Top tech analyst Ben Reitzes on the AI landscape in 2024
News & Politics
Introduction
Ben Reitzes, Managing Director and Head of Tech Research at Melus Research, joined us to discuss the current state and future prospects of major tech companies, specifically focusing on Microsoft, Google, Nvidia, AMD, and Apple in the context of AI advancements.
Microsoft vs. Google
Reitzes expressed a favorable outlook for Microsoft, particularly in comparison to Google. He emphasized that Microsoft boasts higher profit margins and believes its revenue and EPS growth will outpace that of Google next year. Microsoft’s strategic moves in AI and monetization are driving this optimism. Reitzes stated, “Microsoft has the goods in terms of AI and monetizing AI,” highlighting that their cloud service, Azure, is a significant focus area. He acknowledged that Google recently improved its performance but remains convinced that Microsoft will outperform it in the long term.
The Role of AMD and Nvidia
The discussion shifted to AMD and Nvidia, particularly after AMD's recent announcements and CEO Lisa Su’s presentation. Reitzes noted the investors' potential interest in AMD as a secondary player to Nvidia, suggesting that there could be opportunities for growth there. He pointed out that Nvidia continues to be valued attractively, trading under 20 times earnings estimates, which he sees as an appealing investment option. He presented a “would you rather” scenario: Nvidia or Google, given their similar valuations, expressing a preference for Nvidia.
Apple's Position in AI
Shifting focus to Apple, Reitzes countered perceptions that the company is being overshadowed in the tech landscape. He noted that although iPhone sales have been flat, other product categories like Macs, iPads, and wearables are seeing growth. Furthermore, he anticipates Apple's foray into AI initiatives, projecting that they may announce something akin to a ChatGPT model at their WWDC in 2024. He believes that if Apple can showcase significant AI-driven services, their stock will become more attractive to investors.
Reitzes reiterated confidence in Apple’s service sector and emphasized his buy rating for the stock, suggesting that as Apple reveals its AI projects, it could lead to revenue growth that positively influences stock performance.
Key Investment Picks
When asked for his highest conviction buy right now, Reitzes mentioned a particular company, Amcore, which focuses on advanced packaging for AI technologies. However, he affirmed that Microsoft remains a safer investment.
Keyword
Microsoft, Google, AI, Nvidia, AMD, Apple, cloud computing, revenue growth, EPS growth, strategic moves, investor sentiment, WWDC.
FAQ
Q: Why is Ben Reitzes optimistic about Microsoft over Google?
A: He believes that Microsoft has higher profit margins and expects greater revenue and EPS growth compared to Google in the coming year.
Q: What potential does AMD have according to Reitzes?
A: Reitzes sees AMD as a potential growth stock and suggests investors are interested in it as a possible alternative to Nvidia.
Q: What is the outlook on Apple according to Reitzes?
A: Reitzes is optimistic that Apple will unveil AI initiatives that may positively impact their stock and believes their various product lines may see growth.
Q: What is Reitzes' top investment recommendation?
A: He highlighted Amcore for its focus on advanced AI packaging but noted that Microsoft is a safer investment choice.
Q: What are the main focus areas for Microsoft in relation to AI?
A: Reitzes emphasized the importance of Azure and Microsoft’s ability to monetize AI technologies effectively.