Whether they sell smartphones, ads or computer chips, the heavyweights of Silicon Valley have everything to prove to investors looking to see who is best placed in the race to dominate the generative artificial intelligence market.
“If you’re a company, and you don’t have an AI message, you’re not going to be in business very long,” says independent industry analyst Jack Gold.
“Everyone is focused on AI right now. And everyone’s trying to outmarket and out-hype everybody else. And there’s room for a whole lot of players.”
Over the past two weeks, tech’s top companies released their corporate earnings reports for the July-September quarter.
Most of them beat analyst expectations, but on Wall Street, all eyes were on plans for generative AI.
For Max Willens, an analyst at Insider Intelligence,while the division’s credibility among AI startups could “bear fruit in the long run, it is not currently helping Google Cloud enough to satisfy investors.”
The cloud is where most generative AI systems will be unfurled.
Generative AI, considered by many observers to be a seismic change similar to the advent of the internet age, is based on AI systems called large language models.
Microsoft – a major investor in OpenAI – along with Google and Meta have trained their own models.
Companies specializing in cloud services – led by Microsoft’s Azure, Amazon Web Services (AWS) and Google Cloud – are beginning to monetize AI, though the costs remain high for now, says Yory Wurmser, another analyst for Insider Intelligence.
The main cost comes from the microprocessors needed to churn through the data.
Chipmaker Nvidia hit the jackpot by betting years ago on developing graphics processing units (GPUs), now a crucial pillar in the rapid development of generative AI.
But for Gold, one must understand “how AI is ultimately going to be used.”
He says “probably 80 or 90 percent of all workloads will be inference workloads,” meaning the usual functioning of AI models once they’ve been created.
U.S. chip giant Intel has been working to catch up with its rivals, especially Nvidia, when it comes to powerful chips needed to handle AI’s processing demands.
Amazon, which plans to invest up to $4 billion in Anthropic, a rival to OpenAI, is insisting on the importance of Bedrock, its service for building generative AI applications.
Observers are expecting big things from Apple with respect to its digital assistant Siri, which has not evolved all that much in recent years. Amazon recently announced it would gradually add AI capability to its Siri equivalent, Alexa.
For Carolina Milanesi, an analyst at Creative Strategies, no one is behind – yet.
“Nobody’s late in a market that is just getting started and that will require investment and commitments,” Milanesi said.