The media reports that with the development of generative artificial intelligence systems, there is an increase in the spending of global cloud computing giants.
According to information that was made public by journalists at the end of last week, the total capital expenditures of companies such as Google, Amazon, and Microsoft amounted to $42 billion in the third quarter of this year. This figure is 10% higher than the level of expenses recorded for the second quarter of 2023. Analysts also predict that next year the trend of increasing capital expenditures will continue to show the dynamic of increase.
The media note that the heads of the three mentioned companies, which have the status of technology giants, said that huge funds from the capital budget are being directed to the implementation of activities to create machine intelligence systems that need huge amounts of computing power and data. Amazon CEO Andy Jassy is convinced that generative artificial intelligence will bring tens of billions of dollars in profit in the future. According to the results of the third quarter of this year, Amazon Web Services revenue showed an increase of 12% year-on-year. In monetary terms, this figure amounted to $919 million.
Andy Jassy says that due to the lack of stability in the economy in 2023, companies began to complete deals more slowly, but at the same time noted that the volume of such operations shows an increasing trend. The CEO of Amazon also states that for business, the benefits of using generative artificial intelligence are, among other things, that with the help of advanced technology, it is possible to create agents capable of performing tasks such as automating workflows and answering questions.
In October, the media reported that Google organically interacts with the realities of the era of innovation, the specifics of which are determined by the capabilities of generative artificial intelligence and basic AI models that provide the company with the opportunity to accelerate and improve the activities of its research laboratories and teams. During the latest earnings report, Sundar Pichai, CEO of the firm, stated that more than half of all funded startups with generative machine intelligence are Google Cloud customers. According to him, more than 60% of the 1000 largest corporate organizations in the world use this platform to support their work processes.
Sundar Pichai says that over the period of the second and third quarters of 2023, the number of active generative artificial intelligence projects developed using platforms that are part of Alphabet’s ownership structure has increased sevenfold. This year, the tech giant’s revenue generated as a result of so-called cloud activities showed an increase of 22% compared to 2022.
Jeff Pearson, managing director of the technology consulting company Slalom, says that Google, Microsoft, and Amazon are striving to get as large a share of the cloud computing market as possible. The expert also stated that these companies should maintain a high level of competitiveness in the artificial intelligence industry since errors and shortcomings in this area of activity will become a negative impact factor on the relevance of their technological offers to consumers. Jeff Pearson says that huge capital investments in data centers and servers are needed to achieve these goals.
Bank of America predicts that in 2024, the combined capital expenditures of Amazon, Alphabet, and Microsoft, which are associated with activities in the sphere of computing technologies, will increase to $116 billion. Also, the data of this financial institution indicate that last year the corresponding expenses of the three technology giants amounted to $84 billion. This figure is 20% higher than the volume of capital expenditures in 2021.
The need for significant investments in machine intelligence encourages many startups to establish cooperation with larger players. For example, Microsoft has signed an exclusive contract with the startup OpenAI, which has developed the world’s most popular chatbot based on artificial intelligence called ChatGPT. Currently, the value of this contract is estimated at $86 billion.
As we have reported earlier, Google Adds AI Models from Meta and Anthropic to Its Cloud Platform.