Evaluation of “AI investment starting to bear fruit”… Cautiousness still remains
(Seoul = Yonhap News) Reporter Hwang Jeong-woo = Big Tech‘s bet on artificial intelligence (AI), which is pouring a huge amount of money, is starting to bear fruit.
The total sales of the three companies, including Amazon, Microsoft (MS), and Google, in the cloud sector in the third quarter (July to September) totaled $62.9 billion (approximately 86.7 trillion won). This is a 22.2% increase compared to the same period last year. It is also an increase for at least four consecutive quarters.
The Wall Street Journal (WSJ) reported on the 31st (local time) that the accelerating growth of cloud is a clear sign that big tech is beginning to justify its investment in AI.
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“Demand will continue to exceed our available capacity,” Microsoft Chief Financial Officer Amy Hood said on a conference call.
The combined capital expenditures of the three companies, including Amazon, Microsoft, and Google’s parent company Alphabet, surged from $30.5 billion in the third quarter of last year to $50.6 billion in the third quarter of this year. Most of the capital expenditures went into data centers.
However, all three companies said that capital expenditures will continue to increase in the coming months.
Facebook’s parent company, Meta Platform (Meta), also saw its capital expenditures increase from $6.5 billion in the third quarter of last year to $8.3 billion in the third quarter of this year.
“Our AI investments still require a lot of infrastructure,” Meta CEO Mark Zuckerberg said. “We expect to continue to invest significantly in this area.”
Big Tech (PG)
[백수진 제작] illustration
But skeptics say it remains unclear whether the current enthusiasm for AI can support long-term growth to cover all this spending.
Nevertheless, investors saw hope that big tech cloud would see solid growth in the results announced this week.
“The data center cloud business is strong,” said Dan Morgan, portfolio manager at Synovis Trust. “It is this group that shows the most visible evidence of AI impact outside of AI chip sales.”
Google, which has maintained third place in the cloud market for a long time, saw its cloud sales grow by 35%. This exceeds market expectations.
Amazon also surged 6% in after-hours trading on the 31st of last month after announcing accelerated growth in its cloud division.
Amazon CEO Andy Jassy said the cloud AI division is growing in triple digits, faster than the entire Amazon Web Services (AWS) division.
Microsoft lowered its cloud sales forecast, but explained that this was due to the inability to build data centers fast enough.
Stifel analyst Brad Lebeck said Microsoft’s overall outlook for the cloud remains strong.
“It’s disappointing in the short term, but in the long term, it doesn’t change our view that Microsoft is the leader in generative AI,” Leveck said.
Microsoft said its AI product and cloud service revenue this quarter will exceed $10 billion for the first time on an annual basis.
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2024/11/01 16:19 Sent
