The likely message from the leading companies is: be patient
The uncertain take-up of generative AI stands in stark contrast to the money being poured into the tech infrastructure needed to support it. Photograph: iStockHow long can Wall Street’s artificial intelligence-fuelled rally continue without clear evidence that generative AI is giving a meaningful lift to business?
Three months ago Microsoft said that extra demand from AI had added six percentage points of growth to its Azure cloud platform, as customers started to test the technology. That probably translates to nearly $3 billion of extra revenue a year .The number sounds impressive, but it is still little more than 1 per cent of the total revenue Microsoft is expected to report this year.
This is a technology unlike any other: its well-known weaknesses, like the tendency to deliver false results – known as “hallucinations” – pose a unique challenge. It’s not clear how it will fit into today’s business processes, or how readily people will adapt to using it. If the potential pay-off from AI dominates talk on tech earnings calls in the coming days, the big tech companies should at least deliver enough other good news from their existing businesses to please investors.
Shares in Amazon, a chronic lossmaker for much of its 30-year life, hit a record high last week on hopes that it is entering a new era of higher profitability, lifted by stronger retail margins and a reacceleration of growth at its biggest moneymaker, Amazon Web Services.
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