Profit in AI
AI is all the rage these days. A short prompt synthesizes whole essays, images, and even code. It honestly feels a bit like magic.
Where there’s magic, there’s also money. Startups and venture capitalists are spending incredible sums to develop the next best machine learning models. It’s a rising tide in AI - companies that touch AI see a big bump in their stock price and net valuation.
Yet, amid all the excitement, there’s been little discussion on where profits are in the AI industry. Or put another way, who makes the most money with the AI wave.
AWS alone generated $62.2 billion in 2021 with $18.5 billion in operating profit. To put that in perspective, Nvidia’s 2021 revenue was $16.7 billion.
Further, most cloud platforms are part of massive companies - AWS is a part of Amazon, Azure is part of Microsoft, and GCP is part of Google. With scale and capital like that, it’s easy to strongarm other layers in the AI industry.
Semiconductor companies are reliant on cloud platforms for business growth. Datacenter sales are the largest top-line revenue for Nvidia and can’t afford to alienate cloud platforms as they continue to displace traditional on-premise servers.
