Episode summary
AI’s Tangible Wins and Disruption
Summary
The panel argued that AI adoption is already producing measurable returns for companies that can quantify the benefits, but that investors are increasingly focused on the risk of disruption and deflation. The host said the latest AI mapping survey shows more companies are putting numbers on adoption gains, and that adopters with tangible benefits are outperforming. At the same time, the discussion noted a sharp shift in market narrative toward the idea that faster AI could be negative for many businesses.
A guest from software research said AI should be viewed as a software TAM expander rather than a threat, with incumbent vendors using internal AI to speed product development, sales, and operations while also monetizing new AI SKUs. He estimated generative AI could unlock $400 billion in incremental enterprise software TAM by 2028.
Another guest argued that LLM progress remains nonlinear, citing a roughly 10x increase in training compute that could translate into a doubling of model capability if scaling laws hold. The panel also highlighted major bottlenecks in U.S. power and labor for data centers, and said repurposed Bitcoin sites, gas turbines, and other unconventional solutions could create sizable value, with Bitcoin-related stocks still offering upside in many cases.
Key takeaways
- The host said more companies are quantifying AI adoption benefits, and that firms with tangible AI payoffs are already performing well.
- A guest from software research said AI is an evolution for software, not a revolution, and estimated $400 billion of incremental enterprise software TAM by 2028.
- The panel said LLMs may be entering a new step change in capability, with roughly 10x more training compute potentially doubling model performance.
- A guest warned that investors are fast-forwarding from AI benefits to fears of disruption, deflation, and misalignment.
- The panel said the U.S. could be 10% to 20% short of needed data center capacity through 2028, making power and labor key bottlenecks.
- The host said converting Bitcoin sites into data centers can create $10 to $18 per watt of value versus prior trading levels around $1 to $2 per watt.
Notable quotes
“the number of companies that are quantifying the adoption benefits continues to go up quite a bit”
“we see software as a TAM expander”
“we estimate Genai could unlock 400 billion in incremental TAM for software”
“a 10x increase in compute used to train the models results in about a doubling of the model capabilities”
How the episode opens
Welcome to Thoughts on the Market. I'm Michelle Weaver, US thematic and equity strategist here at Morgan Stanley. Today we've got a special episode on AI adoption, and this is the first in a two-part conversation live from our technology, media, and telecom conference.
It's Thursday, March 5th at 11:00 a.m. in San Francisco. We're really excited to be uh here with all of you taping live.
And we've got on stage with me Steven Bird. He's our global head of thematics and sustainability research. Josh Bear, software analyst, and Lindseay Tyler, TMT credit research analyst.
So, Stephen, I want to start with you pretty broad, pretty high level. We recently published our fifth AI mapping uh survey that identifies how different companies are exposed to the broad AI theme. Can you just share with us some insights from that piece and and how stocks are performing with this AI exposure?
Yeah, it's interesting. I mean the uh we've been doing this survey now uh thanks to you Michelle and your excellent work for for quite a while and every 6 months it it is pretty telling to see the the progression. I would say uh a few things that got my attention from my most recent mapping was the number of companies that are quantifying the adoption benefits continues to go up quite a bit.
Uh, and to me that feels like that's going to be table stakes very soon is in every industry. If you see two or three companies that are really laying out quite specifically what they expect to be able to do with AI and lay out the math, I think that really is going to pull all the other companies uh to to follow suit. So, we're seeing that in a big way.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai returns
- ai disruption
- tmt conference
- technology risk
- market outlook
Companies and tickers mentioned
- MS
- Morgan Stanley
Watch the episode
Watch “AI’s Tangible Wins and Disruption” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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