good afternoon welcome to "power lunch," everybody. today we have a special hour of "power lunch" planned. focused on artificial intelligence and the impact it's having on business, the markets and society. >> ai is what everyone is talking about in board rooms and living rooms everyone wants to know if microsoft or google is winning

the race does ai pose a threat to humanity here's what some of the biggest names in business have said. >> we're moving from the auto pilot era of ai to the co-pilot era of ai. >> these are new tools it's point to know that the existing rules still apply there's no exemption or legal shield that ai enjoys. >> we believe we can and must work together to identify and manage the potential downsides so we can all enjoy the upsides. >> i'm personally skeptical of some of the hype that's going into artificial intelligence i think regular intelligence works pretty well. >> it can do all types of things when something can do all types of things, i worry i know we can't uninvent it. >> it's a business story when you think about ai

empowering people to do business. >> ai is the next wave of computers. i call it the iphone moment. we've taken i.t. and put it into the hands of literally every single consumer in the world this is such a big deal. >> the introduction of large language models, artificial intelligence is going to create a productivity boom that we've only seen a few times in the last 75 years. >> widespread adoption of some of these tools can lead to drastic changes in the demand for workers and to wagers, to the income distribution. >> i don't think you can recreate a larry david or seth mcfarland. i don't think it's that easy. >> the evidence of artificial intelligence is so hard to predict what will happen after that it's very much a double-edged

sword. there's a strong probability that it will make life much better and it will have an age of abundance and there's some chance it goes wrong and destroys humanity. >> we will coverall those issues and more first, let's tackle how you can make money off the ai boom you heard about microsoft, google and nvidia, those companies at the forefront and the stocks have been rewarded for it the combined market cap of those three names is right around $5 trillion. there are lots of other opportunities to play in this space. let's bring in gil lowery and steve kovach gil, you were one of the first analysts to say that microsoft's investment in ai is a big deal what would you say to investors now? have they missed the move? >> not in microsoft.

microsoft has been preparing for this for a long time as you put this in the context of other big technology waves, microsoft initially missed the move to google and to cloud. that's why the new ceo was appointed and he's positioned microsoft for this big next wave he's transformed microsoft to capitalize on it and they're just getting started. >> even microsoft is a name people could look to position in what are the others? are they the obvious candidates? are there ones with potential to catch up >> the obvious ones have played out, microsoft and nvidia. on the other side -- those are 2023 events. those companies benefits are going to come this year.

for everybody else the race is still starting it doesn't always matter who has the best position for the race it matters how they execute. as we look at the smaller mid caps that are interesting that could capitalize, we look at zoom info, jfrog, those are companies that are smaller that already utilize artificial intelligence and are leveraged as more code gets written and sales calls get made to leverage this technology. >> chris, we know about nvidia and a couple other companies that -- i could put it this way, are building the plumbing, the back office of ai. give me some other names that are beneath the surface and will be part of the structural architecture of artificial intelligence as opposed to being the front end that we interact with >> yes since that historic, truly

historic, report from nvidia this week, investors are now playing catchup. they're trying to figure out the second events, the second tier companies to benefit we are suggesting networking to connect all these gpus and ai cards together takes plumbing, takes networking and optical companies and networking companies, broadcom is an excellent beneficiary of connecting the ai processors together. >> i have a question about some of the other big tech names we're leaving out of the conversation no one on this panel mentioned apple, amazon. are they too late to this? >> they're a little late to this they haven't emphasized it in the same way that others have. google has been really a leader

in all of this they understand the existential threat for search for something like chatgpt for example it's less clear how someone like amazon is going to benefit from ai in the same way i think they're making appropriate investments, maybe apple is a little behind the curve here as they could be ratcheti capabilities generally each company i think is making a massive investment which we've really seen as of this last quarter of nvidia suggest that when chatgpt was launched in november, all of these orders from all these other companies came pouring in for these chips and now they're just starting to show. >> gil, can i come back to you with specific reference to

microsoft? my observation is this, legacy companies, the history of legacy companies going on to dominate the second and third or fifth chapter of whatever the revolution is is relatively raw. it wasn't nbc or abc or disney that dominated streaming it was netflix, a new company that did that. so why -- explain a little more to me why you think microsoft, not only won't fumble this time, but will lead this time. >> i would actually put google in the position of the incumbent here just like xerox used interface and then microsoft and apple took over the operating system market, artificial intelligence made the most progress in google, in the labs of google, yet they're slowest to

commercialize it because of the innovative dilemma their search is so good that they have a huge incentive not to disrupt it. they're the incumbent. microsoft has positioned itself to be the disrupter and they're so far ahead of google monetizing it. doesn't mean they'll be the only winner, but they have a big head start because they have been thinking about this for a while. their co-pilot was launched in 2021, well before chatgpt. they've been thinking about this for a while. they've been planning for this moment right now they're executing very well. >> gil, thank you for your perspective. chris, thank you steve kovach, you're sticking around. >> i'm sticking around. let's switch gears to ai's impact on the economy and the market more broadly. we're joined by peter barrisson.

we talked about the immediate corporate beneficiaries of artificial intelligence, whether in the plumbing companies that i referred to, the googles, microsofts, amazons, so on what are the other industries or companies diderivatively that wl benefit most, have the most to gain from crossing the ai frontier >> what we saw in the internet boom was that it took a while for companies to figure out how to monetize the internet in fact, the productivity gains from the internet generally came before companies really were able to make a lot of money off it big productivity boom started in the mid 1990s and ended around 2005 we could see a similar story this time around, that it takes

a while for companies to monetize ai. that wouldn't surprise me at all because, if you think about where the profits are coming from now, it's coming from companies that have huge moats around their businesses, companies that benefit from network effect people that use instagram. i don't use chatgpt because others use chatgpt i use chatgpt because it's good. if something else was better, i would use that it's not clear whether the moats around the ai business are going to be so wide that companies that currently are leaders in the tech sector will be able to continue to general the profits they've been enjoying over the last decade or so. >> withat would you add to that, steve? >> there was this debate going on in europe as they're talking about their own legislation. it's this idea that part of the

regulation is that they need to be more transparent about the models they're turning on. we heard resistance from sam altman to that they don't want that regulation. can an open model work like what facebook is working on or meta is working on? can that supercede this? there's been internal discussions within google that these open models are more of a threat than whatever microsoft is doing what do you think about that >> that speaks to the point that if you have a moat around your business and you move to an open source model it becomes more difficult to preserve that mode. ironically the other issues which needs to be addressed is that a lot of tech companies today make money because their offerings are great, but not perfect. if you think about google for example. let's say i want to go to houston. i put in a search how do i get to houston

google will give me a bunch of links to various airline companies. if google had a chatbot that said here's the cheapest flight on this date, that's great that's more helpful to me. how does google make money off that if google's chatbot is ethical, it's going to give me the correct result it will tell me which airline is the cheapest the airline that has that service has no reason to advertise on google. how do you monetize this it may be more difficult than people realize. >> we have to go, peter, but have you changed your odds that there's a 50/50 chance that humanity gets wiped out by ai? >> no. when we speak, shortly after, one of the great pioneers of ai,

he said very much the same thing. my odds are still high maybe because my web cam is blurry and ai is trying to prevent me from spreading this message. >> if it can fix your web cam, then i'll say 50/50 odds it wipes out humanity peter, thank you >> thank you much more to come on this "power lunch" special, the power of ai, including the search for the next big thing plus, the industry's being disrupted by ai and how that will change every day life as we know it from hollywood to to menu at youroc lal restaurant. this "power lunch" special continues after the break.

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welcome back as ai evolves into the buzz word of the year, it brings the risk of ai washing. here's what data break ceo told us about the questions investors need to ask. >> just because a company is doing generative ai doesn't mean that's what it is about. why can't anyone else do the same thing the critical question you have to ask yourself is sort of like just before the i.t. bubble.

>> how do vcs know when the tech is real? duncan davidson joins us what's the first question you ask in trying to separate the real from the science fiction? >> we don't answer that question that question is a trap. you heard the person say it's easy to wrap around chatgpt and throw a business out well, if it's that easy, there's going to be 20 more doing it before you know it you don't want to go into that game instead, we ask a different question are you building a real business i can tell you about how we look into that if you like. >> go ahead. >> well, first of all, there's a situation that always happens called a platform shift. we went from client server to cloud. client server winners got smoked by the cloud people like salesforce.com the question we're asking is will an ai-based crm smoke

salesforce it may seem improbable because they're so big and strong. that's number one. number one, we look at whether it's enterprise ready. a lot of these wrappers around chatgpt that are getting spun up are no way ready to go into enterprise they're too light weight are you trying to replace enterprise and you have a platform that can go in there? if you understand what i'm saying, we don't look at the core chatgpt that's not the business we want to invest in that takes so much capital right now. it's out of the vc range it's like when amazon and azure broke the cloud platform it was investing in things on top of it. >> you would not be investing in the same kinds of things that

google is investing in, that microsoft is investing in. that's out of your scope you'll invest in things that are more bite sized or digestible. >> or is the analogy the uber to the iphone >> we're not going to try to compete with google and microsoft and open ai. we're going to use that as a platform and compete on the level higher when iphone came out, doing apps was an interesting game to play in we're in that part of the game we're trying to invest above the cloud platforms and the ai platforms. >> so then the obvious question, without asking you to open your playbook 100%, what kinds of -- what kinds of companies does this process lead you to right now? >> i think three kinds number one is the platform shift

where you're going after a real existing category enterprise software with ai power underneath it and you go into existing work flow of enterprises. this is the crm example. there's dozens of other categories where ai can empower you. the second one is a data category let me give you a problem with these big platforms. you know about hallucinations, ai can hallucinate you can ask chatgpt a question and it starts making stuff up that's not true. let's say you want to invest in a medical ai system. you don't want that botto to me things up. you have to have the domain they look at, so-called operating design domain of data. it needs to be precisely defined and you have to manage the ai to work within that domain so it's highly accurate. too much is at risk if it makes

something up those database deals where they have a data category that you understand at home, those are good to invest in. i would say -- >> quickly, duncan. >> your third point was what sorry. >> i'm just saying the third point you can invest in after the platform shift and the data thing is you can look at this game of rappers and people doing api calls into ai and you find a category which is not going through this huge thing of everyone doing it. you have a unique knowledge of a category those i would look into. you ask the question this way, instead of asking is it a good tech, you ask when the hype goes away, is this a good business? that's the categories. >> smart way to think about it duncan, thank you very much. >> take care still ahead, you want fries with that.

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welcome back stocks are higher across the board right now. the dow in the green for the first time this week by about 1 full percent or 300 points the nasdaq continuing to soar, up 2% today. today's big winner is marvel technology the company says demand for generative ai boosting its products it expects revenue of about $400 million this year. according to our partners attract insight they're seeing steady in flows and big gains. still ahead, from mind bending special effects to mimicking a singer's voice note for note, ai has entered unchartered and in some cases unwanted territory we'll ask industry insiders how

they're dealing with it when this "power lunch" special continues.

welcome back to a special "power lunch," the power of ai we're looking at some of the industries being disrupted already by ai.

one example is entertainment here's brian braiser explaining one thing ai can't do. >> the movie and the tv series "friday night lights" that came about because i got cut from high school football in front of 250 kids that was a disaster. that was seismic to me now, i don't think that can happen to a machine. they're not going to get cut from high school football and feel humiliation and look around the room and look at all those faces and eyeballs looking at you and penetrating with penetrating eyes that's not going to happen they can't -- ai can't have the experiences that gives -- that brings life to bigger and other ideas. >> that was beautifully expressed. for a look at some of the ways that ai is still disrupting hollywood, let's bring in julia boorstin

julia? >> reporter: it's been a month since the writers strike started and use of ai is one of the key sticking points. they want the studio to regulate the use of ai use. they're saying ai can't write or rewrite literary material and can't be used as source material and that the covered material cannot be used to train ai writers raising concerns that ai is plaj richl machine and writers won't get the payment they deserve for the studio, ai could be a huge money saving source used for everything from location sighting the screen actors guild says

informed consent and fair compensation in the use of ai is a fundamental baseline for the union. and there must be recognition that voice and likeness are stock and trade and must be compensated. i demoed this technology from deep voo doo that enabled someone else to put on and wear my face. there's another technology from wonder dynamics which quickly turned me into a robot and other different characters both of those startups are working with studios and actors to make better looking movies at lower cost you can see the potential here if actors weren't participating in an agreement, it could raise red flags. back to you. >> julia, thank you. let's talk about this with the music industry which faces

some of the same issues. now music labels are saying ai music generators are a direct threat to the industry for more, let's bring in harvey mason, ceo of the recording academy and peter paterno. harvey, let me begin with you. what is the risk and what would the potential damage be to the creative community if, for example, i were able to interact with an ai generating music machine and say i would like you to write me a song in the genre of tina turner i want it orchestrated the way tina's songs were orchestrated and i want it to sound like tina turner >> first off, that's happening and it's going to happen of course, there are risks associated with it we need to figure out how the original creator, in that case

tina, would be compensated it's going to happen ai is here people are using it. creators are going to deploy it. ever since the evolution of the drone, technology has changed the way people create music. i don't see it being any different with ai. there are nuances that we'll discuss and need to be talked about. it's a new version of technology i'm seeing everything from people being terrified to death about ai to people being extremely excited about the potential. it's all over the map. >> could it hollow out the creators, the human creators as brian said, there's no way a bot can have the human experience that creates the kind of sound, the emotional variant that real human-created music has. >> personally, as a creator, i

believe that's absolutely true at the academy we're working to find ways to keep that the case. emotional, heart-feeling story telling is going to always have a human component to it. >> peter, is this back to the future for you like metallica going after napster back in the day. is this a way to protect copyright? >> we have to protect copyright always these issues have to be sorted. >> when you say they have to be sorted, let's take a drake song or pick any one of your clients, if someone created music using their license, would you shut it down >> yes there's two things going on

here one, the use of ai creating music to sound like somebody i don't think there's anything that legally stops that. if you try to pawn it off as someone else's, you can't do that. >> harvey, let me come back to you and pick up on what peter said go back to the tina turner example. i want to create something that sounds like tina turner. the estate of tina turner, rest in peace, could bring action against that creator but the artificial creator can say, it's not tina turner. it just sounds like tina turner. it's just orchestrated like tina turner, but it isn't the same like joe's cola isn't coca-cola. >> under the current conditions there's no clarity we have to establish a way for the original artist, if their name and likeness is going to be

used, for them to be renum rated properly right now it's like the wild, wild west. i would think in the future tina's estate is going to be excited to have tina's voice used in new ways as long as people are crediting tina the right way and people, as consumers understand, there's a difference between the ai tina and original tina. >> interesting. >> i agree at some point it could create streams of revenue. >> opportunities. >> absolutely. >> huge revenue and huge -- more information for consumers and fans of music. >> the switch from napster to spotify. thank you, gentlemen coming up, a company using ai to solve one of the biggest problems facing human kind, getting the wrong food at the drive-throh.ug we'll show you how it works next

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the order is wrong >> can i get the western bacon cheeseburger >> okay. got it >> anything else >> no. actually, can i get the california classic cheeseburger instead? >> okay. got it wi what else can i get for you? >> that's it >> un-california classic cheeseburger, correct? >> correct. >> you're a public company now, market cap over $100 million maybe the most tangible way for people to relate to ai tell us the back story. >> great to be here today. the back story is quite simple at the end of the day we have been in the restaurant business for a while. over the pandemic we realized to

drive through can use ai and add generative ai and it's more impressive we think this is the market being ready and labor costs going up and people realizing we should be doing this i'm getting calls from everyone asking how do we get this into our system now >> one of the great frustrations when i interact with a voice, whether service, whether at a restaurant, whether a service call i make to delta airlines -- i'm not picking on delta -- they never seem to understand or be able to answer the question i have will ai enable it so the question i want answered they can actually answer? >> it's a really good question there's an important distinction between drive through and

customer service in more complex areas. with drive through it's a confined problem set i'm working off a menu that's particular to a franchise. i can understand your question. >> control it? >> i can control it and answer it's not trivial there's a lot of complexities in it. >> no pickles, no lettuce. >> i want a strawberry milkshake, no, i want chocolate. there's all that you're talking about delta airlines to answer your question and make you satisfied, it involves a certain amount of emotional and cognitive intelligence which a drive through doesn't need i was sitting down with a customer yesterday and he said the top 5% of order takers are emotional intelligent. if we can use the ai to make every order taker be accurate

for 100% of orders, that's transformational. >> that offers you a viable business if people want to tie up with you and you're able to increase revenue at these partners by upselling the drive through. >> that's right. upselling is extremely important. the labor savings are nice at the end of the day if you you can upsize the check size by 5 or 6%, that's transformational. >> thank you. coming up, there's an app for that we'll look at the ai applications looking to improve our every day tasks. the dow is up 339 points, a lileore antt mth 1%. we'll be right back.

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i'm not good at photo shop just a few days ago photo shop put in their generative ai technology and i was able to -- i took a photo of you guys in the newsroom in case you're curious why i took that picture, show the original first then show what i was able to do by telling photo shop certain things >> that looks like snapchat. >> all i did was circle kelly's face and type in put a bow on her head if i had to do that myself, i would have no clue. >> i'm also terrible at photo shop. >> i know how to upload a photo to photo shop and that's it. we're going to improve this photo here >> how did they replace -- >> the dead weight >> what's interesting here, if you use photo shop, a photo shop professional can do this in two seconds. >> the fact it can fill in the

background. >> exactly. >> what did you say to it, get rid of tyler >> i said erase him. i circled you and said erase him. >> i hope my boss didn't hear that. >> here we go. circle and add a snowman >> this is our new co-host >> yes when tyler is out sick, we'll have the snowman. >> again, the idea is i said put a snowman next to tyler and, boom, it did it. my point is a dummy like me who can barely use a mouse in photo shop can just tell it what they want to do. >> you can use that to create misinformation. >> we saw that in practice just a few days ago with that fake pentagon photo that sent the markets down really cool for someone like me who might want to explore applications, but this is how practically we're seeing ai

used it's not perfect you can see some blurriness. >> i checked adobe shares and they're up 5% today. >> again, no skills here chatgpt came out on ios next week it's sitting a or whatever, you know, the kids are using it for these days, and then microsoft this week, they're not really necessarily doing apps, but they're calling them plug-ins that kind of are built into this chatgpt. instacart if you ask for a recipe, you say, just order it it does that for you too a lot of interesting, practical ways, but the photoshop thing came out a few days ago and absolutely blew my mind that i can do that. >> so much to play around with. >> thank you for erasing me. >> you're welcome. >> thank you still to come, the legislation situation. lawmakers are struggling to regulate social media still and cryptocurrencies so how about tackling ai we'll explore the potential pitfalls of its rapid ascension

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welcome back to this "power lunch" special we've explored many of the opportunities in ai, investing, in business, and how it will make our lives better, but now we want to examine how it could make our lives worse the potential threats of the technology and what regulation is needed to avoid a bad outcome

from this technological revolution, joining us to talk about all of it, ta tech sbre pree - entrepreneur, the head of the protection bureau, and how are we trying to figure this out >> sam altman caused a stir because he said, if this eu regulation that's working its way through the process right now is passed as it is, we might have to pull out of europe that is a playbook right out of meta's playbook when they are facing regulation. they constantly threaten, we might have to stop offering our service. he actually ended up walking that back today in a tweet saying, we welcome regulation and we're not going to leave europe, but i think, you know, this is telling of the mindset that a lot of these people, especially microsoft, especially open ai, and especially google, also in the eu, and we were talking about motes in the show. they have the mote, these

companies that -- those that i just talked about. they don't want to give that up because they've turned it into a platform already, and by having that control, they can own the future of this they can monetize it better, and this eu law wants them to kind of disclose some of the models that they are training these data sets on they are vehemently against that when they're looking for regulation, what they want is this prescriptive regulation saying ai can't be used for fill in the blank, medical is one that gets used very often. military is another one. so that's -- they want this prescriptive regulation, not saying, you know, this broad, open regulation, and we see some altman kind of stepping in it this week about that. >> how are you thinking about ai as specifically it affects consumer protection, financial protection >> well, one of the things that i just don't think is true is that ai is unregulated in fact, many of the uses of automated decision-making, the

current laws apply we have anti-discrimination laws we have laws against deception we have laws related to employment so many others, and one of the things we like to make clear to the companies we supervise is that your machine or your ai is not some exception out of the existing law we see how ai is being used in customer service, in lending and origi originations, and we're looking at how this can rain in some of those abuses there are other places we may need more rules, but i want to make sure as an initial step that people aren't using their machine as an excuse to violate existing law. >> what are your concerns, and where do you think regulators should be most focused >> my concerns kind of fall into three categories, right? you get the shorter term risks,

the disruption these systems could have toward ecosystems, so what does democracy look like in a world where it's not just humans generatiing content, but people mass producing information and disinformation then we move more so into the midterm or medium term risk of artificial intelligence as to the disruptions to the work force, and then there's this longer term category where there's a little bit of controversy. things like ai alignment and control, and that part of the risks that seems to get a lot of focus, but i think regulators really do need to be kind of zooming into the short-term and then medium term risks and then long-term risks need to stay in this category of exploration and research >> rohit, let me turn back to something you were just saying, and i'm curious. in your realm which is financial protection, let's say i'm ap applying for a mortgage.

there seems to me to be an al go rhy -- algorithmic method where's the line drawn between sort of simple algorithmic decision-making and artificial intelligence decision-making to determine whether i get the mortgage or somebody else gets the mortgage or whether i get this credit score or somebody else gets that credit score? >> well, you're hitting something which many people believe artificial intelligence is sometimes just a marketing term you're right there's many places where automation has been apart of industry advances for generations. we have been using credit scores, other things that are based in data and algorithms i think really where there might be a breaking point is when it does come to generative ai, when you start having the creation of voices and other content that mimic human behavior look at american consumers now when

dealing with banks many are dealing with chatbots who are given humanlike names, and i think that we're going to expect that those bots or others are going to be following the law the same as a human customer service rep. we're going to make sure that when those algorithms or ai are being used for mortgage origination, that all the existing laws on the books apply, and we've really told the industry that if they don't understand how their ai is making decisions, they may not be able to use it and comply with existing law, but it does raise this question. what really is new about ai, and what's really the same >> you can easily imagine. look at crypto we're years into highly successful businesses and now just starting to see the regulatory hammer drops. we've got to be careful. >> i would also point out this discussion i talked about earlier on the show. it seems to be as regulators are

looking at this, one of the lowest hanging fruit they can go at c copyright material, name, image, and likeness >> they're playing our song. thank you. >> thank you >> thank you all for watching this special edition of "power lunch. >> "closing bell" starts right now. >> have a great long weekend, everybody. all right, guys. thank you so much. welcome to "closing bell." i'm scott wapner at the new york stock exchange this make or break hour begins with the big day in the market and the remarkable run for tech, and whether its breakaway bounce for the rest of the market means it can't possibly last for much long longer we ask as the nasdaq asks on its fifth straight week of gains we see where things stand with 60 minutes to go the move in big tech has helped the s&p 500 approach the 4,200 level. there it is. it's above it right now, and we will see if we can get a close