Hello and welcome to Eye on AI. In this edition…Big Tech is increasing its spending on AI…OpenAI abandons its innovation ambitions…Wall Street beefs up its AI infrastructure…and AI models give inaccurate voting information.
Quarterly earnings are for Microsoft, MetaAnd Googlewith AmazonWill be on the road tonight. Those who have reported so far have made one thing clear: They are about to increase spending on AI even more. Of course, the majority of this investment will be in infrastructure such as Nvidia chips and data centers. Nvidia isn’t expected to release its third-quarter earnings for another month, but this will be another announcement to keep an eye on the pulse of the AI boom.
Meta
Meta said it expects capital spending to continue to increase significantly in 2025 as it accelerates investment in infrastructure. The company raised its capital spending guidance for 2024 to between $38 billion and $40 billion, up from $37 billion to $40 billion.
“Our AI investments continue to require serious infrastructure,” said CEO Mark Zuckerberg. earnings call yesterday.
Meta is currently working on the next version of the Llama model and is continuing to establish itself as an AI company—all of which rely on advertising revenue from their social media platforms to pay the bills. To close the gap, Zuckerberg sees AI as a win for his core advertising business. He said advances in AI are helping to better predict what content users want to see, leading to an 8% and 6% increase in time spent on Facebook and Instagram, respectively.
Microsoft
Microsoft announced positive growth for its AI business, reporting that it is on track to surpass $10 billion in annual revenue in the current quarter and will be the fastest product category to reach that milestone. Additionally, the company revealed details about its investment in OpenAI for the first time in a while. Submit regulatory documents quarterlypaints a picture of big losses on the other side of its AI bet.
In the filing, Microsoft said it has committed a total of $13 billion to OpenAI. However, this number does not include the additional $750 million the company invested in OpenAI’s latest funding round in early October (the filing quarter ended September 30).
Besides its overall investment, Microsoft also disclosed the fees that OpenAI is taking out of its profits. The company said losses from its stake in OpenAI were part of the reason it spent $683 million on equity investments during the quarter.
Regarding AI, Google has introduced the way the boom has boosted cloud business. But even more interesting, CEO Sundar Pichai said AI is writing more than 25% of new code at the company, but engineers still review the work before using it.
While the rest of the companies’ AI-related earnings reports are somewhat predictable, I’d love to hear more details about AI’s agenda. Google didn’t respond to my questions about what the process looks like, including what types of coding projects the AI finds most suitable (or not so great) and whether the AI ships any something encoded by AI or not. AI increasingly doesn’t just create products, it also creates products. In future earnings calls, will we know that increased AI coding efficiency (or costly engineer layoffs) is boosting profits?
And with that, here’s more AI news.
Sage Lazzaro
[email protected]
sagezaro.com
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WHO IS IN THE NEWS
OpenAI is working with Broadcom and TSMC to create its own AI chip. Reuters reported that OpenAI has abandoned its ambitions to establish its own foundries – as semiconductor factories are called – due to the huge cost and time requirements. Instead, OpenAI partnered with Broadcom to build the first AI chip focused on inference in a matter of months, and through Broadcom, secured manufacturing capacity with Taiwan Semiconductor Manufacturing Company (TSMC). . The AI company plans to produce its first custom-designed chip in 2026, but sources told Reuters the timeline could change. OpenAI is also tapping into AMD’s commercially available chips, further refining its plan to reduce its dependence on Nvidia.
AI energy and data center projects get a $50 billion boost from Wall Street. Investment giant KKR and private equity group Energy Capital Partners are partnering with technology companies to accelerate access to the electricity needed for AI and will invest a total of $50 billion over the next four years. next year. said Doug Kimmelman, founder and senior partner of Energy Capital Partners Wall Street magazine that thing “[natural] Gas will be at the forefront of this.” AI’s insatiable need for energy continues to be one of the biggest problems facing the technology. In the past few weeks, Amazon, Google and Microsoft have all announced investments in nuclear energy as they seek a more environmentally friendly way to power their AI.
AI designed to identify people who need help paying their water bills will instead offer a big discount to one of the city’s richest customers. The water district of Portland, Ore., piloted a machine learning algorithm designed to predict customers’ ability to pay and then offer discounts to those who are struggling. However, one of the first customers the algorithm targeted was Columbia Sportswear CEO Tim Boyle, who said he received a notification that he was getting a 40% discount despite having no difficulty when paying your water bill. Boyle earned more than $1.6 million last year and holds Columbia stock worth more than $1.7 billion. “I don’t want to discount it – they should give it to someone who needs it,” Boyle told the local news outlet. Willamette weekly. The Portland Water Bureau has approved $350,000 for a pilot contract with contractor SERVUS.
SHIPPING ON AI
Super Micro shares soared 3000% on the AI wave – then the company’s auditors quit and said they had no confidence in management —by Amanda Gerut and Sharon Goldman
Elon Musk says 10% to 20% of AI ‘goes bad’, even as he raises billions for his own xAI startup —by Marco Quiroz-Gutierrez
The CEO of Chanel went to Microsoft headquarters and asked ChatGPT to show her a photo of her company leader. They are all men wearing suits —by Sasha Rogelberg
CALENDAR WHO
November 19-22: Microsoft Burn, Chicago
December 2-6: AWS re:Invent, Las Vegas
December 8-12: Neural Information Processing Systems (Neurips) 2024, Vancouver, British Columbia
December 9-10: Fortune Brainstorm AI, San Francisco (registered This)
EVALUATION OF AI NUMBERS
50%
That’s about how often top AI models answer queries about voting with inaccurate information, according to testing from Proof Newsa nonprofit news outlet that reviewed Anthropic’s Claude 3 Opus, Google’s Gemini 1.5 Pro, OpenAI’s GPT-4, Meta’s Llama 3, and Mistral’s Mixtral 8x7B v0.1. Proof News also found an accuracy gap depending on language: 52% of responses to questions asked in Spanish contained inaccurate information compared to 43% of responses to questions asked in Spanish. Questions are asked in English. Folks, just get your voting information from official sources.
