- Major companies are pouring enormous resources and money into artificial intelligence.
- However, many people are still not able to get significant returns from their investments.
- CEOs want to reassure shareholders that this is to be expected.
Some of the world's biggest companies are now making big bets on artificial intelligence.
In 2023, Apple spent more than $22 billion on research and development of generative AI products. In its latest quarterly results, Meta said it expects to spend between $35 billion and $40 billion this year alone, primarily on improvements to its AI infrastructure.
Google's head of AI, Demis Hassabis, upped the ante, saying he expects the search engine giant to spend more than $100 billion on the technology.
OpenAI CEO Sam Altman is touting an even bigger number of up to $7 trillion to transform the semiconductor industry to power AI.
This means a lot of money will be spent on something that hasn't historically been profitable for all but a few companies.
But leaders of companies pouring significant resources into AI are saying the same thing to reassure impatient shareholders. It's coming.
Meta's stock price fell on Wednesday despite beating revenue expectations, due in part to heavy investments in AI and so-so revenue forecasts. CEO Mark Zuckerberg said the economic downturn is temporary and hoped to allay investor concerns.
“Historically, investing in building these new scale experiences into our apps has been a long-term investment for us and for the investors who support us,” Zuckerberg said in the earnings call. It's been a very good investment. And the early signs are very positive here as well.” phone. “But building state-of-the-art AI will be a larger-scale undertaking than any other experience we add to the app, and we expect this to turn around until our new AI service reaches scale.” It could take several years.”
Elon Musk had more strong words for investors on Tuesday after Tesla reported a plunge in profits.
The company has so far not yet fulfilled its self-driving promise, instead offering drivers fully self-driving software, which actually requires full-time operator supervision. This is a support function.
Still, Musk maintained during the earnings call that Tesla is an AI company, and had a specific message for shareholders who don't think Tesla will one day develop a self-driving car.
“If you don't believe Tesla is the solution to autonomy, I don't think you should invest in the company,” he said on a conference call. “And we do. And we are.”
Will AI become a reality?
Other CEOs are wondering when and how generative AI will deliver on its ambitious promises.
AI was a hot topic at the World Economic Forum meeting in Davos in January, but some technology leaders remained cautious about the technology.
Cloudflare CEO Matthew Prince told Reuters at the time that people should expect an “AI stall” in the coming months.
I'm thinking, “Hey guys, we can make cool demos, but where's the real value?” he told the outlet.
Meta shareholders were certainly spooked by Zuckerberg's “wait and see” policy.
Nvidia may be an exception. After all, they are the leading manufacturers of the very chips that power the AI products that companies are rushing to develop.
Earlier this year, NVIDIA reported much better-than-expected fourth-quarter revenue of $22.1 billion, thanks in part to soaring demand for AI.
On Thursday, Microsoft and Alphabet reported profits, some of which came from their respective AI divisions.
Microsoft reported a profit of $21.9 billion for the quarter ending March 31, beating Wall Street expectations. The company attributes this growth to its cloud computing platform, Azure, which includes generative AI services.
Google's parent company reported profits of $23.7 billion during the same period. Alphabet CEO Sundar Pichai said part of the company's performance in the most recent quarter was due to cloud services powered by Google's Gemini AI model.
“We are well underway in the Gemini era and there is great momentum across the company,” Pichai said in a statement. “With our leadership in AI research and infrastructure and global product deployment, we are well positioned for his next wave of AI innovation.”