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• AI has emerged as a major technology in 2022, with image generation models such as DALL-E, MidJourney, and Stable Diffusion, and text-generation model ChatGPT leading the way.
• Clayton Christensen’s The Innovator’s Dilemma explains the different kinds of innovations, and how incumbents have fared in previous tech epochs.
• Apple has taken advantage of the open source Stable Diffusion model, optimizing it for its own chips and operating systems, and potentially building it into its OS.
• Amazon is leveraging its cloud services to provide GPUs for training and inference, but must gauge demand for these services.
• Marginal costs of AI generation may make it challenging to achieve product-market fit, and costs should come down over time as models become more efficient and cloud services gain returns to scale.
• AI is a massive opportunity for Meta, Google, and Microsoft, and all three companies are investing heavily in the technology.
• Meta is investing in AI to power its services, better target ads, and recommend content from across its network.
• Google has a go-to-market gap and a business-model problem when it comes to AI, but its technology is still the best on the market.
• Microsoft is investing in the infrastructure of the AI epoch, and is well-placed to benefit from the disruption of AI.
• OpenAI may become the platform on which all other AI companies are built, and Nvidia and TSMC may be the biggest winners.

Published January 9, 2023. Visit Stratechery to read Ben Thompson’s original post.