Shulou(Shulou.com)11/24 Report--

According to the news on July 26, artificial intelligence could one day bring huge returns to tech giants such as Microsoft and Alphabet, but these companies say deeper investments are needed before the gains begin to show.

Microsoft says costs have risen sharply as new data centers are built to support artificial intelligence services. Buying chips from companies such as Nvidia for use in data centers will continue to increase capital expenditure.

Analysts point out that Microsoft's cost in the field of artificial intelligence is mainly related to two aspects: one is to develop its own products, such as the upcoming $30-a-month Copilot AI assistant, and the other is to assist companies that want to use Microsoft Azure cloud computing services to develop artificial intelligence products.

Microsoft executives say the service will start generating most of its revenue in the first half of next year.

"they are buying a lot of H100 chips," said Ben Bajarin, chief executive and chief analyst of Creative Strategies, a market research firm. The H100 is Nvidia's flagship chip for artificial intelligence.

Bajarin added, "if not this quarter, then next quarter, you may see a similar situation on Amazon, because these two companies are cloud computing platforms that are currently used by most people on the market to train artificial intelligence systems."

However, Alphabet has done a good job of controlling costs, though not for long. Ruth Porat, chief financial officer of Alphabet, who will be president and chief investment officer, said the delay in the construction of the data centre was responsible for lower-than-expected capital spending in the second quarter.

"in terms of artificial intelligence, Google has invested more than $200bn over the past decade, but users and investors do not fully recognize it," said Scott Kessler, global head of technology media and telecoms at Third Bridge, a market consultancy.

Analysts believe Google's advantage is that it has its own custom chip tensor processor unit (Tensor Processor Unit,TPU), which can be used to handle artificial intelligence tasks and help reduce costs.

James James Cordwell, an analyst at Atlantic Securities, said Microsoft was likely to "buy a lot of Nvidia chips because Microsoft does not have its own replacement chips".

But Google also admits that it will buy chips from other companies in addition to using its own chips. Mr Porat said these spending could be a drag on profits and growth.

"Microsoft and Google share the same information about inflection points, but Microsoft investors want to see more," said Gene Munster, managing partner of Deepwater Asset Management, a deepwater asset management firm.

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