The biggest artificial intelligence news this week came from software companies Snowflake and rival Databricks. For investors homing in on AI stocks, there's also investment advice from BlackRock, economist Ed Yardeni and Deutsche Bank to munch on.
Snowflake this week hosted an investor day during its annual user conference. Snowflake said it plans to partner with chipmaker Nvidia, one of the biggest names in AI chips. Snowflake's customers will be able to build AI models using Nvidia tools.
In addition, Snowflake sells data analytics and management software that runs on cloud computing platforms. At the event, Snowflake also rolled out Snowpark Container Services. It enables customers to securely develop large language models to train AI-driven applications.
Meanwhile, privately held Databricks acquired generative AI startup MosaicML on June 26 for $1.3 billion. At its annual summit this week, Databricks also touted its AI initiatives.
"The MosaicML acquisition will enable Databricks to offer a comprehensive AI model development platform that it believes has advantages over its competitors," Raymond James analyst Simon Leopold said in a note to clients. "Databricks' generative AI platform allows customers to build their own AI models from scratch."
Amid the Snowflake rivalry, Databricks could file an initial public offering when market conditions improve, analysts say.
AI Stocks: Economic Impact
Elsewhere, the BlackRock Investment Institute partly focused on the momentum in AI stocks in its 2023 midyear outlook. BlackRock sees long-term, positive economic impact from generative AI. It also called generative AI a potential "mega force."
"The wider range of tasks that can be automated now means deploying these new innovations may boost productivity," the report said.
"White collar jobs are at an increased risk of automation than before," BlackRock went on to say. "The resulting cost savings could boost profit margins — companies with high staffing costs or a large share of tasks that could be automated stand to benefit the most. But they could also get left behind if they don't adapt."
Economist Yardeni holds a similar view on stocks with an AI bent.
"AI is sparking a new industrial revolution that's bound to transform business processes in every industry," he said in a note to clients. "But capitalizing on the promise may mean upgrading legacy IT systems in multiple corporate areas — launching a new technology capital spending cycle."
Fear Of Missing Out
Meanwhile, U.K.-based Deutsche Bank analyst Adrian Cox published a report on generative AI.
"The most important acronym in artificial intelligence right now is not LLM (large language model) or GPT (generative pretrained transformer), but FOMO (Fear of Missing Out)," Cox wrote.
He added: "Enterprises are inundating technology companies demanding AI products and services. Investors are piling into chipmakers and software companies."
The Deutsche Bank report covers the generative AI landscape. Cox says companies to watch include chipmaker Nvidia and cloud computing plays like Amazon Web Services, part of Amazon.com. He also notes software makers like Microsoft, network technology supplier Arista Networks and internet search giant Alphabet.
Microsoft is the biggest investor in ChatGPT developer OpenAI.
Meanwhile, there's a troubling development for AI stocks. The Biden administration is weighing tougher restrictions on exports of computer chips that process AI software. The new restrictions would ban exports of Nvidia's less powerful A800 AI chips. Nvidia designs these chips to avoid export curbs.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
