The world’s largest technology companies are spending billions of dollars on what they have called a revolution which is transforming the world in a new industrial age.
They talk in glorious terms about the potential of programming machines to think, learn and solve problems like people.
They speak of artificial intelligence (AI).
On their recent earnings calls with Wall Street analysts, AI was regularly mentioned by the so-called Magnificent Seven tech stocks that dominate US equities indices.
Meta Google parent Alphabet, Amazon, Apple, Facebook parent Meta Platforms, Microsoft, Nvidia, and Tesla have a combined market capitalisation of US$16.7 trillion (A$25.7 trillion), which is 13 times the size of the Australian economy.
Although these companies do not break out their AI spending, it is estimated to be a combined $30 billion to $40 billion per year, excluding acquisitions.
This is a sub-set of the estimated $100 billion-plus spent worldwide on AI through the development of algorithms and systems that enable computers to perform tasks usually requiring human intelligence.
New industrial age dawns
“The Age of AI is in full steam,” said Jensen Huang, founder and CEO of Nvidia (NASDAQ: NVDA), the technology giant which carries the mantle of the world’s largest company with a market value of $3.58 trillion (A$5.5 trillion).
Huang said generative AI, which “trains” systems to create content like text, images, audio, videos, was not just a new software capability but “a new industrial revolution” that could create a “multi-trillion dollar” industry.
“AI is transforming every company, industry and country. Enterprises are adopting agent AI to revolutionise workflows,” Huang said on the Nvidia third quarter earnings call.
“The age of robotics is coming. Countries across the world recognise the fundamental AI trends we are seeing and have awakened to the importance of developing their national AI infrastructure. The Age of AI is upon us, and it's large and diverse.”
Global software developer Microsoft’s AI business is on track to surpass an annual revenue run rate of $10 billion next quarter, faster than any business in its 49-year history, said Chairman and Chief Executive Officer Satya Nadella.
“AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process," Nadella said on the company’s earnings call.
“We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.”
Microsoft (NASDAQ: MSFT) has data centres in more than 60 regions around the world, and announced new cloud and AI infrastructure investments in Brazil, Italy, Mexico, and Sweden, as it expands its capacity in line with long-term demand signals.
AI revolution is underway
Alphabet (NASDAQ: GOOG) and Google CEO Sundar Pichai said the group was uniquely positioned to lead in the AI era because of its robust AI infrastructure, including data centres, chips and global fibre network, world class research teams and global reach.
Two Microsoft employees, Demis Hassabis and John Jumper, won the Nobel Prize for Chemistry for their work on AlphaFold, an AI program designed to predict the 3D structures of proteins based on their amino acid sequences.
“This is an extraordinary achievement and underscores the incredible talent we have, and how critical our world-leading research is to the modern AI revolution, and to our future progress,” Pinchai said.
Pichai saw a significant opportunity as AI-powered features “supercharged” Google’s search functionality and made it more helpful.
Apple (NASDAQ: AAPL) CEO Tim Cook said Apple Intelligence AI and machine learning technologies, which are integrated into Apple’s products and services, marked “the start of a new chapter” for its products, including the iPhone, Mac and iPad.
“This is just the beginning of what we believe generative AI can do, and I couldn't be more excited for what's to come,” Cook said on the Apple earnings call.
Return on investment
Meta (NASDAQ: META) CEO and founder Mark Zuckerberg said AI was having a positive impact on almost all aspects of the group’s work from core business engagement and monetisation to our long-term roadmaps for new services and computing platforms.
“First, it's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years, so I think we should invest more there,” Zuckerberg said on the earnings call.
“Second, our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too.”
Zuckerberg cited Ray-Ban Meta glasses as an example of how the company best known for its social media sites including Facebook was incorporating AI into its wearable products as it expanded into virtual and augmented reality.
Not only did the glasses take photos and videos, play music, allow phone calls but, with new AI updates, they could translate languages, answer questions, help with memory and make suggestions.
“I continue to think that glasses are the ideal form factor for AI because you can let your AI see what you see, hear what you hear, and talk to you,” he said.
Electrical vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) is focused on building the future of energy, transport, robotics and AI, according to Chief Executive Officer and Product Architect Elon Musk.
Director of Autopilot Software Ashok Elluswamy said Tesla aimed to lower the cost of its EVs to increase sustainable energy and transport adoption.
“But the next stage in that, really as it fits into AI road map, is when we bring in robotaxis, which lowers the initial cost of getting into an EV -- that's really where we see the marriage of EV road map and the AI road map,” Elluswamy said on the Tesla earnings call.
But Tesla was being judicious about our “AI compute” spending and considering how to best use existing infrastructure before making further investments, Chief Financial Officer Vaibhav Taneja said.