As the world’s largest technology firms compete to leverage and disseminate artificial intelligence (AI), one expert says companies focused on AI consumption have an advantage over those focused on its production.
Mark Lehmann, the head of Citizens JMP, told BNN Bloomberg in a Thursday interview that Meta Platforms Inc., which reported quarterly earnings on Wednesday, is the best example of an “AI consumer” primed to take advantage of the increasingly popular technology.
“(Meta) had a terrific quarter, I think their outlook was purposefully a little muted, but I think what they had to say is as a consumer of data and a consumer of AI… they are the prime if not one of the most prime beneficiaries of what we’re seeing in that space,” he said.
Meta’s stock was up more than two per cent in midday trading on Thursday following remarks a day earlier by CEO Mark Zuckerberg, who said 2025 will be a “really big year” for the company’s AI development.
Lehmann said that despite the market-rattling news earlier this week that Chinese-based startup DeepSeek had created a high-performance open-source AI model reportedly at a fraction of the cost of competitors like ChatGPT, tech players like Meta are still prepared to spend big on AI.
He added that Meta is well positioned to see a high rate of return on its AI investments down the line as a large-scale consumer of data and technology.
“I think it’s become pretty clear that the winners are those who can manipulate the data the best and at the cheapest price point, so you saw stocks like Salesforce do extremely well, you saw Meta do extremely well,” he said.
“And then you had some that had question marks about those who have invested in AI and are more specific as opposed to agnostic - the agnostics are going to be the winners.”
Lehmann said he saw the same themes play out when semiconductor and computer storage companies first came on the tech investing scene.
“The consumers of that technology did far better than the producers of that technology. You wanted to buy Microsoft 30 years ago, you didn’t necessarily want to buy Dell and Compaq, and I think that analogy holds true even today,” he said.
“You want to buy the consumers of the data as opposed to betting on who’s going to have the most important data, the one company, and I think the stocks are proving that out this week.”
Markets cooler on Microsoft
Microsoft Corp., meanwhile, saw its stock drop by more than six per cent midday Thursday after the tech giant said Wednesday it expects its cloud computing business to grow slowly this quarter as it struggles to build enough data centres to keep up with growing AI demand.
Despite the negative market reaction, Lehmann said Microsoft’s tempered outlook is a good thing, as it shows the company wants “to make sure the revenues ascribe to the expenses” when it comes to AI investment.
“I think Microsoft has a great lens on what the future is, and I think that buildout that they describe is happening, it’s real, it will take place, but they also have made big bets in certain types of AI… and I think that’s part of the fear that hit that stock,” he said.
“And I think it’s proper to be tempered, it’s had a great run and like a lot of these stocks, you’ve got to get to that next leg of growth, and I think that’s why the market’s taking a little bit of a pause today.”
But Lehmann added that investors who want to get more exposure to big tech and AI players should be looking for opportunities to buy when stock prices go down – as they did during the DeepSeek-fuelled selloff earlier this week.
“(Meta) stock was 10 per cent lower on Monday than it is right now,” he said.
“If you have conviction in a name that you think is going to be really great… you’re going to get these moments of opportunity that you have to take advantage of.”
With files from Bloomberg News