Jefferies said in a report that the potential of artificial intelligence has only scratched the surface, estimating the total addressable market at more than USD25 trillion. The broker evaluated key debates including comparisons between AI and previous technology waves, investment returns, adoption barriers and financing risks. It believes challenges remain, but the obstacles can be overcome, creating an uneven AI adoption path.

The broker noted that AI has already achieved the fastest monetization ramp-up in history. Anthropic is expected to reach USD200 billion in annual revenue in only around seven years, far faster than the roughly 25 years taken by AWS. However, according to the Ramp AI Index, median AI spending among US enterprises is only USD12 per employee per month, about 65x lower than the average software spending of USD777, indicating the industry is still at an early stage. Infrastructure is constrained by electricity supply, talent and approvals, while enterprises also face obstacles including security concerns, unclear return on investment and costs, as well as data silos.

Jefferies believes claims of the "death of SaaS" are overstated, arguing that software is not dead and only weaker software vendors will be eliminated. Frontier labs are more likely to cooperate with leading suppliers rather than own the full stack. Currently, AI monetization for most application software vendors accounts for only a low- to mid-single-digit percentage of revenue. The broker prefers cybersecurity and infrastructure over application software, and favors individual winners over broad sector allocations.

Jefferies is optimistic on companies with advantages that can capture AI spending opportunities in computing, data, cybersecurity and applications. Its top picks among large platforms are Microsoft Corporation (MSFT.US) , Amazon.com, Inc. (AMZN.US) and Alphabet Inc. (GOOGL.US) , while Oracle Corporation (ORCL.US) and CoreWeave, Inc. (CRWV.US) provide direct exposure to constrained AI computing capacity. The broker also favors Snowflake Inc. (SNOW.US) and Dynatrace, Inc. (DT.US) in the data/observability segment, as well as Palo Alto Networks, Inc. (PANW.US) and Okta, Inc. (OKTA.US) in cybersecurity. Intuit Inc. (INTU.US) is viewed as a contrarian pick because the market's concerns over AI appear overstated relative to its nearly 40 years of data accumulation, deep AI talent pool and highly sticky applications. (ad/u)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)