FOMO prompts tech giants to invest billions in artificial intelligence | Wilnesh News

Tech giants aren’t making many acquisitions these days, largely due to the unfavorable regulatory environment. But they are looking for other ways to spend billions on the next big thing.

Amazon’s A $2.75 billion investment in artificial intelligence startup Anthropic, announced this week, is the company’s largest venture deal and the latest example of an artificial intelligence gold rush that has the largest tech companies pulling out their wallets.

Anthropic is the developer behind the artificial intelligence model Claude, which competes with GPT Microsoft-Supports OpenAI, and Google’s Gemini.along with Yuan and applethey are all racing to integrate generative AI into their vast portfolios of products and features to ensure they don’t fall behind in this market. Expected to exceed US$1 billion Income over ten years.

According to PitchBook data, investors invested $29.1 billion in nearly 700 generative artificial intelligence deals in 2023, a value increase of more than 260% from the previous year.

A lot of that funding is strategic because it comes from technology companies rather than venture capitalists or other institutions. Fred Havemeyer, head of U.S. artificial intelligence and software research at Macquarie, said fear of missing out was one of the factors driving their decision.

“They definitely don’t want to miss the opportunity to be part of the artificial intelligence ecosystem,” Havemeyer said. “I definitely think there is FOMO in this market.”

The huge investment is necessary because artificial intelligence models are notoriously expensive to build and train, requiring thousands of specialized chips that, until now, have mainly come from Nvidia. Meta, which is developing its own model called Llama, said it spent billions on Nvidia’s graphics processing units, one of many companies that helped the chipmaker’s revenue grow more than 250% year over year. .

Whether it is the construction or investment route, there are a limited number of companies with the ability to participate in the market. In addition to developing chips, Nvidia has become one of Silicon Valley’s top investors, taking stakes in many emerging artificial intelligence companies, in part to ensure that its technology is widely deployed. Likewise, Microsoft, Google and Amazon sometimes offer cloud credits as part of the investment.

In the Amazon-Anthropic deal announced Wednesday, the two companies said they would work closely together in a variety of ways. Anthropic will use Amazon Web Services and Amazon chips for its computing needs. Anthropic’s models will be distributed by Amazon to AWS customers.

Earlier this month, Anthropic launched Claude 3, its most powerful model, which it says lets users upload photos, charts, documents and other types of unstructured material for analysis and answers.

Microsoft was earlier involved in the generative artificial intelligence investment business. US$1 billion Invest in OpenAI in 2019. Its investment scale has since grown to approximately US$13 billion. Microsoft makes extensive use of OpenAI’s models and provides open source models on its Azure cloud.

Alphabet plays the role of builder and investor. The company has refocused much of its product development on generative artificial intelligence and its newly named Gemini model, adding functionality in search, files, maps and elsewhere. Last year, Google committed to investing $2 billion in Anthropic, after confirming it had taken a 10% stake in the startup and signed a large cloud contract with the two companies.

Havemeyer said tech giants are not just throwing money into the “hype cycle” because these investments in AI startups align with their product roadmaps.

“I don’t think it’s flippant,” he said.

Havemeyer said alliances with large cloud providers could not only bring much-needed cash to startups but also help them attract customers.

Cloud companies say, “Come to us, work on our platform, have local access to the latest and greatest artificial intelligence models and use our infrastructure,” Havemeyer said. “It’s also part of a larger ecosystem.”

“We’re seeing a lot of alliances emerging between hyperscalers that have massive scale, infrastructure and deep pockets,” he added.

On recent earnings calls, tech executives reiterated their focus on generative artificial intelligence, making clear to investors that they have to spend money to make money, whether it’s developed internally or by investing in startups.

Microsoft Chief Financial Officer Amy Hood said last year that the company was adjusting its “workforce to enable the AI-first work we’re doing without adding a significant number of employees.” She said Microsoft will continue to prioritize investing in artificial intelligence as “something that will shape the next decade.”

Leaders at Google, Apple and Amazon also Suggest to investors that they are willing to cut costs broadly across departments in order to shift more funds toward artificial intelligence projects.

Microsoft, through its Microsoft Research division, has invested in a number of technologies that support the generation of artificial intelligence.Amazon It is said It is planned to train a larger and more data-hungry model than OpenAI’s GPT-4.

Apple researchers recently released details of their work on MM1, A series of small artificial intelligence models Can accept textual and visual input. Apple is in a different position than its peers because it doesn’t sell cloud services.Nonetheless, the tech giant is reportedly looking for AI partners, which could include US-based Google and Baidu in China. An Apple representative declined to comment on AI partners.

For example, Microsoft’s investment in OpenAI includes profit sharing from the nonprofit sector and credits for using Microsoft’s cloud services.Microsoft’s deal for Inflection AI amounts to an expensive acquisition, with some reports putting the total spend at US$1 billion. As part of the deal, Microsoft hired Inflection AI founder Mustafa Suleyman to lead the Copilot AI initiative.

“I think we’re starting to see some creativity and dealmaking,” Newman said. Regarding Amazon’s agreement with Anthropic, he said acquisitions are “much more difficult than investments.”

That’s because global regulators are cracking down on big tech companies, making large-scale acquisitions more difficult. Even investments are drawing close attention.

In January, the Federal Trade Commission announced a wide-ranging investigation into the largest players in artificial intelligence, including Amazon, Alphabet, Microsoft, Anthropic and OpenAI.

FTC Chairman Lina Khan described the investigation as “a market investigation into the emerging investments and partnerships between artificial intelligence developers and major cloud service providers.” Regulators have the power to order companies to submit specific reports or answer questions about their business in writing.

“We know regulators are increasingly focused on traditional routes to completing acquisitions,” Newman said. “Now, the game has obtained the most basic IP.”