TLDR:
– Amazon is benefiting from the AI trend while enterprise software firms struggle.
– Cloud service providers like Amazon are expected to have a brighter future compared to software companies.
Key Elements:
While enterprise software firms struggle to generate revenue from generative artificial intelligence, cloud computing leader Amazon.com (AMZN) is making bank on the trend, according to analyst Brian White. In the AI gold rush, Amazon is selling the “picks and shovels” by offering cloud services, while companies developing AI software and services may not see significant revenue. White warns of a potential sell-off in enterprise software shares as some stocks have reached “frothy” levels amidst an investor rotation out of semiconductor stocks.
White reiterated his buy rating on Amazon stock, which recently broke out of a flat base and rose 1.2% to close at 200. Generative AI has not delivered significant revenue for the enterprise software industry, leading some analysts to caution against making bold bets in this space. Amazon stock is already benefiting from the trend, while AI stocks like Nvidia have faced skepticism from economists and stock analysts.
In summary, the current stage of the gen AI development cycle suggests that it’s too early to expect major revenue from enterprise software firms focusing on AI. Leading cloud service providers like Amazon’s AWS are expected to have a brighter future compared to these software companies.