The world has been rocked by the explosion of generative AI, but one question is all too rarely raised: Who can afford it? According to the business publication The Information, OpenAI lost about $540 million last year while developing ChatGPT and claims it needs $100 billion to achieve its goals.
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Sam Altman, the creator of OpenAI, recently told a panel that his company would be the most expensive startup in Silicon Valley history.
Microsoft also provides reassurance that it is keeping an eye on its bottom line when asked how much its AI effort will cost after investing billions of dollars in OpenAI. It would take a staggering investment in cutting-edge technology and the hiring of award-winning researchers to create something even close to the magnitude of what OpenAI, Microsoft, or Google have to offer.
“People are unaware that big AI tasks, like ChatGPT, need enormous amounts of computing power. Additionally, training those models can be quite expensive, according to independent analyst Jack Gold.
How many businesses are truly able to afford to purchase 10,000 Nvidia H100 systems, which cost tens of thousands of dollars each? enquired Gold.
The answer is essentially no one, and in the computer industry, if you can’t build the infrastructure, you rent it. Businesses currently outsource a significant portion of their computing requirements to Google, Microsoft, and Amazon’s AWS.
Experts cautioned that with the development of generative AI, this dependence on cloud computing and tech behemoths will only grow, placing the same people in control.
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According to Stefan Sigg, Chief Product Officer at Software AG, a company that creates business software, the unpredictability of cloud computing prices “is a heavily underestimated problem for many companies.”
Sigg likens cloud charges to power bills and warns that businesses that don’t know any better could be in for “a big surprise” if they allow their engineers to rack up expenditures in the haste to develop innovation, particularly AI.
Azure is Microsoft’s standout cloud offering, and some industry watchers think the company’s all-in wager on AI is truly about safeguarding Azure’s success and ensuring the cash cow’s future.
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For years, Azure has been the unattractive breadwinner for the company, generating enormous earnings without garnering the media attention of an iPhone or direct-to-consumer social media. When it comes to Microsoft, “the golden goose is a monetizing cloud with Azure because we’re talking about what could be a $20, $30, or $40 billion opportunity annually down the road if the AI bet is successful,” according to Dan Ives of Wedbush Securities.
Generative AI, according to Microsoft CEO Satya Nadella, is “moving fast in the right direction.” Ives projected that Nadella, who enjoys high regard on Wall Street, will have six to nine months to demonstrate that his wager is a success.