#012 Sunday Special - Nvidia, The Trillion Dollar Baby, AI Startups Face Challenges in Turning Hype into Reality, Google Cloud in AI Battle with Microsoft and Amazon
Fresh & Hot curated AI happenings in one snack. Never miss a byte 🍔
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AI BYTE # 1 📢 : Nvidia, The Trillion Dollar Baby - The Secret Behind Its Record-Breaking Revenue
⭐ Nvidia, a company that was once known for its gaming hardware, has now become the undisputed leader of the AI industry.
Its revenue has more than doubled from last year, reaching $13.5 billion, and its net income has increased by nine times, reaching $6.2 billion.
The main driver of its success is its AI hardware division, which accounts for over three-quarters of its total sales.
Nvidia’s GPUs: The Powerhouse of AI Models
Nvidia’s graphics processing units (GPUs) are the preferred choice for running powerful AI models that can generate realistic text and images, such as OpenAI’s GPT-4, Midjourney’s ChatGPT, and Anthropic’s Claude.
These models require massive amounts of computing power and data, which Nvidia’s GPUs can provide efficiently and cost-effectively.
Nvidia’s flagship AI product is the H100 GPU, which is in high demand and short supply. Its predecessor, the A100 GPU, is also widely used by customers such as Microsoft, which partnered with OpenAI to build ChatGPT.
Nvidia’s Early Bet on AI Pays Off
Nvidia’s dominance in AI hardware is not a coincidence. The company foresaw the potential of AI more than a decade ago and invested heavily in developing its parallel computing platform CUDA, which enabled its GPUs to run AI models faster than its competitors.
Nvidia’s CEO Jen-Hsun Huang said that the company put its whole focus on artificial intelligence and made every chip with AI in mind. This gave Nvidia a huge advantage over other computer hardware companies such as AMD and Intel, which are now trying to catch up.
Nvidia’s Diversification from Gaming and Crypto
Nvidia’s transition from Gaming to AI was also influenced by other factors, such as cryptocurrency and social impact. Nvidia’s GPUs were used by crypto miners to generate digital assets such as Bitcoin, which boosted its sales but also caused environmental and social problems.
Nvidia’s Chief Technology Officer Michael Kagan said that crypto did not bring anything useful for society, but AI did. He said that with ChatGPT, everyone could create their own machine and program by just telling it what to do.
Nvidia’s Future Outlook and Challenges
Nvidia’s future looks bright, as it expects to increase its revenue to $16 billion in the next quarter. However, it also faces some challenges, such as meeting the growing demand for its H100 GPUs, which are expected to be sold out until 2024.
It also faces competition from other tech giants such as Google, Amazon, and Microsoft, which are developing their own AI chips. Moreover, it faces regulatory hurdles for its planned acquisition of Arm, a British chip designer that supplies many of its rivals.
AI BYTE # 2 📢 : AI Startups Face Challenges in Turning Hype into Reality
⭐ AI Startups face uphill challenges in building sustainable businesses around generative AI, the technology that powers humanlike chatbots.
Startups that have seen declining user growth, layoffs, and reduced revenue projections after the initial hype around ChatGPT, a popular generative AI tool released by OpenAI in November 2022.
There has also been an instance of legal troubles of Stability AI, an AI startup that raised $101 million but was accused of fraud by one of its co-founders.
Generative AI Boom and Bust
ChatGPT’s launch sparked optimism in the venture world that commercial AI applications would materialize quickly and create new opportunities for startups.
Investors thus rushed to back startups building products powered by generative AI, such as text-to-image generators, text-to-video creators, and AI writing tools, before they had proven customers or revenue.
But usage of these products has waned from peak levels, as measured by monthly online visitors, according to data from Similarweb.
AI Market and Competition
There is still much excitement for AI in the tech industry, as established companies such as Microsoft and Google invest heavily and roll out new AI products, and business is booming for Nvidia, whose chips are used to train AI models.
Startup investors say the technology is still early and could one day mint a new generation of multibillion-dollar startups.
However, the AI buzz has not been enough to stem a precipitous drop in total startup funding, which plummeted by almost half in the second quarter, even as investment in generative AI startups increased 65% to $3.3 billion, according to PitchBook data.
AI Business Model and Cost
Venture investors are unsure what a winning business model looks like for a startup building new products around generative AI, and whether they can retain users and develop products that existing tech companies couldn’t easily mimic.
Training cutting-edge models can cost companies billions of dollars, thanks to the large volumes of data they need to ingest and analyze, and investors have become hesitant to bankroll such businesses, given the uncertain path to profitability and heavy competition from well-funded rivals such as Google and Microsoft-backed OpenAI.
Frank Slootman, the CEO of Snowflake, said on an earnings call that many executives have characterized their foray into language models as experimental and exploratory.
AI Legal Issues and Fraud
Stability AI, an AI startup that helped ignite the AI boom with its viral text-to-image generator called Stable Diffusion, has since come under scrutiny.
Emad Mostaque, its CEO, has been accused of fraud by Cyrus Hodes, one of Stability’s early co-founders, who sued Mostaque and the company, alleging that he sold his shares in Stability for just $100 after Mostaque convinced him the company was essentially worthless.
A Stability spokesperson said the suit was without merit.
AI BYTE # 3 📢 : How Google Cloud Is Using AI to Compete with Microsoft and Amazon?
⭐ Google Cloud’s AI Strategy: What You Need to Know
Google Cloud, the third-largest cloud provider in the world, is betting on artificial intelligence (AI) to gain an edge over its rivals Microsoft and Amazon.
The company announced several new AI products and features at its Annual Cloud Conference in San Francisco on Tuesday, August 29, 2023.
Some of the highlights:
Generative AI: Google Cloud is making its most powerful AI technology, called Generative AI, available to all customers.
Generative AI can create realistic text, images, and other content based on data or prompts. Google Cloud’s current large PaLM 2 model, which powers many of its Generative-AI features, was previously only accessible to selected customers.
Now, anyone can use it to generate content for various purposes, such as Marketing, Education, or Entertainment.
Google Cloud will also offer AI models developed by Meta Platforms (formerly Facebook) and Anthropic, a startup that Google invested in.
AI-Powered Office Tools: Google Cloud is also launching a suite of AI-powered tools for corporate Gmail accounts and other workplace software products.
The tools can help users draft emails, summarize documents, schedule meetings, and more. The tools will cost an extra $30 a month per person, matching the price that Microsoft will charge for a similar offering in its 365 suite, which is still in testing.
Customer Showcases: Google Cloud showcased how some of its customers are using its AI technology to create innovative products and services. For example, GE Appliances is developing an app that uses Google’s AI models to create recipes based on the food in a customer’s fridge.
Other customers include Character Technologies, a chatbot app maker that uses Google’s TPUs and GPUs to power its AI systems.
Google Cloud’s CEO Thomas Kurian said that Generative AI is like the invention of cloud computing decades ago, a development that revolutionized the IT industry. He also said that Google Cloud has enough resources to meet customer needs, despite the growing demand for AI computing power.
Google’s CEO Sundar Pichai said that Google is aggressively adding resources needed to run AI software while acknowledging the difficulty of predicting the demand.
He also said that Google will offer Gemini, its answer to the AI system behind OpenAI’s popular ChatGPT bot, to cloud customers once the model is developed. Google co-founder Sergey Brin has been working almost full-time at the company with researchers developing the model.
Google’s new AI products will intensify competition with Microsoft and Amazon, the two leading cloud providers that also have strong AI capabilities.
Microsoft has backed OpenAI with billions of dollars and sells access to its ChatGPT technology.
Amazon has its own AI services and products, such as Alexa and AWS.
Google hopes that its AI strategy will help it catch up with its rivals in the lucrative cloud market, which is expected to grow rapidly in the coming years.
According to Gartner, a research firm, the global public cloud market will reach $332 billion in 2021, up from $270 billion in 2020.
Amazon has a 32% market share, followed by Microsoft with 20%, and Google with 9%.
If you have 1 1/2 hours to spare, you can view the entire Conference on YouTube
