• AI is at an “inflection point” that could allow investors and companies tap into a $6 trillion opportunity, Morgan Stanley said.
• “We see AI accelerating digital transformation and tech diffusion across the economy,” analyst Brian Nowak said in a note.
• Investors should focus on areas including e-commerce, public-cloud computing and advertising to ride the boom, the bank said.

Artificial intelligence is having a breakthrough moment and will revolutionize everything from online search to commerce and content, unlocking $6 trillion in tech investment potential, according to Morgan Stanley.

AI-driven search tools could power stronger recommendation engines for social media and e-commerce, create better content-production tools and improve shared-economy marketplaces for transportation and other services, the bank said in the note.

“We see AI accelerating digital transformation and tech diffusion across the economy,” Morgan Stanley Research’s internet analyst Brian Nowak said in a research note.

Excitement around AI exploded in recent months following the debut of OpenAI’s buzzy bot, ChatGPT, with people already using it to write emails and seek stock-market advice. The hype has boosted a handful of tech stocks from Nvidia to C3.ai – and that’s driven half of this year’s gains in US equities, according to JPMorgan, cited by MarketWatch.

Morgan Stanley recommends five key business areas for investors to focus on in the coming years, in order to capitalize on the massive projected growth opportunities made possible by AI. Here’s what the bank said about these domains.

1. Advertising

• “Only about 21% of all advertising globally in 2022 was digital, with a potential $780 billion in ad spending still offline.”
• “AI, large language models and generative-AI creation tools could help advertisers better target customers online, leading to improved paid and organic results from search engines, higher engagement in social media and online video, and more sales from ad units.”

2. E-commerce

• “With just 23%, or about $1 trillion, of retail spending online in the U.S. in 2022, there is a potential $3.3 trillion opportunity for e-commerce.”
• AI and large language models can improve the shopping experience for customers, increasing sales and making online shopping more interactive and increasing sales.”
• “AI can also reduce costs for retailers with more efficient logistics networks and routing, lower return rates based on more efficient product targeting and improved customer service.”

3. Travel

• “Though 76% of travel is already being booked online, digital travel platforms are well-positioned to capitalize further on their large and unique data sets. AI-driven suggestions will assist in the research and planning process.”
• “Over time, AI will help devise prepackaged itineraries, and recommend specific flights, accommodations and experiences that best match consumers’ needs. As a result, travel companies will benefit from higher customer conversion and repeat use.”

4. Shared economy

• “While ridesharing and food delivery are closely associated with digitalization, they had just 8% and 21% digital reach, respectively, when looking at the total population who could potentially use the services.”
• “AI-based improvements to data use will better match drivers to riders and food purveyors to consumers. Further in the future, AI-enabled autonomous driving and delivery could help lower costs.”

5. Public Cloud

• “Analysts expect cloud adoption rates to grow this year, with AI demand fueling the acceleration in the medium to long term. Over the next four years, IDC 1 forecasts that AI will drive one-third of the total growth in public cloud and expects global AI spending on the public cloud to reach $328 billion in 2025.”

https://markets.businessinsider.com/news/stocks/artificial-intelligence-6-trillion-ai-boom-investment-strategy-morgan-stanley-2023-4?amp