Tech giants Meta, Apple, Microsoft, and Amazon have reported a surge in AI spending and plans to increase it further, exceeding analyst expectations. The boost in stocks for Meta and Microsoft, in particular, was significant, with the latter becoming the second company to hit $4 trillion market valuation.
Meta’s ad revenue, driven by its deployment of artificial intelligence in the ad system, exceeded expectations by a couple of billion dollars. CEO Mark Zuckerberg attributed this success to his multi-billion-dollar investment in building a team dedicated to creating “superintelligent” AI, which he believes will lead to more payoffs for its advertising business.
Microsoft reported an 18% increase in sales and $75 billion in revenue from its cloud computing platform Azure, largely thanks to the adoption of its AI product Microsoft 365 Copilot. The company’s productivity and business processes segment also exceeded expectations, with revenue boosted by widespread adoption of its AI-powered software.
While Silicon Valley’s AI spending boom brings hope for payoffs, concerns remain about demand for AI scaling up to meet investment levels. The Federal Reserve warns that if demand doesn’t grow as expected, it could have “disastrous consequences.” The tech giants’ record pledges of investment will need to be followed by tangible revenue growth to avoid such outcomes.
The question on everyone’s mind is: Is Silicon Valley’s AI bet finally starting to pay off? As the technology improves and adoption increases, demand for AI is bound to grow, but its extent remains uncertain. For now, the AI bulls are optimistic, while the risk of overspending lingers, waiting to be answered by time and the market.
Source: https://gizmodo.com/silicon-valleys-ai-spend-goes-berserk-as-microsoft-starts-cashing-in-2000638318