Hello and welcome to Eye on AI. In this edition…Big Tech is increasing AI spending... OpenAI drops its foundry ambitions... Wall Street boosts AI infrastructure... and AI models give inaccurate voting info.
Quarterly earnings are in for Microsoft, Meta, and Google, with Amazon’s on the way tonight. Those who reported so far made one thing clear: They’re about to amp up spending on AI even more. Of course, most of this investment will go to infrastructure like Nvidia chips and data centers. Nvidia isn’t set to announce its Q3 earnings for another month, but it will be another telling one to watch for the pulse on the AI boom.
Meta
Meta said it expects capital expenditures to continue to grow significantly in 2025 as it accelerates its infrastructure investments. The company raised its capital expenditures guidance for 2024 to between $38 billion and $40 billion, up from $37 billion to $40 billion.
“Our AI investments continue to require serious infrastructure,” CEO Mark Zuckerberg said on the earnings call yesterday.
Meta is currently working on the next version of its Llama model and is continuing to position itself as an AI company—all while relying on ad revenue from its social media platforms to foot the bill. To bridge the gap, Zuckerberg framed AI as a win for its core ad business. He said its advancements in AI are making it possible to better predict what content users want to see, leading to 8% and 6% increases in time spent on Facebook and Instagram, respectively.
Microsoft
Microsoft posted positive growth for its AI business, reporting that it’s on track to surpass $10 billion in annual revenue run rate in the current quarter and will be its fastest product category to reach that milestone yet. Additionally, the company disclosed details of its investment in OpenAI for the first time in a quarterly regulatory filing, painting a picture of massive losses on the other side of its AI bet.
In the filing, Microsoft stated it’s made $13 billion in total commitments to OpenAI. This, however, didn’t include the additional $750 million the company reportedly invested in OpenAI’s latest funding round at the beginning of October (the filing quarter ended Sept. 30).
Besides its overall investment, Microsoft also disclosed the toll its bankrolling of OpenAI is taking on its profits. The company said that losses from its stake in OpenAI were part of the reason it had a $683 million expense on its equity investments for the quarter.
On AI, Google touted how the boom has boosted its cloud business. But even more interestingly, CEO Sundar Pichai said AI is writing over 25% of new code at the company, but engineers still review the work before using it.
While the rest of the AI-related earnings statements from the companies were somewhat predictable, I would’ve loved to hear more detail about the programming by AI. Google did not respond to my questions about what this looks like in process, including what types of coding projects it’s found AI is best suited for (or not so great at) and if it’s shipped anything coded by AI yet. AI is increasingly not only the product, but also making the products too. On future earnings calls, will we hear that increased efficiency of AI coding (or layoffs of expensive engineers) are boosting profits?
And with that, here’s more AI news.
Sage Lazzaro
sage.lazzaro@consultant.fortune.com
sagelazzaro.com
How will your business adapt in the face of a shifting global landscape? Join global executives and policy leaders at the Fortune Global Forum in New York City Nov. 11-12 to discuss AI, the future of democracy, rising geopolitical tensions, and more. Request your invite here.
