Powerful AI Reports from Major Technology Companies

Big tech companies drew attention with their strong performance in artificial intelligence (AI) in their latest quarterly reports. Microsoft (MSFT), Google (GOOG, GOOGL), and Amazon (AMZN) reported solid results from their cloud services. These reports were met with positivity on Wall Street.

However, companies benefiting from cloud services, such as OpenAI (OPAI.PVT), are still not profitable. TECHnalysis Research President and Chief Analyst Bob O'Donnell stated, "How a company like OpenAI will cope in a situation where it will spend 1.4 trillion dollars and lose billions of dollars every quarter is a big question mark."

Amazon announced a growth of 20.2% in its AWS segment, reaching its highest level since 2022. Microsoft’s cloud revenues increased by 26%, reaching 49.1 billion dollars. Meanwhile, Google’s cloud revenues rose by 34% year-on-year, reaching 15.1 billion dollars.

All these companies continue to rapidly increase their data center capacity to meet the demand for AI tools. Investments are expected to rise even further in the coming year. Following the reports, Amazon and its parent company Google (Alphabet) saw their shares rise, while Microsoft’s shares fell. However, analysts generally found the results positive. O'Donnell noted, "The numbers from cloud companies were extraordinary, and they showed strong growth."

However, questions remain: When will AI developers achieve similar returns on investment? AI infrastructure companies are recording large figures, but AI large language model companies are spending billions of dollars while developing new models.

OpenAI has committed to spending 1 trillion dollars to provide the computational power necessary to operate its AI services. Brad Gerstner asked OpenAI CEO Sam Altman how the company would meet its spending commitments of 1.4 trillion dollars with 13 billion dollars in revenue. Altman stated that the company’s revenues were much higher than 13 billion dollars.

Altman emphasized that their revenues are growing rapidly and that OpenAI is expected to become a significant AI cloud service provider. Zeus Kerravala remarked, "This situation resembles Amazon's early days; it took a long time for the company to become profitable."

Various deep-pocketed supporters may help OpenAI, Anthropic (ANTH.PVT), xAI (XAAI.PVT), and other major AI companies continue in the future. Gene Munster stated, "I believe that large language models will be the most exciting growth companies over the next five years."

It's also important to remember that not every AI company will survive. As the AI industry matures, many names will fall away, and more interesting business models will emerge. Kerravala summarized the situation, saying, "I don’t think all these companies will be winners; I believe one or two companies like Amazon will stand out in the AI world."

Additionally, Amazon, Google, and Microsoft will be happy to provide as much computational power as possible to AI companies and will generate more revenue in the process.