Google's LLM Gemini will be one of the winners, says Needham's Laura Martin
Speakers
Laura Martin
— Senior Entertainment and Internet Analyst
Brian Sullivan
— Anchor, CNBC (Last Call / Power Lunch)
Summary
Laura Martin of Needham tells Power Lunch that Wall Street is funding too many LLMs and Google/Alphabet is positioned to be a winner with Gemini. She argues Gemini has model and chip advantages and may focus on enterprise AI, where the money is bigger than consumer AI. She also discusses Apple's Google search-exclusivity economics, Meta's Dina Powell McCormick hire and power challenges, and says Amazon is doing the best job on power. Needham maintains a hold on Meta.
- Needham sees Alphabet's Gemini as one of the LLM winners.
- Gemini's model progress, efficient in-house chip, and closed ecosystem are cited.
- Enterprise AI may be more valuable than consumer AI, with harder security requirements.
- Apple's Google search-exclusivity revenue remains supported despite the monopoly ruling.
- Meta's Dina Powell McCormick hire and political pivot do not change Needham's hold.
- AI data-center power needs are a serious problem; Amazon is said to be best positioned.
Ideas
Alphabet among LLM winners with Gemini.
Wall Street is funding too many LLMs, but Google/Alphabet is positioned to be one of the winners with Gemini. Gemini has raced ahead of OpenAI's model, Alphabet has an efficient in-house chip, and it runs a closed ecosystem. She also argues enterprise AI may fit Gemini first because security requirements are harder but the money is bigger in enterprise; Apple's $20B/year iOS search-exclusivity payment and the courts' refusal to stop it reinforce the Google ecosystem, and the companies are worth more together than separately.
Apple keeps Google search exclusivity revenue.
Apple's search-exclusivity economics with Google remain supportive: Apple already receives $20B a year for exclusive search rights on iOS, the roughly $1B Apple is expected to give Google for Gemini is effectively a reduction in the price Google pays Apple for search exclusivity, and the court did not stop Google's payments despite the monopoly finding. The companies are worth more together than separately.
Meta hold; AI power risk serious.
Needham has a hold on Meta, and the Dina Powell McCormick hire and Meta's political pivot do not change that view. Meta's power requirements for AI are a serious problem, and it is less well positioned than Amazon because Amazon has core competencies and physical logistics.
Amazon best positioned on AI power.
Amazon is doing the best job among the large platform companies in dealing with the power challenge for AI because it has many core competencies and physical logistics capabilities.
