According to Bank of America, artificial intelligence will be the catalyst for major tech stocks in the next five years. The sector fell in 2022 thanks to macro factors including inflation and rising interest rates. The tech-heavy Nasdaq Composite is down 25% this year, compared with the S&P 500’s roughly 12% decline. However, artificial intelligence is the “backbone” of the internet and will increasingly be linked to the performance of stocks in big tech companies, Bank of America analyst Justin Post said. Artificial intelligence and machine learning “will be a critical driver of everything the web does, including content relevance, ad performance, e-commerce conversion, market efficiency and even customer service,” he wrote in a note on Monday. “AI/ML technology is important in all Internet sub-sectors (media, commerce and transportation), and companies that can effectively use this technology (developed in-house or through cloud providers) can create a competitive advantage.” Big tech is investing heavily in artificial intelligence, with capital investments from the three biggest internet companies, Meta, Alphabet and Amazon, reaching $40 billion by 2023, he said. He sees those three, plus Airbnb and Uber, as the biggest beneficiaries in this environment. Meta Meta has been committed to investing in AI since 2013, and its new supercomputer, the AI Research Center Cluster (RSC), is expected to be the world’s fastest AI computer upon completion. RSC will help the Facebook parent advance in a number of areas, including helping to seamlessly analyze images, video and text together and developing new augmented reality tools. Meta said AI capability, primarily for its advertising business, will drive the majority of its 2022/2023 capex, Post added. Meta also uses artificial intelligence to predict what content will be important to users in their news feeds, as well as to determine what content is suggested in Reels, the video component. Shares are down about 64% year to date. Alphabet AI has become a focus of Alphabet’s investments, acquisitions and internal spending, the Post said. Google parent Google’s UK-based AI research lab DeepMind Technologies is responsible for general-purpose AI technology, including Google Assistant and personalized app recommendations on Google Play. Alphabet also said it is using DeepMind to improve energy efficiency in its data centers, noting that DeepMind’s revenue more than tripled from 2019 to 2020. Artificial intelligence also plays an important role in search and YouTube. Since 2016, Alphabet has invested nearly $120 billion in artificial intelligence. Its shares have lost nearly 31% so far this year. Amazon E-commerce giant Alexa is using artificial intelligence and machine learning to power the Go Store and its recommendation engine. “Information from these three core pillars of the company work together to create a unified customer experience,” Post writes. The Alexa ecosystem also powers a broader market with multiple hardware businesses integrating with Alexa and its ambient intelligence. Artificial intelligence is also used to predict customer demand, estimate product availability and improve delivery routes. In addition, Amazon is leveraging machine learning capabilities through its cloud offering, Amazon Web Services, the Post said. The Post said Amazon did not disclose the percentage of the equity investment, but based on Amazon’s past comments it believes it is a large and growing share of the total capital. Shares are down more than 45% year to date. Airbnb Artificial intelligence is used throughout Airbnb, including its search algorithms. Post said the vacation rental platform uses more than 100 factors to determine how a listing appears in search results. It also helps hosts optimize prices using variables including hotel rates, seasons and local events. The company recently launched a platform that allows tenants to post apartments. Airbnb shares have lost nearly 41% year to date. Ride-sharing service Uber uses artificial intelligence in nearly all of its core functions, which has led to “significant advances in demand forecasting and network optimization that improve the customer experience,” the Post said. He added that AI drives Uber’s matching algorithms and is used in its GPS services to improve range, speed and accuracy. Shares are down almost 34% so far this year. — CNBC’s Michael Bloom contributed reporting.