Overall, the AI investments represent one of the largest cash injections into a specific technology in Silicon Valley history – and they could serve to further entrench the biggest tech companies at the center of innovation. he U.S. economy as other businesses, governments and individual consumers turn their attention. to these companies for AI tools and software.
This colossal investment also raises expectations for the amount of energy that will be needed in the United States in the years to come. In West Virginia, old coal-fired power stations scheduled to close, will continue to operate to send power to the massive and growing data center in neighboring Virginia.
“We are very committed to making the investments necessary to stay at the forefront,” Google’s Porat said in a conference call Thursday. “This is a once-in-a-generation opportunity,” added Google CEO Sundar Pichai.
The biggest tech companies had already been investing steadily in AI research and development before OpenAI released ChatGPT in late 2022. But the chatbot’s instant success prompted major companies to suddenly increase their spending. Venture capitalists have also poured money into the sector, and start-ups with just a handful of employees have raised hundreds of millions to develop their own AI tools.
The boom has driven up prices for high-end computer chips needed to train and run complex AI algorithms, raising prices for big tech companies and start-ups. AI engineers and researchers are also rare, and some of them are. multi-million dollar salaries.
Nvidia – the chipmaker whose graphics processing units, or GPUs, have become essential to training AI – expects to earn about $24 billion this quarter, after earning $8.3 billion it two years ago during the same quarter. The massive increase in revenue led investors to bid up the company’s stock so much that it is now the third most valuable company in the world, after Microsoft and Apple.
Some of last year’s AI hype has come back to Earth. Not all of the AI startups that have secured significant venture capital funding are here yet. Concerns about AI increasing so quickly that humans can’t keep up seem to have mostly abated. But the revolution is here to stay, and the rush to invest in AI is already starting to help boost revenues at Microsoft and Google.
Microsoft’s revenue in the quarter was $61.9 billion, up 17% from a year earlier. Google’s revenue in the quarter increased 15 percent to $80.5 billion.
Interest in AI attracted new customers who helped boost Google’s cloud revenue, allowing the company to beat analysts’ expectations. Shares rose about 12 percent in after-hours trading. At Microsoft, demand for its AI services is so high that the company can’t keep up right now, said Hood, the CFO.
For Meta, the challenge is to develop AI while assuring investors that it will ultimately profit from it. While Microsoft and Google sell access to their AI through giant cloud software companies, Meta has taken a different route. It doesn’t have a cloud business and instead makes its AI available for free to other companies, while finding ways to integrate the technology into its own social media products. This month, Meta integrated AI capabilities into its social networks, including Instagram, Facebook and WhatsApp. Investors are skeptical, and after the company raised its forecast for how much it would spend in 2024 to $40 billion, its shares fell more than 10%.
“Building edge AI will also be a larger undertaking than the other experiences we’ve added to our applications, and it will likely take several years,” Meta CEO Mark Zuckerberg said in a conference call Wednesday. “Historically, investing in creating these new experiences at scale in our applications has been a very good long-term investment for us and for the investors who are loyal to us. »
