Hundreds of billions being spent. When and how will they get any return?
Good question
I have long wondered what is the business case
It just looks like their competition spending is billions on AI so we must do the same to avoid being left behind which is a poor decision process
Well, technology is moving and evolving so fast now, it’s come to the point of take the risk and get in head first. If a company tries to get in later in the game, they are too far behind to catch up. It costs them more in terms of ‘perception’, client attraction and retention, etc, all leading to revenue loss.
A prime example is when UBS tried to get into internet banking back in the early 2000’s. It was way too late. Most other banks already had proper and functional on-line and internet banking. Because of late decision on UBS, a lot of clients (revenue) was ‘missed’.
Many times, it’s a case of one head-honcho bragging ‘i have this’, say at a golf game, and wanting to see the puckered face of his peer. The puckered face guy comes down with mandates the following morning, and it’s a scramble to ‘outdo’. Have seen it happen often. Also have fond memories of those ‘following Monday outdo scrambles’. … LOL
I’m sure Larry has a ‘recover in case of loss’ strategy. In the worst case, may be he will proceed further with his cloud offering. Notable mention is that he also has large involvement in ‘US Tik-Tok’. For that, he needs DCs - space, storage, etc. plugging in AI to data that huge is a trmendous value/revenue generation opportunity on it’s own. Data that can be gathered from AI mining can be sold off for sooooooo many uses generating additional business opportunities.
IT = Information Technology = Data manipulation and Data management. Information (Data) is power and $$$
He is in a rather unique place, I think …
Well xAI colossus was estimated to cost around 27B to build. And now they are renting out part of it for 27B per year, so seems pretty profitable to me!
It’s like renting out a house for 2’500 per month after paying 30k to build it.
That pushes the business case down the road.
What are the costs and revenue of the people renting xAI.