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Goldman Sachs Warns of Disappointing Returns from Costly AI Investments
5 minute tech market update.
Kristoffer Lindström
July 01, 2024
TECH BRIEF
Goldman Sachs warns tech companies could face disappointing returns on their artificial intelligence (AI) investments which are estimated to exceed $1 trillion due to AI's high costs and performance issues. Despite optimism from some experts trusting in cost reductions over time, shortages of necessary components like AI chips may slow down returns.
💡 Insight: Goldman Sachs' caution on AI investments underscores the current overestimation of ROI and underestimation of costs in the AI sector. Companies must navigate scarcity in crucial AI components and unrealistically optimistic future cost decline assumptions, potentially slowing AI's transformative promise.
Google's latest AI model, Gemini 1.5 Flash, outpaces OpenAI’s newest bot, ChatGPT-4o, by 20% and can accommodate more information in its analysis, Google Cloud CEO Thomas Kurian claims. The model also offers a unique feature, 'grounding', which sources answers and scores them for trustworthiness. Google plans to introduce an industry-specific grounding tool in Q3, allowing for customised AI queries against data from Moody's and Thomson Reuters among others.
Top SaaS tools for performance management including Datadog, New Relic, Dynatrace, AppDynamics, and Splunk offer critical real-time monitoring, deep analytics and proactive problem resolution. These platforms provide customizable dashboards and AI-driven insights for efficient performance management. Other noteworthy tools include SolarWinds, LogicMonitor, ManageEngine, and Scout APM that also offer diverse features with a focus on application performance and system stability.
Microsoft's AI CEO, Mustafa Suleyman, stated that any online content is "freeware" to train AI models unless the content provider specifically prohibits it. The controversial remarks drew several questions around permissions for generating new content from existing works. Critics equate Suleyman's statement with theft, while Microsoft and OpenAI face numerous copyright infringement lawsuits.
QUICK
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Chime Acquires Salt Labs, Targets Enterprise Market for IPO Boost with $173M Deal - Chime Financial is acquiring Salt Labs, co-founded by Jason Lee, for an initial $14 million. The deal could reach $173 million if performance targets are met, with Salt team potentially earning 0.9% of Chime stock.
Kleiner Perkins Raises $2 Billion to Boost AI-Based Startups Despite Market Volatility - Venture capital firm Kleiner Perkins has raised over $2 billion for two new funds aimed at investing in startups leveraging AI, despite a challenging fundraising climate.
Vista-Backed Solera Corp. Files for Public US IPO, Aims to Raise $1.5 Billion - Auto-data firm Solera Corp. has filed for a US IPO, aiming to raise up to $1.5 billion. The Vista-backed company plans to use proceeds for debt repayment and corporate purposes.
Epic Games Submits Fortnite and Store to Apple Amid EU Regulation Changes - Epic Games has submitted Fortnite and its own game store to Apple for EU approval, utilizing the Digital Markets Act. The launch faces notarization hurdles and heavy Core Technology Fees.
BUSINESS QUOTE OF THE DAY
"An entrepreneur is someone who jumps off a cliff and builds a plane on the way down."
-Reid Hoffman.
The takeaway: Entrepreneurship involves risk and adaptation.
Example: When creating LinkedIn, Hoffman navigated the unknowns of a new social network for professionals, adapting as the platform grew.
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