Last Thursday, the three American stock indexes closed lower. And we didn’t have to look far for the reasons for this fall. The growing costs of artificial intelligence, which could soon impact the profits of Tech giants, is starting to worry investors. Let’s take stock.
Panic on Wall Street
Concretely, Microsoft and Meta have both indicated that their expenses will increase soon due to investments in the cloud to accelerate the development of their generative AI projects.
Even if there is no fire and GAFAMs are still largely profitable, a small wave of panic has gripped Wall Street. Informed observers have noted in particular that the Redmond firm’s profit increased by 14% during the last quarter, a level lower than its revenues (+16%).
Mark Zuckerberg’s group doesn’t really reassure either. Its costs certainly remain under control over the last three months at $23.2 billion. But the company warns that “significant acceleration” is looming in 2025, still to help it progress in its AI projects.
As spotted Les EchosGoogle is doing better and responding to concerns. How ? Its CEO, Sundar Pichai, indicated that the company managed to reduce the cost of AI queries by 90% in 18 months thanks to technical innovations carried out internally.
Amazon is also doing very well, and its CEO, Andy Jassy, sent an optimistic message about the cloud:
We have already proven that we can generate enough operating income and free cash flow for this activity to generate a very profitable return on investment, the Amazon boss wanted to reassure. We expect the same with generative AI.
Observe longer-term trends
Finally, it is important to point out that these upward or downward trends observed on the stock market are not significant in the short term. It is therefore appropriate to observe the evolution of the curves over the longer term to get an idea.
Last February, for example, the shares of large technology companies had already fallen sharply. Jim Reid, an analyst at Deutsche Bank, believed that we could see “the sign of an excessive extension of the recent strong rise”.
Dan Ives, an expert from Wedbush, was tempered: he judged that it was probably only an epiphenomenon, while “the AI revolution has begun”. You can always reread our previous article dedicated to this subject here.
