- Major companies are pouring vast amounts of resources and money into artificial intelligence.
- But many have yet to see any significant returns on their investment.
- CEOs hope to re-assure shareholders that this is to be expected.
Some of the largest companies in the world are placing major bets right now on artificial intelligence.
In 2023, Apple spent more than $22 billion on R&D for generative AI products. Meta projected in its latest quarterly earnings that it will spend somewhere in the range of $35 to $40 billion this year alone, largely to improve its AI infrastructure.
Google's AI exec Demis Hassabis upped the ante and said that he expects the search engine giant to spend more than $100 billion on the technology.
Sam Altman, OpenAI's CEO, has an even bigger number: Up to $7 trillion in order to transform the semiconductor industry that will power AI.
That's a lot of money going into something that hasn't generated much revenue so far — with the exception of a few companies.
But leaders of businesses pouring tons of resources into AI are saying the same thing to reassure any impatient shareholders: Stick around. It's coming.
On Wednesday, Meta's stock tumbled despite beating sales expectations partly due to its heavy investments in AI and so-so revenue projections. CEO Mark Zuckerberg hoped to ease any investor concerns by saying that this downturn is temporary.
"Historically, investing to build these new scaled experiences in our apps has been a very good long-term investment for us and for investors who have stuck with us. And the initial signs are quite positive here too," Zuckerberg told investors in an earnings call. "But building the leading AI will also be a larger undertaking than the other experiences we've added to our apps, and this is likely going to take several years on the upside once our new AI services reach scale."
Elon Musk had even stronger words for investors on Tuesday after Tesla reported plunging profits.
The EV company has so far yet to deliver on its promise of autonomous driving, instead giving drivers its Full-Self Driving software, which is really a driver-assistance feature that requires full-time supervision of the operator.
Even so, Musk insisted during an earnings call that Tesla is an AI company and had a specific message to any shareholder who thinks that Tesla won't develop self-driving someday.
"If somebody doesn't believe that Tesla is going to solve autonomy, I think they should not be an investor in the company," he said during the call. "And we will. And we are."
Will AI deliver?
Other CEOs have wondered how and when generative AI will deliver on its ambitious promises.
In January, during the World Economic Forum meeting in Davos, AI was the hot topic of the moment, but some tech leaders remained cautious of the technology.
Matthew Prince, CEO of Cloudflare, told Reuters at the time that people should expect an "AI letdown" in the coming months.
"Everyone's like, yeah, I can build these cool demos, but where's the real value?" he told the outlet.
Shareholders at Meta were certainly spooked by Zuckerberg's "wait-and-see" line.
Nvidia could be the exception to the case. After all, they're the leading makers of the very chips that power the AI products companies are rushing to build.
Earlier this year, Nvidia smashed fourth-quarter expectations by reporting $22.1 billion in revenue, thanks in part to a surge in AI demand.
On Thursday, Microsoft and Alphabet reported profits, which they ascribed in part to their respective AI sectors.
Microsoft beat Wall Street's expectations by reporting $21.9 billion in profits for the quarter ending on March 31. The company attributed that growth to its cloud computing platform, Azure, which includes generative AI services.
Google's parent company reported $23.7 billion in profits for the same period. Alphabet chief executive Sundar Pichai attributed some of the company's most recent quarter's performance to its cloud services, which is now equipped with Gemini, Google's AI model.
"We are well underway with our Gemini era, and there's great momentum across the company," Pichai said in a statement. "Our leadership in AI research and infrastructure and our global product footprint position us well for the next wave of AI innovation."