{"text":[[{"start":10.49,"text":"A generalised euphoria over generative artificial intelligence has gripped Wall Street. "},{"start":15.244,"text":"But the technology had little to do with the strong business performance reported by most of the big US tech companies in recent days. "}],[{"start":22.97,"text":"Understanding where the technology is starting to yield real business results — and where it isn’t — will be key to distinguishing the AI winners from the AI losers in the coming months and years. "}],[{"start":32.8,"text":"Consider, for example, the business rebound that the biggest cloud computing platforms have experienced this year. "},{"start":39.192,"text":"Last week, reaccelerating growth in the cloud computing divisions at Microsoft and Google fed hopes that AI was starting to make a noticeable impact. "},{"start":46.922,"text":"This week, Amazon Web Services, the cloud market leader, has added to the upbeat mood. "}],[{"start":53.31999999999999,"text":"The recent results provide little insight, though, into how much this growth rebound reflects a pick-up in spending on generative AI, how sustainable any such spending will prove to be, and how expensive it will be to deliver the new AI services. "}],[{"start":67.03,"text":"The last two years brought a drastic fall-off in cloud growth. "},{"start":70.709,"text":"Many customers who had seen their cloud bills soar during the pandemic put a brake on new spending as they tried to work out how to get more bang for the buck. "}],[{"start":78.92,"text":"This pause, referred to euphemistically by the tech companies as a period of “optimisation”, laid waste to one of the industry’s biggest drivers of expansion. "},{"start":87.287,"text":"Revenue growth at AWS tumbled from 40 per cent at the end of 2021 to a relative trough of 12 per cent 18 months later. "}],[{"start":95.56,"text":"That it has now rebounded to 17 per cent in the latest quarter is a sign that the indigestion caused by the earlier binge of cloud spending is largely a thing of the past. "},{"start":104.352,"text":"According to Andy Jassy, Amazon’s chief executive (and former head of the cloud division), this is a return to the status quo ante, when the move to the cloud was fuelled by a desire to drive down IT costs. "},{"start":115.79400000000001,"text":"With only 15 per cent of corporate IT workload in the cloud, he argues this trend has a long way to run. "}],[{"start":122.16,"text":"AI is not the main force here — though, at the margin, it is certainly becoming a factor. "},{"start":128.027,"text":"Most clearly, Microsoft’s annualised revenue from generative AI is now generally put at about $4bn, while Jassy also said it has become a “multibillion-dollar” business for AWS. "}],[{"start":139.10999999999999,"text":"It is unclear how quickly these AI revenues will grow, or how big the market will be. "},{"start":144.302,"text":"There has been a stampede by customers to train new AI models and to try out the new services these make possible. "},{"start":150.28199999999998,"text":"But until this period of mass experimentation passes, it is hard to predict how much value the new technology will create — or how much customers will be willing to pay for it. "}],[{"start":160.27999999999997,"text":"While the timing of the pay-off is uncertain, the costs are very real. "},{"start":164.48399999999998,"text":"Alphabet, Amazon and Microsoft are on course for combined capital spending of more than $150bn in their current financial years, more than $40bn above what they spent the year before. "},{"start":175.45199999999997,"text":"These are massive downpayments on the promise of a coming tech boom. "}],[{"start":179.89999999999998,"text":"Cutting depreciation charges by extending the expected useful lives of all this new data centre gear has taken some of the edge off this vast build-up in investment at all three companies. "},{"start":189.41699999999997,"text":"Alphabet, for instance, boosted its operating profits by nearly $4bn last year after it increased the expected life of its servers and networking gear to six years, spreading the cost of buying new equipment over a longer period. "}],[{"start":202.67999999999998,"text":"Another factor offsetting some of the pain is the cloud companies’ claim to be able to tie their investments closely to expected near-term revenue from customers who are lining up to try out the new technology. "},{"start":212.784,"text":"That helps to explain why Wall Street has taken the latest investment increases from the cloud companies in its stride. "}],[{"start":219.62999999999997,"text":"A further unknown is whether the generative AI wave will be disruptive enough to upset the balance of power in the cloud industry, which has looked remarkably stable in recent years. "},{"start":228.63399999999996,"text":"At an annualised $100bn, AWS’s revenue is probably twice that of Microsoft’s Azure cloud platform. "},{"start":235.67699999999996,"text":"Google is further behind. "}],[{"start":238.42999999999998,"text":"Customers are understandably conservative about shifting their vital data and IT workloads between clouds, and AWS has been racing to build out its AI capabilities. "},{"start":247.659,"text":"But Microsoft’s early lead, thanks to its partnership with OpenAI, is a big factor behind Azure’s current growth rate of 31 per cent, nearly double the 17 per cent of AWS. "}],[{"start":258.92999999999995,"text":"This will be a long race, with every chance of resetting the competitive dynamics between the tech giants. "}],[{"start":264.31999999999994,"text":""}]],"url":"https://creatives.ftacademy.cn/album/153055-1714742217.mp3"}