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Companies invest in A.I. as they reduce expenses in other areas

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Companies invest in A.I. as they reduce expenses in other areas

As tech companies look to cut costs, investors are interested in hearing about their efforts to boost profitability. However, they are also eager to know about the significant investments being made in the field of artificial intelligence.

This week, Alphabet, Microsoft, Amazon, and Meta announced their quarterly results, highlighting their attempts to increase efficiency amid mounting economic concerns. However, in the realm of artificial intelligence and the recent surge in large language models (LLMs), such as the ones powering ChatGPT, these tech giants cannot afford to fall behind.

Generative AI programs leverage extensive data and processing power to generate outputs that appear to be created by a human, such as a block of text, a code snippet, or a computer-generated image. Building and running such programs require specialized supercomputers, which can be quite expensive.

During their earnings calls this week, tech CEOs extensively discussed the potential of AI, whether they are creating their own models or quickly incorporating them into their products. The recurring theme was their focus on the significant amounts of money they will invest in building and operating these applications.

Alphabet’s CEO, Sundar Pichai, is facing significant pressure to develop AI products as chatbots with advanced capabilities pose a potential threat to the company’s core product, Google search engine. Recently, the company declared an internal “code red” in response to this challenge.

During the earnings call on Tuesday, Sundar Pichai, the CEO of Alphabet, reported that the company is making “good progress” towards its AI objectives. He also stated that they will continue to thoughtfully and carefully integrate generative AI advancements to enhance the search engine’s performance.

Pichai mentioned during the earnings call that Google is utilizing AI to enhance the conversion rate of advertisements and minimize the amount of harmful text integrated into the AI models. Furthermore, the company is merging its two main AI teams, Brain and DeepMind.

Moreover, Pichai revealed that Google is not only relying on its self-developed chips to support its models but also utilizing Nvidia’s processors, which are widely used to train and implement state-of-the-art AI.

Microsoft has integrated OpenAI’s GPT technology into Bing search engine, Office, and Teams teleconferencing system. Satya Nadella, the CEO, has said that AI will eventually drive revenue growth and is already increasing the usage of the company’s apps. Adding a chatbot to Bing has quadrupled downloads, according to Nadella. Moreover, Microsoft has generated over 200 million images via its Bing integration.

Nadella cautioned that building the massive data centers necessary to run AI applications would require a significant amount of capital. He stated that Microsoft would continue to invest in its cloud infrastructure, especially in AI-related expenses, to meet the growing demand driven by customer transformation. Nadella also expressed his expectation that revenue would grow over time as a result of these investments.

On Thursday, Amazon CEO Andy Jassy provided a detailed response to an analyst’s query about the company’s generative AI strategies. Jassy stated that Amazon is developing its own large language models and creating machine learning chips for data centers, highlighting the enormity of the market.

Jassy stated during an earnings call on Thursday that while generative AI capabilities have been around for some time, the models were not impressive until the last six to nine months. He emphasized that the models have significantly improved in size and quality, creating a remarkable opportunity to revolutionize every customer experience.

According to Jassy, due to the extensive resources required for building LLMs, there will only be a few companies that can afford to invest in the time and money it takes to create them. He believes Amazon’s size and resources will enable it to be one of those companies. LLMs require hundreds of computers running for weeks, and they must be overseen by expensive machine learning engineers.

Amazon’s approach differs from that of Microsoft and Google as it mainly focuses on selling access to its technology via its Amazon Web Services division. Nonetheless, Jassy announced that Amazon will work on applications such as engineering code writing programs. He added that large language models are being used across all Amazon businesses to enhance customer experience, including their voice assistant, Alexa.

Mark Zuckerberg, the CEO of Meta, aimed to refute the belief that his company has abandoned its focus on the metaverse, after turning its attention in that direction in late 2021. However, he clarified that Meta is capable of investing in metaverse technologies while simultaneously pouring significant resources into AI, which he considers a “crucial theme” for the company.

According to Zuckerberg, although machine learning has been used to provide recommendations and operate Facebook’s news feed and ad systems, Meta’s current primary focus is on generative foundation models. He added that the progress made in this area over the past year has been remarkable and that the work being done will have an impact on all of their applications and services.

Zuckerberg mentioned that Meta plans to utilize generative AI models in a range of products, such as chat features in WhatsApp and Facebook Messenger, tools for creating images on Facebook and Instagram posts, and eventually even programs capable of generating full videos from brief descriptions. He expressed particular enthusiasm for the idea of “AI agents,” which typically refer to AI programs that can achieve specific objectives.

About Rajesh Parmar

Rajesh Parmar

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