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Rajiv Jain, chairman and chief investment officer of GQG Partners, one of the biggest buyers of Nvidia Corp in the first quarter (8.2 million shares worth over $2.3 billion), recently said that the AI race is going to create ‘more losers than winners’ as it disrupts several business models across industries. With everyone jumping onto the AI bandwagon, the fate of them all is a mystery for now.
Rajiv believes that apart from NVIDIA, the winners in the AI race would be large tech companies. However, it is not necessary that everyone emerges a winner, especially big tech. Similar to the buzz that occurs with any disruptive technology, most companies are eager to try their hand to hopefully reap benefits from it. However, several fail to sustain in the competitive market owing mainly to the cost dynamics. Here, one can’t help but draw parallels to the dot-com boom of the early 2000s when a number of companies failed owing to reasons such as market overconfidence, investors’ fear of missing out, abundance of venture capital funding, and companies failing to make a profit. Yes, the AI euphoria does give you that déjà vu.
Tracing the AI Winners
Looking at NVIDIA’s success story, and the recent valuation of close to $1 trillion, it is clear that to be the forerunner of a race, you should either be a disruptor by being the first one to innovate and stay ahead, or simply be an essential enabler to fuel the existing race. NVIDIA has been in the forefront for fuelling AI companies. Big techs such as OpenAI, Meta, Amazon, Oracle are utilising NVIDIA’s H100 GPUs for powering their AI models. It was reported that OpenAI had in fact reached out to Microsoft five years ago to build AI infrastructure on thousands of NVIDIA GPUs.
While OpenAI is taking home all the trophies, Microsoft is gaining big from it. The company has been riding high on the success of ChatGPT and related applications that are now an integral part of Microsoft products. Investing $13 billion on OpenAI and releasing major announcements in the recent Build conference, none of it would have been possible for Microsoft without OpenAI.
Not Everyone’s Game
While a few companies are surely flying high, not everyone is reaping from it. Google, one of the major players in the game, has been struggling to strike a dominance in the AI race. Reeling from the infamous Google debacle at the Paris event that cost the company a jaw-dropping $100 billion, the company came up with major AI announcements at the recent Google I/O event endorsing Bard and PaLM2. Though its chatbot, Bard, received updates and is substantially popular, it is still not able to catch up with ChatGPT that is now available as an app on iOS.
In trying to cash-in on the chatbot wave, China’s Baidu launched its ChatGPT rival Ernie. However, post the announcement, the company’s shares dropped to an 8-week low. Baidu’s stocks continued to show no improvement and dipped further. However, the company has not given up and continues to be optimistic. It recently announced a $145-million venture capital AI fund to back-up companies that focus on AI generated content applications.
Online community Stack Overflow has been witnessing a slump ever since ChatGPT came into existence. Instead of spending time on Stack Overflow to browse for answers, users have been inclining towards ChatGPT. To protect their content, the company announced its plan to charge AI developers to access its programming-driven questions. Recently, the company also faced a 10% layoff of its workforce owing to focus on profitability and strategy change.
Building LLMs comes with its fair share of challenges. AI advisor Vin Vashishta recently compared LLMs to a boat. “It’s fun until it’s your boat and you have to take care of it.” The problems of cost and fine tuning datasets will be a deterrent in addition to finding people with experience that can deploy LLMs, hence one should be wary of the RoI which should be significant before starting a project.
The Benefiting Intermediaries
Though not all can shine in the AI race, considering how not everyone can build their LLM models, there are companies that benefit from utilising generative AI. Companies that use AI as a support function will benefit. This includes examples like Zoho that have integrated ChatGPT into their in-house applications.
Consumer search startup Neeva, founded by former Google executives, had launched their AI-powered search earlier this year, but last month the company had to shut down its operations. Within days, cloud-based data company Snowflake acquires Neeva to enable users to have a conversational experience.
It was noted that the usage of ChatGPT in companies led to a positive influence on the company stocks, as it reflected a jump in labour-force productivity. In addition to integrating ChatGPT-like conversational chatbot SlackGPT on their platform, cloud-based company Salesforce also announced their plans to collaborate with Accenture to bring in generative AI for CRM. To further ride the AI wave, some companies are leveraging ChatGPT by offering their services in the form of plugins on the portal.
With the accelerated pace of AI development, it is evident that AI is inevitable and companies will be involved in one way or another. But how they leverage AI is what matters. Jensen Huang from NVIDIA recently mentioned that more than worrying about AI taking away jobs, someone who is an expert at AI will take it. To quote, “Either you are running for food, or you are running from becoming food.”
