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Zhidong reported on April 30 that according to New York Times reporter Karen Weiss, large technology companies such as Meta, Google, Microsoft, and Amazon are investing heavily in expanding and improving AI infrastructure to support market demand for cloud computing.
Tech giants have all started to expand their data centers in 2024. Google will spend $3 billion this year to build new and old data center campuses, the company allocated $75 million on April 26 as an AI skills development fund, Meta announced on April 24 that it will invest another billion dollars in chips and AI data centers, and Amazon also announced on April 25 that it will invest $11 billion in a new data center in Indiana and will create 1,000 new jobs.
Both Microsoft and Google's cloud business sales are on the rise, with Microsoft's generative AI contributing 20% of the cloud computing division's growth this year, and Google's cloud business unit reaching 28% sales growth in the first quarter.
Andy Jassy, Amazon's chief executive, said this month that the company should reduce its reliance on computing power providers and instead gain greater autonomy by expanding cloud computing services and developing its own computing infrastructure, such as chips.
Meta has a similar plan in this regard, and the company is adopting an "alternative" construction strategy this year to be able to flexibly respond to uncertain changes in the market. However, Meta's shares fell 16% in the second quarter on the company's massive investment strategy, and CEO Mark Zuckerberg insisted that these long-term investments were necessary, calling on investors to be patient.
1. Silicon Valley giants have invested heavily in AI computing power centers, and AI's contribution to cloud business has been highlighted
If 2023 is considered a critical year for AI chatbots, then 2024 is expected to be a critical year for AI infrastructure development. While this shift may seem less eye-catching, the tech industry is actually rapidly pouring tens of billions of dollars into supporting AI businesses.
Companies are restructuring their data centers to support AI, not only Silicon Valley giants such as Amazon and Meta, but also institutions in places like Saudi Arabia are scrambling to build supercomputers to handle AI. It seems that all the companies that are making a difference in the tech space or are well-funded have joined this spending frenzy. Some industry insiders predict that this investment boom could last for years.
Cloud computing has brought new variables to the investment model of the technology industry. More and more startups, as well as large enterprises in different industries, are choosing to partner with cloud service providers to host their networks and data on cloud platforms. Tech giants are also investing heavily in expanding and improving their cloud infrastructure in order to attract and retain these customers.
Tech bigwigs are determined to invest in AI, but they are also under pressure from investors. Meta's stock price fell more than 16% after an investor conference call on April 24. The decline was largely due to investors' dissatisfaction with Zuckerberg, who expressed concern about the company's huge investment in AI, but Zuckerberg did not regret the company's investment decision, urging investors to be patient and perhaps take years to see results.
Investors seem to be positive about Microsoft's investment in AI. Microsoft is one of the few big tech companies to make public the financial details of its generative AI business, which is said to have contributed more than a fifth to the growth of its cloud computing division and played a significant role in attracting new customers to Microsoft Azure. Microsoft CEO Satya Nadella has repeatedly emphasized the centrality of Azure in AI projects.
At the same time, Google also reported data for its cloud business unit in the first quarter, which saw a sales growth rate of 28%, partly due to the contribution of AI technology. Amazon, another major cloud service provider, has not yet mentioned specific AI investment and business details, but industry insiders speculate that Amazon is likely to have invested heavily in AI technology given its leading position in the cloud computing market.
2. Meta, Google, and Microsoft invested heavily in infrastructure, spending more than $32 billion in three months
Meta, Google, and Microsoft recently disclosed to investors their capital expenditures for the first three months of 2024, with spending totaling more than $32 billion on data center construction and other infrastructure investments. In their conference calls with investors, the tech giants said they have no plans to slow down their investments in AI in the near future.
Meta highlighted its commitment to investing in AI infrastructure. In a call on Wednesday, the company announced that it would need to invest billions of dollars in additional chips and AI data centers, a figure that exceeded previous expectations. Zuckerberg was a staunch supporter of the decision on the call, saying the valuable investments would continue to advance.
Google's increase in capital expenditures has also been particularly significant, with its investment nearly doubling from last year, mainly to build and equip its data centers. According to Reuters, Google will spend $2 billion on April 26 to build a data park in Fort Wayne, Indiana, while spending $1 billion to expand three existing data center campuses in Virginia. In addition, the company announced an initiative called the Google AI Opportunity Fund, which allocates $75 million as a fund to train Americans in AI skills.
Microsoft's capital spending on AI infrastructure also showed solid growth, reaching 22% in the first quarter of this year.
Although Amazon has not yet released a specific financial report, it expects to report an increase in capital spending on AI infrastructure in its April 30 earnings report. Amazon's cloud computing division invested $11 billion on April 25 to build a new data center in Indiana and will create 1,000 new jobs.
3. The "shovel seller" won the hemp and used self-developed chips to get rid of dependence
The dazzling spending reflects an old Silicon Valley fable: during the California Gold Rush, it wasn't the miners who profited the most, but the shovel sellers. There is no doubt that Nvidia is one of the biggest AI winners, with its chip sales more than tripling over the past year.
The phenomenon of huge investments in AI technology is reminiscent of the investment model of the dot-com bubble in the 90s of the last century. While the promise of AI technology is exciting, it is often the companies that provide the foundational technology, facilities, and key components that are driving the industry and creating long-term value. Software giants Microsoft and Oracle, chipmaker Intel, and Cisco, the equipment maker responsible for connecting these new computer networks, are among the companies that have really benefited from the Internet boom.
In a recent letter to shareholders, Amazon's CEO, Andy Jassy, said that while AI applications like ChatGPT have attracted a lot of public attention, there are actually broader opportunities for technology development around infrastructure and data.
Jesse specifically emphasized the importance of computing infrastructure, especially chips. He believes that for Amazon, self-developed AI chips can not only improve the efficiency and performance of its services, but also reduce its dependence on third-party suppliers, so as to have greater autonomy in cost control and technological innovation.
In the development of AI, the construction needs of infrastructure are mainly divided into two categories. The first category is to build the largest and most cutting-edge AI models. According to some AI developers, each round of investment in these advanced models will soon exceed $1 billion. Whether developed independently or with partners, mastering the R&D capabilities of cutting-edge systems is essential to maintain the company's leading position in the field of AI.
The second type is AI inference, which is the process of using AI models for actual queries and operations. For example, an insurance company might leverage generative AI technology to automatically summarize the content of a customer complaint. In addition, companies may also integrate AI technology directly into their products, as Meta recently embed chatbot assistants in social platforms Facebook and Instagram. This application also requires expensive investments.
Building and equipping a data center is a time-consuming process, but also a shortage of chips and high manufacturing costs are challenges. In the face of these long-term and significant investments, Susan Li, Meta's chief treasurer, mentioned that the company is adopting a "fungible" construction strategy. This strategy means that Meta wants to maintain some flexibility when it comes to building infrastructure. This approach helps companies make timely and appropriate adjustments in the face of future uncertainties and market changes to ensure the long-term value and effectiveness of their investments.
Conclusion: Huge investments have been made to maintain the demand for cloud computing, and the status of AI has been implemented in infrastructure construction
As AI technology continues to advance and applications expand widely, tech giants are investing heavily in AI infrastructure to ensure they stay ahead of the technology race in the future. Despite investor concerns about short-term financial volatility, these companies have maintained a long-term investment strategy, believing that these investments could lead to new growth opportunities and profitability for the company.
From the independent research and development of AI chips to the expansion of data centers to the continuous optimization of cloud computing services, these investments not only reflect the firm confidence of tech giants in the potential of AI technology, but also herald the arrival of a new era supported by strong infrastructure. As these investments are made, we expect to see AI technology exert an even more profound impact across industries, bringing broader change and value to society.
Source: The New York Times