Investing.com - As technology evolves, major companies like Microsoft Corporation (NASDAQ:MSFT) are increasingly incorporating AI as a co-pilot on platforms such as Outlook and Word. However, integrating AI without skyrocketing costs remains a challenge for consumer and enterprise-facing software businesses.
Theo Maas, portfolio manager at Northcape Capital, highlights that implementing AI can be costly due to the extensive computing required in the background. For example, ChatGPT searches are five to ten times more expensive than simple Google (NASDAQ:GOOGL) searches. To account for these costs, Maas suggests that there needs to be both subscription-based revenue streams and consumption or usage-based revenue streams.
Large corporations like Salesforce Inc (NYSE:CRM) ($302 billion) and Adobe Systems Incorporated (NASDAQ:ADBE) ($173 billion) have already started introducing AI co-pilots for their users. Although they stand to benefit more than Microsoft given their smaller size, success hinges on how well they introduce new pricing models to customers who may already be accustomed to paying lower fees.
Maas sees potential investment opportunities in undervalued companies such as Salesforce and Adobe but also mentions Canva ($25 billion), which has an advantage with its fresh code base compared to Adobe's long history.
OpenAI's doubling in value since 2021 demonstrates the potential rewards of investing in AI pioneers. NVIDIA Corporation (NASDAQ:NVDA) is another beneficiary of this trend; however, its shares have recently been deemed "massively overhyped" by some investors.
Despite concerns from industry leaders regarding unchecked excitement around AI development – leading Elon Musk and Steve Wozniak among others calling for a moratorium – advancements continue unabated with Google(NASDAQ:GOOG) announcing updates similar to ChatGPT within its Bard chatbot system.
According to Maas, it’s difficult finding any piece of software that couldn't benefit from incorporating AI somehow; however, he acknowledges user base size plays a significant role when justifying implementation costs. For start-ups, obtaining an OpenAI license and integrating ChatGPT into their products might be the way forward.
In addition to well-known software players such as Wisetech Global Ltd (ASX:WTC), Xero Ltd (ASX:XRO), and Technology One Ltd (ASX:TNE) investing in AI on the ASX market, online classifieds giants Seek Ltd (ASX:SEK) and Rea Group Ltd (ASX:REA) are also harnessing its power for improved ad targeting. Various exchange-traded funds offer exposure to AI businesses as well. Australian banks, supermarkets, retailers, airlines, miners, and healthcare companies are all exploring how to adapt workflows to enhance services amid this rapidly evolving landscape.