Stanley said. In addition, Google “has existing partner/developer relationships through its AI developer tools, which we expect to grow our data-sets and reach over time,” while “using state-of-the-art LLM and multimodal models such as LaMDA, MUM is likely to be differentiated to build PALM, and personal assistants on top.

Morgan Stanley’s note coincides with Google’s I/O 2023 developer conference on Wednesday, in which executives explained Google’s AI developments and plans.

Reading Google developers conference is about AI, as refund requests, maps, work documents generated from emails


Analysts said Amazon has the largest single-person consumer-purchase dataset and expanding AI capabilities, but its “hardware is the best” even with 400 million devices compared to Google and Apple.

meta platform

The Meta platform has user access, data and AI expertise, but it lacks in hardware, analysts wrote.

Morgan Stanley said, “While Meta does not have a large hardware-installed base, its reach is underscored by the 3 billion daily active people across its family of apps.”

The firm cited IDC data to say that Meta has about 3.8 billion active monthly users globally between Facebook and Instagram, and 1.8 billion on WhatsApp.


Meanwhile, Apple is “positioned to deliver a broad-based personal AI assistant, but AI model capabilities are less clear.”

Hardware isn’t a problem, with about 2 billion devices — about 1.2 billion iPhones — and most of them compatible with Siri, which is well positioned to integrate with LLM, and Apple has a ton of user data. Is.

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However, the lack of any performance data on Apple’s AI capabilities is still a question mark.

“Little has been said about whether Apple will be building their own LLM, or whether they will decide to partner with an open-source vendor such as StabilityAI,” Morgan Stanley said.

Shares of all four companies are seeing gains this year as enthusiasm for generative AI grows. Apple stock is up 33.6% in 2023, Facebook parent Meta has nearly doubled with a 93.7% gain, Alphabet shares are up 26.7% and Amazon stock is up 31.2%. For comparison, the S&P 500 index SPX,
is up 7.3% so far this year, while the Dow Jones Industrial Average DJIA,
is up 1.3%.