The AI war of the tech giants: Microsoft leads, Apple Qualcomm catches up, and Google evaporates 1.22 trillion overnight

Original source: Titanium Media

Author: Lin Zhijia

Image source: Generated by Unbounded AI

As the generative artificial intelligence (AI) boom represented by ChatGPT continues to spread, in the third quarter of this year, Microsoft, Google, Qualcomm, Intel, Lenovo and other technology giants have increased their AI technology and embraced the wave of generative AI.

** Titanium Media App learned that ** On October 25, OpenAI officially confirmed that Microsoft, Google, OpenAI and other large technology companies jointly established a new AI security industry organization "Frontier Model Forum", appointed Chris Meserole, an executive of the American Think Tank Association, as the executive director of the organization, and established a new $10 million AI security fund, aiming to promote research in the field of AI security and promote the development of safety standards for AI models.

At the same time, whether it is rumors or official releases, many technology giants have stepped up their efforts to promote AI: Apple builds an "AppleGPT" internal chatbot product and plans to invest another $1 billion in AI technology every year; Intel is accelerating to help more enterprises build ChatGPT-like applications; Lenovo released the world's first AI PC, which can run "personal large models"; Qualcomm released the first Snapdragon 8 mobile platform with terminal-side and generative AI technology, PC processor X Elite, etc.

**In terms of performance, AI investment seems to be seeing very different results. **On October 25, Microsoft (NASDAQ:MSFT) third-quarter revenue was $56.5 billion, up 12% year-on-year, and net profit under GAAP increased 26% year-over-year to $22.3 billion, including "intelligent clouds" such as Azure up 19% year-on-year, and AI was higher than market expectations. OpenAI's annual revenue exceeded $1.3 billion, up 4,542% from last year. But Google Cloud "stalled", with revenue up 22.5% in the third quarter, compared with a 37.6% increase in the same period last year.

Therefore, in the face of the different "report cards" of the giants, the market feedback is obvious: on Wednesday (25th) US stocks, Microsoft rose 3% again, while Google's parent company Alphabet stock price fell 9.5%, and the market value evaporated 166.64 billion US dollars (about 1.22 trillion yuan) overnight, which is the fifth largest one-day loss in the history of US listed companies, reducing the market value of a Nike company.

ChatGPT traffic plummeted, but tech giants are still betting on the future of AI

In 2023, with the blessing of new AI technology, people's lives and work are being reshaped in ways never imagined. Under the wave of AI, all industries are accelerating breakthroughs.

However, more than 300 days after the boom spread, the traffic of ChatGPT, the core product of AI chatbots, began to plummet.

Statistics compiled by Titanium Media App show that as of October 23, 2023, the growth of ChatGPT platform views during the year showed a downward trend month by month, from 131.6% in January to the first negative growth in June, a decline of 10%, and then declined, with an increase of less than 2% in October. At the same time, the browsing dwell time was shortened to about 7 minutes, and the user traffic churn rate reached 39.37%.

(Image source: Titanium Media App editor)

It is clear that the popularity of large models has declined, and users are returning to calm about the new thing of ChatGPT. But on the flip side, tech giants still want to bet on the future of AI.

On October 24, Lenovo held the annual Tech World Technology Innovation Conference in North America, which not only released the world's first AI PC, which can run a "personal large model", but also cooperated with NVIDIA, Intel, and AMD "Big Three" to promote smart devices, infrastructure and solutions.

Among them, the more concerned is NVIDIA founder and CEO Jenxun Huang announced at the scene that he and Lenovo will cooperate with Lenovo to launch a new hybrid AI plan to bring the next generation of AI technology to global enterprise users, and Lenovo will provide new enterprise-level AI solutions based on NVIDIA MGX architecture, Lenovo hybrid artificial intelligence services, etc.

Huang said at the scene that ten years ago, the intelligence that humans were able to make was to understand the meaning of data, understand speech, understand images, and understand the meaning of data. But now, within a second, humans can generate data through computer technology. And it doesn't just understand unstructured data, it digitizes any information.

"How we look at an AI model, it's essentially a bit like a brain, but unless you turn it into an app, it's going to do nothing. In the future, we may hear another concept called retrieval augmentation generation (RAG), which is another way of saying for creating chatbots whose functionality can be enhanced and vectorized by your data into a semantic database, rather than a relational database, a database that understands meaning. You can talk to this database, ask questions, and respond. In Huang's view, through NVIDIA AI Enterprise's TAM, generative AI technology can be brought to global enterprises.

From left to right, F1 CEO Domenicali, AMD CEO Su Zifeng, Lenovo Group Chairman and CEO Yang Yuanqing, and NVIDIA CEO Jensen Huang
At another conference, Qualcomm released a number of Snapdragon 8 mobile platforms based on generative AI, the first Snapdragon 8 mobile platform with terminal side and generative AI technology, PC processor X Elite, etc.

Qualcomm CEO Cristiano Amon (Cristiano Amon) said that Qualcomm's PC CPU (central processing unit) Snapdragon X Elite built for AI uses a self-developed core "Oryon". Compared with Apple's M2 Max and Intel's i9-13980HX, the Snapdragon X Elite has 4.5 times the AI processing power of competing products, heterogeneous AI engine performance up to 75TOPS, supports running generative AI models with more than 13 billion parameters on the device side, and can process 30 tokens per second when using a side-side chat assistant based on 7 billion parameters.

Earlier at Qualcomm's 2022 third-quarter earnings conference, Ameng said, "We expect that Snapdragon Windows PC will have an inflection point in 2024." ”
However, seeing the price of Xiaomi two-in-one notebook equipped with Snapdragon 8CX of more than 2200 yuan, coupled with the weakening support of Microsoft Windows for the ARM architecture, the exaggerated statement that "Qualcomm fired the first shot to besiege Intel" still needs to be seen, and the gap is too far from the Wintel ecosystem.

**Compared with Lenovo and Qualcomm in the field of generative AI, Microsoft and Google hope to continue to increase AI technology. **

At the earnings conference on October 25, Beijing time, Microsoft announced that it will continue to increase capital spending to expand AI cloud services and data centers. According to the financial report, Microsoft's capital expenditure in the quarter was $11.2 billion, another seven-year high. For reference, Microsoft's capital expenditure in the first and second quarters of this year was $7.8 billion and $10.7 billion, respectively. The company expects Microsoft's capital expenditures to continue to grow sequentially as it continues to invest in cloud and AI infrastructure.

On the same day, Ruth Porat, Google's president and chief investment officer, also mentioned in the earnings conference that Google sees the potential of AI solutions such as Vertex AI and Duet and will continue to actively invest. He said AI is a top priority for Google's growth. Previously, on August 29, Google announced a cooperation with NVIDIA to launch technologies such as Duet AI, an AI work assistant, and Vertex AI, an AI platform for developers.

In addition, Apple reportedly created its own large-scale language model, Ajax, and launched a chatbot called "Apple GPT" within the company. The company's senior vice presidents of AI and software engineering, John Giannandria, Craig Federighi and Apple Services Director Eddie Cue, are responsible for and involved in this effort, and plan to invest about $1 billion a year in generative AI applications. In addition, Apple is also considering integrating generative AI into products such as development tool software.

The latest news is that Intel has partnered with The Boston Consulting Group to sell and build ChatGPT-like applications directly to enterprise customers. Intel wants to sell its products to highly privatized companies and keep the most important data in a private cloud. At present, the project has been supported by the company's CEO, Henry Kissinger.

AI commercialization has limited results, and the industrial transformation cycle will be a long process

Although technology giants have increased their AI, from the financial reports of Microsoft and Google, they find a completely different situation.

Among them, Microsoft performed well. In the first fiscal quarter of fiscal 2024 ended September 30 (that is, the third quarter of 2023), Microsoft's revenue reached $56.5 billion, a year-on-year increase of 12%, the highest growth rate in the past year and a half; Under General Accounting Principles (GAAP), net income increased 26% year-over-year to $22.3 billion. Among them, the revenue of the "intelligent cloud" business, which includes Azure, enterprise services, server software and other products, increased by 19%, an increase of two percentage points from the previous quarter.

At the earnings conference, Microsoft CFO Amy Hood revealed that AI services contributed 3 percentage points of growth to the Azure cloud, which is higher than the previous expectation of 2 percentage points. She expects Azure's revenue growth to be 26%-27% in the next fiscal quarter at constant exchange rates, and revenue contributed by AI will continue to increase.

Microsoft CEO Satya Nadella said at the earnings conference that Azure cloud services have more than 60 data center regions around the world and have the best AI training and inference infrastructure. At the model layer, Azure has access to OpenAI big models and open source communities such as Meta and Hugging Face. More than 18,000 organizations currently use OpenAI's model service through Azure, many of them new to Azure. For reference, the figure was 11,000 customers at the end of July.

Microsoft stressed that more than 1 million users have paid to use its AI-embedded Copilot feature, which can help enterprises automate everything from coding and spreadsheet analysis to PPT production**. The tool will be fully available next month, so the market expects Microsoft's revenue to jump sharply by then. **

But Microsoft's other strong competitor in AI, Google, has a very "bad" performance. **

On October 24, Eastern time, Google's parent company Alphabet (NASDAQ: GOOGL) announced its financial report for the third quarter of 2023, with a total revenue of $76.69 billion, a year-on-year growth rate of 11% from 3% and 7% in the first and second quarters, higher than market expectations. This is also the first time that Google's revenue has recovered double-digit year-on-year growth in a year; Net profit was US$19.689 billion, a year-on-year increase of more than 40%.

Among them, however, Google Cloud has seen its slowest quarterly growth in 11 quarters — revenue increased 22.5% in the quarter, 37.6% in the same period last year, 32% in the fourth quarter of last year, and 28% in both the first and second quarters of this year.

Although Google has actively integrated AI into its own search products this year, the problem is that the main source of revenue for Google search is advertising, but investors are more concerned about AI than the improvement of advertising, and Google has not benefited much from the launch of various AI-driven services.

At the earnings conference, Google CEO Sundar Pichai said that the search engine is still Google's dominant business, and the previous launch of the chatbot Bard is just an "early trial and complementary experience" for the search engine. Pichai admits that customers "face some challenges" with cloud spending, suggesting that Google's cloud division is not only not getting gains from AI technology, but is also suffering due to customer spending cuts. **

** Affected by this news, Google's stock price continued to fall, with its market value falling by 1.22 trillion yuan overnight, the fifth largest one-day loss in the history of a U.S. listed company. **
Interestingly, earlier The information also made up for the bottleneck of AI commercialization. OpenAI enterprise sales are under pressure as customers seek to opt for cheaper AI solutions, the report said. Jayesh Govindarajan, senior vice president of AI at software giant Salesforce, said the company still uses OpenAI, but is trying to support more AI services with open-source models as well as internally developed models, which can cost less.

It is also reported that most of OpenAI's current $1.3 billion revenue comes from consumer-grade ChatGPT paid subscriptions - domestic AI models are basically free.

High cost, scarce computing power, and slow commercialization have become obstacles for the AI big model industry.

An AI industry insider told Titanium Media App that now the low-price sales and vicious "involution" competition between large model companies are intensifying, which is difficult to benefit the healthy development of the domestic AI industry.

At the interface REAL conference held on October 25, Li Di, CEO of Xiaoice Company, said that AI companies have made great efforts in creating value, but they can only charge at a very low cost price, resulting in a smaller market size. The first problem facing the application and commercialization of AI products today is the "misunderstanding", that is, there is a huge gap between the value created by AI and the value actually obtained, which has led to the biggest difficulty for AI companies in the past decade.

Li Di pointed out that the current scientific and technological change is undoubtedly underway, but the problem is that we are in the context that the technological innovation shock period has not yet ended, most product applications have not yet been verified, and the suitable business model has not yet been determined. At such a moment, the business model of API calls cannot truly reflect the value of AI technology.

"Many of us always have a 'time does not wait' mentality, that is, the era of big models is coming, the entire industry has changed by leaps and bounds, and many people say that if you don't learn AI, you can't find a job, and panic and worry intensify. But the nature of the world is that we humans always face the unknown more than the known. Anxiety is not necessary. Li Di said.