Google, Amazon well-positioned to capture massive AI market, Morgan Stanley says
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Amazon.com (NASDAQ:AMZN) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) are well-positioned to drive and capture the massive potential market in artificial intelligence, according to Morgan Stanley.
The firm sees an estimated market of $205B and $820B in the U.S. and globally, respectively, for generative AI enterprise software. The potential long-term upside for more durable multi-year revenue growth for the Google Cloud Platform and Amazon Web Services, the two largest cloud computing platforms.
âAs labor markets and job functions/tasks become increasingly digitized, augmented, and in some cases automated, we'll see increased demand for cloud services [software-as-a-service, infrastructure-as-a-service and platform-as-service] to power these tools,â analysts led by Brian Nowak wrote in an October 1 note.
Generative AI is driving enthusiasm for tech stocks higher, some expected to benefit more than others. Nvidia (NVDA) is up more than 200% so far this year on expectations it will continue to be a major beneficiary of the technology. 
Morgan Stanley did a deep dive into the impact of generative AI on the labor market and enterprises to identify the scope of business processes that can be automated.
The firm expects 25% of the U.S. labor market to be impacted now, with wages totaling $2.1T eliminated, and forecast 20% generative AI adoption across enterprise companies within three years.
âAI expands scale advantages for market leaders, as the value of large, differentiated, first-party data sets, leading distribution, and the ability to invest rises,â the analysts wrote. âBoth GOOGL and AMZN have significant data and distribution advantages, as well as large balance sheets to invest aggressively ahead of the opportunity.â
Google, Google 
Google's unique data sets within Workspace â think Gmail, Docs, Sheets, etc â combined with built-in generative AI functionality creates strong monetization potential, the firm said, echoing Microsoft (MSFT) Chief Executive Officer Satya Nadellaâs testimony in D.C. earlier today.
That could mean incremental cloud revenue of up to $10.8B. 
Alphabet (GOOG) (GOOGL) shares are up 50% year-to-date.
Amazon
Amazon (AMZN) also has oodles of data, starting with 250M Prime members, 175M Prime video views, millions of AWS customers and roughly 2M sellers. 
Amazon's experience as a market leading infrastructure as a service, or IaaS, cloud platform provides depth of expertise and trust required to develop a compelling offering, Morgan Stanley said. The companyâs capabilities should attract developers looking to build their own AI applications, driving incremental platform as a service, or PaaS demand. 
Amazon (AMZN) shares are up 50% year-to-date.

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