The big technology companies that have also established themselves in the AI segment aim to be the main global players in the field and it seems that, so far, they are doing quite well.
Three of them – Amazon, Microsoft and Google – are the largest providers of cloud services in the world, occupying approximately two thirds of this market.
Because artificial intelligence needs expensive servers and chips and high computing power, these three companies have an advantage over the others, according to an analysis by XTB, a brokerage house specialized in international stock exchanges, ZF cites.
Microsoft was the second company to report its results
The season of publishing financial results started a few days ago with Alphabet, the parent company of Google. As such, the results were very good, even if the market eventually responded with a modest increase of around 3%, analysts say.
Google’s infrastructure capital expenditure (CAPEX) was $13 billion, up from $8 billion a year ago.
Microsoft was the second company to report its results. Again, the numbers were good, but due to issues with some cloud-specific component vendors, the company issued a slightly more subdued outlook for the current quarter, and shares fell about 7%.
This proves to us once again how sensitive investors are at the moment to hesitations in the sphere of cloud services and, therefore, also in that of artificial intelligence. Microsoft reinvested even more than Alphabet in the last quarter: about $15 billion, which is a 50% year-over-year increase.
Mark Zuckerberg promised “significantly higher” investments
The results were excellent even for the Meta player. All important parameters for the company increased and, at the same time, they announced huge investments. For Meta, CAPEX was $9.2 billion, compared to $6.7 billion a year ago. CEO Mark Zuckerberg promised that these investments will be “significantly higher next year”. However, the shares ended up losing about 6%.
Amazon was the last of the four to report results. The company’s numbers were also excellent. The company’s important segment, advertising and cloud grew noticeably, both by 19%. Amazon’s CAPEX was $22 billion, $55 billion year-to-date, $69 billion last year, and CEO Andy Jassy says spending will be $75 billion this year. billions of dollars.
It is better to invest “too much” than “too little”
Although part of this will not go to the servers, but to the physical infrastructure, in the form of deposits, we are still talking about a significant amount, XTB analysts note.
If we do some quick calculations, the expenses of these four companies are about 60 billion dollars per quarter. If the amounts remain constant, we are talking about 240 billion dollars a year, which is a considerable amount. Also, all companies agree that, next year, expenses will increase.
Company leaders say it’s better to invest “too much” than “too little” because demand always outstrips production capacity, seeing this as a once-in-a-lifetime opportunity.
Where does Nvidia fit into this picture? Specifically, a significant part of these revenues will go to Nvidia, because it is the only company that can provide the best chips for artificial intelligence in a reasonable time frame.
Will these investments bring benefits to the companies?
AMD is technologically similar, but cannot compete with Nvidia’s production capacity (the chips for both companies are made by Taiwan’s TSMC). In this context, the best business is selling “pickaxes” during the gold rush. In this case, the “pickaxes” are the Nvidia chips. According to the statements, Nvidia has had an excellent year and expects the same for next year, XTB representatives explain.
Will these huge investments bring benefits to the companies? Probably, but we can’t know for sure at this point. If artificial intelligence proves to have a significant and positive impact on the global economy, productivity and companies, then these investments will be justified.
In addition, it would further strengthen the already very strong position of these big players, making competition almost impossible. However, if AI turns out to be a “dead end” or if monetization is difficult, these investments could be considered a waste, and companies could lose hundreds of billions of dollars, the analysis also shows.
Source: www.descopera.ro
