Hello and welcome to Eye on AI! In this edition…Wall Street's leading AI skeptic is at Goldman Sachs; Hollywood celebs urge Gavin Newsom to sign SB-1047; A highly anticipated AI startup comes out of stealth; and (surprise!) Russia is using AI for election influence efforts.
The president of the United Arab Emirates met with President Joe Biden yesterday to hammer out a deal to cooperate on AI issues. The geopolitical backdrop of the meeting was certainly complex—the Gulf nation wants easier access to U.S. technology, but the U.S. has restricted Gulf states from freely importing U.S.-made AI chips over concerns the technology could leak to China.
Observed from another angle, however, the meeting was quite simple: Money makes the world go round. The U.S. wants—and needs—Middle East oil money in order to remain dominant in AI. And Gulf states like the UAE, which want to become AI powerhouses themselves in a bid to diversify their economies, are more than happy to shower U.S. AI companies with billions.
Sam Altman wants to drive down AI costs
Of course, wealth may be good, but who doesn’t love a bargain? Sam Altman certainly does. The OpenAI CEO has been talking for months about reducing the costs of the computing power and infrastructure that is fueling the AI boom. Yesterday, he published a blog post that, while ostensibly focused on the untapped potential of AI that will drive “massive prosperity,” clearly challenges the world to build enough data centers and manufacture enough AI chips to make developing and operating AI cheaper.
“If we want to put AI into the hands of as many people as possible, we need to drive down the cost of compute and make it abundant (which requires lots of energy and chips),” Altman wrote. “If we don’t build enough infrastructure, AI will be a very limited resource that wars get fought over and that becomes mostly a tool for rich people.”
Middle East wealth poised to feed the need for AI power
Of course, cheap often doesn’t come cheap. Altman knows this, given the news in February that he was seeking trillions of dollars to reshape the entire landscape of AI chips and data centers. In the meantime, the Gulf States, including from sovereign wealth funds in the UAE, Saudi Arabia, Kuwait, and Qatar are seen as one important way to feed—and fund—Altman’s need for AI computing power, and that of many other hot AI startups like Anthropic and Mistral. OpenAI is rumored to be in talks with MGX, the $100 billion UAE-backed investment fund, for a multibillion-dollar funding round that is said to value OpenAI at $150 billion.
CNBC reported this week that funding for AI companies by Middle Eastern sovereign funds has increased fivefold over the past year, though Saudi Arabia’s human rights record has led some companies to turn down its cash. Anthropic reportedly ruled out taking money from the Saudis in its last funding round, citing national security issues.
There are also AI partnership deals flying around the Gulf: Ahead of the UAE’s meeting with President Biden, UAE AI company G42 announced it had teamed up with AI chip juggernaut Nvidia to work on climate tech. In April, Microsoft also announced a $1 billion investment in G42, and last week the two companies said they would open two “responsible AI” centers in Abu Dhabi. Last week Saudi Arabia’s Aramco partnered with AI startup Groq to build the world’s largest data center for high-speed AI processing.
The environmental cost of AI is alarmingly high
Money may make the world go round, but more down-to-earth concerns like air, water, and food are essential to humanity’s survival. When it comes to the environmental impact of AI, the real price of the massive investment in AI chips and data centers—aimed at reducing the cost of computing power required to harness AI—is alarmingly high.
The Washington Post reported recently that OpenAI’s ChatGPT must chug just over one bottle of water to write a 100-word email. One email per week for a year would use up 27 liters of water and that means if one in 10 U.S. residents asked ChatGPT to write an email weekly, it would require more than 435 million liters of water.
Cheap AI will cost a fortune
Is it all worth it? When seen through Sam Altman’s rose-colored glasses, the answer is an unequivocal yes. In typical overly dramatic, prophetic tones, Altman wrote in his blog post that “I believe the future is going to be so bright that no one can do it justice by trying to write about it now.” (Sorry, Sam, I’m still going to try.)
Costly downsides like AI’s environmental impact warranted zero mention in Altman’s dispatch. They also seemed to be largely overlooked in the geopolitical discussions about AI’s future, including the recent meeting between President Biden and UAE President Mohammed bin Zayed Al Nahyan.
Only time will tell how these issues will play out. But I get the feeling that Sam Altman—and other AI and global leaders—already know that the quest for cheap AI will cost a fortune, in more ways than one.
Before we get to the news: I highly recommend checking out Jeremy Kahn's latest Fortune magazine story that dropped this morning. It focuses on how Intel’s years of missteps have left it fighting for survival in the Nvidia-dominated AI era: Who could have imagined that Chandler, Ariz., outside Phoenix, where Intel is investing nearly $30 billion to build two state-of-the-art semiconductor plants, would be where the company's fate might be decided?
Sharon Goldman
sharon.goldman@fortune.com
