Wall Street On AI: Less Talk, More Action — Tech Titans' Strategies Unveiled

U.S. corporations are moving from words to deeds when it comes to artificial intelligence (AI).

As Goldman Sachs highlighted in a note, mentions of AI have tapered off slightly from last quarter’s peak. But investment commitments by U.S. companies to this transformative technology continue to intensify.

Corporate Mentions Wane, Investment Bets Ramp Up

In the second quarter (Q2) 2023, 35% of S&P 500 companies used the word “AI” in their earnings discussions. In Q3, this figure eased to 29%.

This decrease might hint at a tempering of the initial exuberance but doesn’t overshadow the broader, upward investment trend.

“Generative AI has enormous economic potential and could raise global labor productivity growth by over 1 percentage point per year in the decade following widespread adoption,” Goldman Sachs economists Jan Hatzius and Joseph Briggs wrote in a study.

The biggest U.S. companies are in fact not just preparing for an AI-centric future; they’re banking on it.

Goldman Sachs remains bullish on AI’s economic horizon, forecasting a sharp investment upswing in the U.S. to nearly $100 billion, and globally to $200 billion by 2025.

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Tech Titans Chart The Course For AI’s Future

Goldman Sachs has extracted key insights from the discussions about AI strategies among U.S. technology giants. Here is what they uncovered:

• Microsoft Corp. MSFT: The Redmond, Washington-based company anticipates a sequential increase in capital expenditures, reflecting its commitment to scaling AI solutions, which will likely influence the cost of goods sold but is expected to correspond with revenue growth.
  
• Alphabet Inc. GOOGL: Google’s parent company is focused on re-engineering its cost structures to free up resources, aiming to facilitate these investments and achieve long-term sustainable financial growth.
  
• Tesla, Inc. TSLA: The electric vehicle manufacturer reported that R&D expenses are on the rise, with significant investment flowing into AI technologies for projects like the Cybertruck, full self-driving capabilities, Optimus, and Dojo.
  
• Apple Inc. AAPL: The Cupertino, California-based tech giant views AI and machine learning as integral to nearly every product they release. The company’s strategic use of AI underscores its importance as a foundational element within its broad product ecosystem.
  
• Amazon.com, Inc. AMZN: The e-commerce company anticipates that its generative AI initiatives through AWS will generate a substantial revenue stream, potentially in the tens of billions of dollars, in the coming years. The Seattle company’s approach to generative AI is resonating with its customer base, which uses AWS for AI-related workloads.
  
• NVIDIA Corp. NVDA: The chipmaker giant expects the era of generative AI to take off in the near term, driven by rising demand across a broad range of users. The company’s executives have expressed confidence in their supply outlook and are actively collaborating with their supply chain partners to boost supply consistently quarter over quarter.
  
• Advanced Micro Devices, Inc. AMD: AMD is in the midst of planning for 2024, with AI and data center expansion being key investment targets. They expect to ramp up R&D and marketing investments to capitalize on these opportunities. AMD forecasts Data Center GPU revenue to hit around $400 million in Q4 and exceed $2 billion in 2024, positioning the MI300 as AMD’s quickest product to reach $1 billion in sales.

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