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Tech giants Alphabet, Microsoft and Meta all reported robust revenue growth in their first-quarter earnings calls this week, highlighting their ambitions and investments in artificial intelligence. The term “AI” was repeated dozens of times by the executives and analysts on the calls, reflecting the industry’s belief that AI is the key to innovation and competitive advantage. Alphabet’s call mentioned AI 50 times, followed by Meta with 49 times and Microsoft with 46 times.
The number of references to AI by these tech titans is just the latest signal that investors are clamoring for opportunity to invest in generative AI technology, which has captivated Silicon Valley in recent months. It also signals that Alphabet, Microsoft and Meta are now being viewed as bellwethers for the entire AI industry, which is big business: According to PwC, the AI market is predicted to contribute $15.7 trillion to the global economy by 2030.
Growing influence in fast-growing market
Big Tech companies such as Google, Microsoft and Facebook control many of the most important developments in artificial intelligence, given the sheer cost of compute and scale required to develop large language models (LLMs). A recent report warned that “industrial capture” is looming over the AI landscape — that is, “a handful of individuals and corporations now control much of the resources and knowledge in the sector, and will ultimately shape its impact on our collective future.”
The tech giants have enormous influence over billions of users who rely on their tools and platforms for many aspects of their personal and professional lives. Their views and actions on AI have implications for policymakers, regulators and society at large. As they go, so do we — as well as policymakers, regulators and society at large.
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To date, these companies have been applying AI to improve their existing products and services, such as search engines, social networks, cloud computing and digital assistants, as well as to create new ones, such as self-driving cars, virtual reality and new healthcare technologies.
Microsoft is a big winner thanks to OpenAI partnership
Microsoft, which placed a huge bet by investing billions in OpenAI, the developer of ChatGPT, emerged as a big winner, with $52.9 billion in revenue, an increase of 7%. The results pushed Microsoft’s stock higher and sent a signal that its wager on OpenAI — which began as an under-the-radar $1 billion investment in 2019 — is showing signs of paying off.
Over the past three months, Microsoft has been busy embedding generative AI across its product portfolio. There was the splashy announcement in February of the new OpenAI-powered Bing, as well as the mid-March debut of the generative AI-powered Copilot 365 to “change work as we know it.”
“The world’s most advanced AI models are coming together with the world’s most universal user interface — natural language — to create a new era of computing,” said Satya Nadella, chairman and chief executive officer of Microsoft, on Tuesday’s earnings call. “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”
Google fell behind in AI but focused on long-term promise
Meanwhile, Google parent Alphabet reported a 3% rise in revenue and earnings for the first quarter, which topped estimates.
However, there’s no doubt that Google has had to face up to falling behind in AI — even though it was the research leader for the past decade, developing the Transformers architecture that today’s LLMs are based on. In December, Google management reportedly issued a “Code Red” after the release of ChatGPT, but famously flopped in announcing their Bard chatbot in March.
But in its earnings call Sundar Pichai, CEO of Alphabet and Google, talked progress. “Our investments and breakthroughs in AI over the last decade have positioned us well,” he said, highlighting steps made in developing state-of-the-art large language models, empowering developers, creators and partners with AI tools and enabling organizations of all sizes to use and benefit from Google’s AI advances. “We have made good progress across all three areas,” he said.
Meta pushed AI ambitions, sending stock higher
Finally, Meta also released better-than-expected earnings that sent the company’s stock higher — a bright spot as the company has made steps to focus on efficiency (which led to massive layoffs).
Mark Zuckerberg, Meta founder and CEO, used the numbers as a jump-off point to tout Meta’s AI efforts and ambitions.
“A key theme I want to discuss today is AI,” he said near the beginning of the earnings call. “Our AI work comes in two main areas: first, the massive recommendations and ranking infrastructure that powers all of our main products — from feeds to Reels to our ads system to our integrity systems, and that we’ve been working on for many, many years — and second, the new generative foundation models that are enabling entirely new classes of products and experiences.”
The AI battle is just beginning, but Big Tech power looms large
We will be watching Google, Microsoft and Meta — as well as Amazon and Apple — battle for position in the AI space. But the issues related to industrial capture will be playing out as well, including the fact that training a state-of-the-art LLM can require hundreds of millions of dollars. ChatGPT, for instance, reportedly required more than 10,000 GPUs to train, and demands even more resources to continuously operate.
Even if these companies look for new directions beyond the GPU and ever-larger LLMs, the fact remains that they are at the center of the generative AI explosion. So we all need to pay attention to what is coming down the Big Tech pike — because in many ways, they control our AI future.
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