The explosion of generative artificial intelligence has raised a question that is rarely addressed: who can afford it?
OpenAI spent about $540 million last year developing ChatGPT and says it will need $100 billion to reach its goals, according to The Information.
Sam Altman, founder of OpenAI, recently stated, “We will be the most capital-intensive startup in the history of Silicon Valley.”
When Microsoft, which has invested billions of dollars in OpenAI, is asked how much its AI venture will cost, the company says it is keeping its eye on its bottom line.
Building something similar to what OpenAI, Microsoft, or Google offer would require an astronomical investment in state-of-the-art chips and the hiring of leading researchers.
According to Jack Gold, an independent analyst, “People don’t realize that to do a significant amount of things in AI, like ChatGPT, you need huge amounts of processing power. And training those models can cost tens of millions of dollars.”
The reality is that virtually no one can afford it. In technology, if you can’t build the infrastructure, you rent it, and that’s what companies are doing by outsourcing to Microsoft, Google, and Amazon Web Services (AWS) in droves.
With the advent of generative AI, the cloud computing sector and tech giants are growing and consolidating their dominant positions, experts warn.
The unpredictable costs of cloud computing are an underestimated problem for many companies, according to Stefan Sigg, head of product at Software AG.
Some observers believe that Microsoft’s all-out bet on AI seeks to protect Azure’s success and secure its future.
For Microsoft, “the golden goose is monetizing the cloud with Azure, because we’re talking about what could be a $20 billion, $30 billion, or $40 billion per year opportunity in the future if the AI bet succeeds,” said Dan Ives of Wedbush Securities.
Microsoft CEO Satya Nadella insists that generative AI is moving in the right direction.
Regulators are hoping to keep pace and prevent the giants from imposing their terms on smaller companies.
But it may be too late to determine which companies have the wherewithal to lay the groundwork for generative AI.