The Ascendancy of Cloud Giants: Unleashing the Potential of AI

The development of ChatGPT has been compared to groundbreaking inventions like the first microprocessor, the Internet, and the mobile phone, according to Bill Gates. This perspective on the disruptive power of artificial intelligence (AI) is shared by numerous respected research bodies and leading entrepreneurs. Experts estimate that AI advancements have the potential to significantly impact the global economy, with projections indicating a 5-7% increase in global GDP over the next decade, equivalent to around $4.5-7 trillion, as stated by Goldman Sachs and McKinsey.

While it may seem that AI has only recently taken shape in our lives, researchers have been working on AI software since the 1950s, and businesses began integrating AI in the 1990s. In recent years, technology giants like Microsoft, Google, and Amazon have made substantial investments in AI across various domains. However, the high costs associated with advanced computing infrastructure and AI model training create barriers to entry, favoring cash-rich tech giants. For example, Microsoft’s $10 billion investment in OpenAI, the creator of ChatGPT, is likely allocated to financing cloud computing expenses and AI computations.

Investors are showing optimism about the growth potential of AI companies, as evident from the significant stock price increases experienced by the industry. Notably, Nvidia, the developer of the graphics processor used by OpenAI, has seen its stock surge by 192% since the beginning of the year.

A notable trend in recent years is the transition of companies and organizations to cloud-based platforms for their work environments. This shift toward advanced computing infrastructure opens up a realm of innovative software applications and services. Anticipated AI-based applications will operate on top of the cloud environment, making the cloud transition even more appealing for businesses. The future convergence of the cloud and AI is expected to drive the AI cloud market forward. In this new landscape, cloud service providers will have the opportunity to offer AI services as subscriptions. Research company Statista projects that the market size of AI-based products will reach $2 trillion by the end of the decade, representing a tenfold increase from the current level of $200 billion.

Two prominent cloud service companies are positioned to benefit greatly from selling additional services to their large existing subscriber base. The first is Salesforce, an American company known for its customer relationship management system (CRM). Salesforce has recently introduced intriguing AI-based applications, including the notable “Einstein GPT.” This tool combines AI capabilities with the extensive CRM database, enabling subscribers to obtain contact information about companies, draft initial introductory emails, and more. In the realm of customer service, this advanced tool is expected to facilitate more accurate and timely responses to customer inquiries.

Another potential beneficiary is Adobe, the software giant renowned for its PDF document software and Photoshop image design software. In recent years, Adobe has shifted to a service-based sales model and envisions that AI will greatly expand the scope of usage for its design software. As evidence of this, Adobe recently launched an AI plugin for Photoshop that generates images based on textual descriptions provided by users. Initial user reactions have been enthusiastic, resulting in a 41% increase in the company’s stock over the past month.

In the context of the 19th-century gold rush, the greatest beneficiaries were the suppliers of equipment and services to gold seekers. Similarly, chip companies focused on the AI field are expected to play a significant role by providing the substantial computing power required. One notable example is Taiwan Semiconductors, a chip manufacturing giant projected to experience a sharp revenue increase from the AI field. Their partnership with chip company Nvidia, which accounted for approximately 6% of Taiwan Semiconductors’ revenue in the past year, further strengthens their position in the AI market.