In 2023, global spending on AI was estimated to be $154Bn, and this year, it is estimated to be $202Bn. The majority of the spending over the next few years is estimated to be $630Bn. These are astronomical spending levels for any new business in recent history. The majority of this spending is being done by global tech majors that are racing against the clocks as AI market formation takes place.
Given the rate of consumer acceptance, companies are forced to deploy more than estimated to maintain the services. All these expenses have created strong revenues. For example, Microsoft is going to achieve an annual revenue rate of $10Bn by next quarter. This is the fastest business in history to reach this milestone.
The question remains whether the development and back end will be able to grow at the same pace. This is already being tested. Some reports have surfaced mentioning that the new training model outputs seem to plateau. This means the incremental change between new and current is hardly there, which would slow down the incremental launches in the industry.
Another worry is whether new USA administration will impose higher restrictions on concerned hardware and the response to it would be severe from other countries. This would impact the hardware supply leading to slower addition.
These issues are the main concern from the operations side but from the investors' side as these companies' valuations have surpassed expectations any disappointment in profits or otherwise would lead to a higher correction.
This would make the next couple of quarters crucial for companies as investors and other stakeholders focus on every small detail. Thus, creating an environment that can be volatile next year.
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