Bernstein managing director Toni Sacconaghi said Friday that AI technology will evolve over time, suggesting that some setbacks are likely to take place at times but that the overall concept represents a "clearly breakthrough" innovation.
Sacconaghi's comments came in the wake of rising interest in AI during the early part of 2023, spurred in part by OpenAI's ChatGPT, which Microsoft ( NASDAQ: MSFT ) has integrated in its search engine Bing. Meanwhile, Google ( NASDAQ: GOOG ) has launched an experimental conversational AI chatbot called Bard, which ran into some trouble at a public unveiling event.
At the same time, China’s Baidu ( NASDAQ: BIDU ) is also developing an AI-powered chatbot similar to ChatGPT called “Ernie bot," expected to launch next month.
"This is an evolutionary technology and with any evolutionary technology ... there is a learning curve," the analyst said in an interview with CNBC. "Users are learning and companies are learning but I do think this notion of conversational AI is a really transformational thing."
He added: "It's ultimately going to change the way that human beings interact with computers going forward in a way that is much less discreet and much more conversational."
To prove his "evolutionary" point, Sacconaghi pointed to Google's ( GOOG ) ( GOOGL ) Bard chatbot rollout event, which included well-publicized issues in its demonstration. Still, the Bernstein analyst argued that, despite these setbacks, the notion of conversational AI concept is "clearly breakthrough".
Meanwhile, he spotlighted some limitations over technological algorithms, which will eventually evolve.
Looking at the mentioned stock movement in Friday's intraday session: MSFT and GOOG down about 2% and BIDU down about 5% .
Over a period of one year, tech giants have underperformed broader market index:
Tech-focused ETFs are also in negative territory in Friday's intraday session: Invesco QQQ Trust ( QQQ ) -1.47%; Technology Select Sector SPDR Fund ( XLK ) -1.74%; iShares Global Tech ETF ( IXN ) -1.45%; Direxion Daily Technology Bull 3X Shares ( TECL ) -5.4%; Vanguard Information Technology ETF ( VGT ) -1.75%; iShares U.S. Technology ETF ( IYW ) -1.84%.
Looking at 2023 so far, AI stocks have seen a significant surge. For instance, C3.ai ( AI ) has more than doubled since the end of 2022. BigBear.ai Holdings ( BBAI ) has jumped more than 400% on a year-to-date basis, while SoundHound AI ( SOUN ) has nearly tripled.
Meanwhile, AI will likely provide additional opportunities for Big Tech players and companies poised to deliver the infrastructure for the emerging technology. This includes names like Nvidia ( NVDA ), Ambarella ( AMBA ), Microsoft ( MSFT ), Alphabet ( GOOG ) ( GOOGL ), Apple ( AAPL ) and IBM ( IBM ).
For deep analysis on chatbot market, see why Seeking Alpha contributor Bill Zettler says, " Baidu seems undervalued compared to MSFT and GOOG ."
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AI concept is ‘clearly breakthrough' and will evolve over time - Bernstein's Sacconaghi