Boosting Your Business with AI:
Boosting Your Business with AI: Prepare for Rising Costs Alongside Sluggish Revenue Growth
Though the AI boom is starting to pay off, hardware costs for developing and running AI models have soared. Last quarter, Amazon, Microsoft, and Google’s cloud revenues hit $62.9 billion, a 22.2% increase year-over-year, yet all three anticipate higher expenses ahead. Meta invested $8.3 billion in new assets, up from $6.5 billion a year earlier, while Amazon, Microsoft, and Google spent $50.6 billion, up from $30.5 billion last year.
Prepare for rising expenses and the need for additional funding for AI initiatives. Venture capital funding in AI startups has hit $64.1 billion this year, and the total share of VC investments going toward AI this year is the highest on record.
While sceptics question if AI’s current hype will drive sustainable long-term growth to justify spending, company figures tell a different story. Thus, Google reported 35% revenue growth, with Alphabet (3%), Amazon (6%), and Microsoft (6%) stocks each rising in a single day.
All companies project significant revenue growth ahead; however, investors’ patience is likely to wane, as they state that it’s not enough revenue growth compared to the extreme level of AI spending. E.g., Meta and Microsoft have already been stock penalised for ramping up AI investments without fast enough revenue growth.
Top tech executives are preaching patience. Zuckerberg (META) noted that it could take years to monetise AI apps, while Google’s CEO Sundar Pichai said, “The risk of under-investing is dramatically greater than the risk of over-investing.”
So, the question remains: to invest or not to invest?
Evolvy Era 