M Global IdeaThematicsEdge AI: Product Releases on Track, but Where Are Killer Apps? Edge AI is progressing faster than we would have anticipated 2 months ago. From our conversations, we believe investors are too focused on Killer Apps and not appreciating the sweeping effects of AI in hardware devices. 4G to 5G provides the precedent. Samsung is emerging as the catalyst stock. Morgan Stanley & Co. International plc+Edward StanleyEquity Strategist Edward.Stanley@morganstanley.com +44 20 7425-0840 Matias OvrumEquity Strategist Matias.Ovrum@morganstanley.com +44 20 7425-9902 Morgan Stanley Asia Limited+Shawn KimEquity Analyst Shawn.Kim@morganstanley.com +852 3963-1005 Morgan Stanley & Co. LLCErik W WoodringEquity Analyst Erik.Woodring@morganstanley.com +1 212 296-8083 Morgan Stanley & Co. International plc+Lee SimpsonEquity Analyst Lee.Simpson@morganstanley.com +44 20 7425-3378 Morgan Stanley & Co. LLCSabrina E HaoResearch Associate Sabrina.Hao@morganstanley.com +1 212 761-3793 Maya C NeumanResearch Associate Maya.Neuman@morganstanley.com +1 212 761-1946 For context, see:• Thematics: Tech Diffusion: Edge AI – Growing Impetus (7 Nov 2023)• Apple, Inc.: Getting More Bullish on Apple's 'Edge AI' Opportunity (8 Jan 2024) • Thematics: Emerging Theme Tracker (25 Jan 2024)• Asia Technology: Memory – What Is Edge AI Worth? (25 Jan 2024)The ball is rolling for AI on the Edge: Since we published our initial primer two months ago, we are starting to see product releases and demos across the six product groups we highlighted. We take stock of the products launched/announced so far and look forward to upcoming product releases.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Key TakeawaysEdge AI is moving into the hardware verticals we outlined in our report two months ago.Smartphones and PCs are seeing the biggest jumps in product releases and pipeline.We think investors are too narrowly focused on searching for Killer Apps. Instead, look for OEM-led hardware upgrades for OS, camera & other native features. The shift from 4G to 5G PC & Smartphone gives investors a roadmap for replacement cycles. January 28, 2024 09:00 PM GMTM Global Idea2Exhibit 1:Edge progress...
