Analysts at Barclays have named consumer internet stocks set to do well — and badly — in an age of generative AI. Outlining what they called “a framework for generative AI success,” the bank analyzed possible opportunities and risks as generative AI is embraced around the world. “The next few years could change the way traffic flows through the internet, and the market cap of many stocks,” the analysts wrote in a Sept. 12 note. “We think it’s still too early to declare the AI (artificial intelligence) ‘winners’ and ‘losers’ in the consumer internet space. Instead, we think the right thing for investors to do at pivotal times like today is to focus on previous major shifts in technology. Taking this approach, we have created a framework that can be applied today to assess potential winners and losers as the AI theme plays out.” In assessing stocks that could outperform (and underperform), the bank took into account factors including the amount of data companies have access to, the ease of replicating content and audience trust. Stocks to watch Barclays named several stocks that it says screen well, including U.S. tech giants Google , Meta and Amazon . “The best companies in AI are likely to have a combination of: 1) distribution advantages, 2) strong technical AI prowess, 3) the resources to invest aggressively, and 4) a willingness to ship and execute,” the analysts wrote. Both Google and Meta are already well-placed in the industry; the former has over three billion Android users and millions of users across its apps, while Meta has four “mega apps,” each with over a billion daily active users, the analysts said. Similarly, Amazon stands to benefit from its web services platform which has “a unique vantage point” to offer a wide range of services to AI start-ups and enterprise customers, while its retail arm has the “largest e-commerce customer base worldwide (ex-China),” the analysts added. Outside of the U.S., the bank likes stocks including German retail platform Zalando and investment group Prosus. It said Prosus – which has a 26% stake in Tencent – is slated to gain from the Chinese tech company’s “development of foundational models ongoing, huge troves of data, massive distribution and impressive tech capability.” Stocks that ‘screen poorly’ The bank also identified stocks it said screen poorly, including British fashion retail giant Asos , publisher Reach , and U.S. small and mid-capi e-commerce players. Barclays warned that, for these companies, generative AI could make audience acquisition more difficult and limit opportunities for investments. Commenting specifically on the U.S. small and mid-cap e-commerce stocks, the analysts said: “names that demonstrate low customer retention, have relatively weak position in their respective end markets, have limited headroom to invest in [generation] AI projects, and lesser amounts of data from the smaller user bases. We do point out that the logistical intensity of these names could help protect the companies from disruptors.” — CNBC’s Michael Bloom contributed to this report.
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