Generative AI for enterprises shows first signs of slowdown



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Summary

Leading cloud providers and their customers are more cautious about generative AI. The focus is on cost, efficiency, and measurable value.

The buzz around generative AI seems to be cooling, at least a bit. According to The Information, several executives, product managers, and salespeople at major cloud providers – including Microsoft, Amazon Web Services, and Google – are cautious about their customers’ willingness to invest in new AI services.

Reasons cited include high cost, lack of accuracy, and the difficulty of measuring the true value of generative AI in day-to-day operations.

Despite successful testing in small groups, some cloud customers have encountered problems when trying to roll out the technology to thousands of users, according to big cloud employees.

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In a presentation to Amazon AWS salespeople, a Gartner analyst predicted that the industry is at the peak of the “hype cycle” surrounding large language models and other generative AI. He expects the euphoria to turn into Gartner’s “trough of disillusionment.” Eventually, however, the analyst expects widespread adoption.

How to make money with generative AI

Microsoft has seen an increase in cloud revenue from AI thanks to its exclusive partnership with OpenAI. However, Google and AWS have yet to see financial success from their recent investments.

Analysts estimate that Microsoft generated more than $1.6 billion from AI-related cloud services last year. This is largely due to sales of OpenAI software and OpenAI’s use of Microsoft cloud servers.

OpenAI’s investment in cloud computing capacity is estimated to be approximately $1 billion by mid-2023. OpenAI uses Microsoft’s computing infrastructure, which means that a portion of Microsoft’s investment of up to $13 billion will flow back to the company.

Google hopes to generate at least $1 billion this year in North America alone by selling AI services to cloud customers. This seems like a small amount compared to the $33 billion Google Cloud generated last year.

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