Nvidia Surges Past Amazon's Market Cap and is Creeping on Google

Today on the AI breakdown, Google pledges 25 million to retrain Europe on AI. Before that, on the Brief, Nvidia has surpassed Amazon as the fourth biggest company in the world. The AI Breakdown is a daily podcast and video about the most important news and discussions in AI. Go to breakdown.network for more information about our YouTube, our newsletter and our discord. Welcome back to the AI Breakdown Brief. All the AI headline news you need in around five minutes. And yes friends, a crazy new milestone in the AI insurgency. Nvidia has overtaken Amazon in terms of market value. Basically during Monday trading, Nvidia rose just around 3% to reach a new market cap of $1.83 trillion. That puts it ahead of Amazon's 1.8 trillion and just behind Alphabet, which is of course Google's 1.85 trillion. The only other two companies that are ahead of Nvidia now are Microsoft at 3.11 trillion and Apple at 2.9 trillion. You may notice that all of those companies have a fairly significant stake in the AI future. Now one interesting note is that this is less about Amazon doing anything poorly and more about just the excitement around Nvidia. A Saxo bank analyst said Amazon was actually among the winners in the current earnings season as Amazon's outlook is improving. Nvidia is just riding the first investment wave of the current AI boom, with massive capital expenditures being deployed in data centers. Now, of course, Nvidia had a monster 2023 as well, but a lot of its gains came in the first half of the year when ChatGPT hype was at its peak. In the second half of the year, Nvidia didn't rise as much. But now, since the beginning of 2024, Nvidia is up nearly 50%. Of course there has been a lot of semiconductor and AI chip stories in the news recently, with the big story of last week being reports that Sam Altman was out trying to raise somewhere between 5 and 7 trillion dollars, in other words, around 8% of global GDP for a new network of AI chip fabrication plants. Well, earlier today, Jensen Huang, the CEO of Nvidia, spoke at the World Government Summit in Dubai and said that he wasn't sure that it was going to take $7 trillion to meet the world's compute needs. He said you can't assume that you will just buy more computers. You have to also assume that the computers are going to become faster and therefore the total amount that you need is not as much. Payments.com goes on. He said he has confidence that the chip industry will lower the cost of AI as its components are made faster and faster and faster. Now, that said, it's not like he's saying that Sam Altman is an order of magnitude off here. Huang also said, we're at the beginning of this new era. There's about a trillion dollars worth of installed base of data centers. Over the course of the next four or five years, we'll have 2 trillion worth of data centers that will be powering software around the world. Now, I think one of the big differences between Altman and Huang here, in addition to the fact that Jensen is running a public company, and so all of his comments are going to be radically more scrutinized by shareholders than Sam Altman's, who has the benefit of going after big outlandish plans because of course, he is running a private company. But still, there's something revealing in this statement. You have to also assume that the computers are going to become faster, and therefore the total amount you need is not as much. My instinct, although I don't want to put words in his mouth, is that the way that Altman would respond to that is that as the computers become faster, it won't mean that we can get the compute we demand right now for not as much. It will just mean that we demand even more compute. This is basically the way that Altman sees everything, that the unleashing of AI and ultimately AGI will create so much demand for everything, energy, compute, and all of the things that those produce that it will require, as he put it at Davos, breakthroughs in energy that it demands this sort of wild international project to bring online far more fabrication of AI chips. And optimistically, perhaps it's also why he doesn't see ultimately some big lack of jobs because of AI. His argument has basically been that the more capacity humans have to create and make things, the more things we demand to be created. Ultimately, that creates a whole new set of jobs to do all that creation. Although, of course, as I've pointed out in the past, that doesn't necessarily account for what happens during the transition. Now, the other comments from Jensen Huang that made news from that summit were a repeated call, something he said before, that countries have to be investing in their own sovereign AI infrastructure. He basically said that countries that allowed all artificial intelligence to come from outside were going to not only miss out on significant economic potential, but also potentially lose elements of their culture as AI becomes dominant. He said simply, you cannot allow that to be done by other people. It is really up to you to take initiative activate your industry, build the infrastructure as fast as you can. Now, he also used this appearance to tamp down on fears of AI. He said there are some interest to scare people about this new technology, to mystify this technology, to encourage other people to not do anything about that technology and rely on them to do it. And I think that's a mistake. We're seeing a little bit more of a feisty pushback against some of the AI doomerism out there. Sam Altman made what appeared to not be a particularly veiled reference to Gary Marcus when he tweeted over the weekend, you can grind to help secure our collective future, or you can write substacks about why we are going to fail. Now, if you've listened to this show, obviously you know that both accelerationism and doomerism have a place in the conversation that we're facilitating here. But I do understand the frustration around folks who make it their career to be the poop in the punch bowl. At some point it gets hard to tell where someone's genuine concerns end and their financial interest in being the loudest critic begins. Now moving over to another very topical story. Yesterday, of course, was the Super Bowl. The super bowl is the biggest advertising event of the year. Indeed, it's the one time that Americans actually want to be advertised to this year, as we knew AI was going to show up in a number of different super bowl commercials. And that is exactly what happened. Microsoft Copilot's Watch Me ad, which we profiled last week, played during the fourth quarter. Which, for what it's worth as someone who's bought super bowl ad time before, means that they didn't make the decision to buy this spot until relatively recently, at least compared to some of the other advertisers. Still, as I said last week, I loved the tone of this particular commercial reintroducing AI to the world as something not to be scared of, but as something that is fundamentally about empowering people and giving them superpowers. Another AI related ad that just showed AI being used was for Google's Pixel 8. It showed how someone with visual impairment could use Google's new guided Frame AI feature to tell them when and how many faces are in a frame. In addition to telling the story of a particular AI product, it continued Google's trend and as being the only company, and I mean the only company to be able to pull off heartwarming consistently without veering into the realm of cringe. In Etsy's Big Game ad, the American political establishment used Etsy's AI powered gift mode feature to figure out what to send France as a thank you for the Statue of Liberty, of course, coming up with a cheese board. And then there were a couple ads that were making fun of AI. The sports drink Body Armor used tropes around AI producing extra fingers and weird images to eventually get to the hook line. Now nothing in sports should be artificial. Before lauding the real sweeteners and real flavors of the body armor drink, there was also a Despicable Me 4 ad that showed the minions as behind famous AI glitches like too many fingers but doing it for a laugh now. Ad Week wrote, despite having its moment, 2024 is not the year of the AI Super Bowl. And despite everything I just said, that's absolutely true. However, you have to remember that the frame of reference for that is what was widely called the Crypto Bowl a couple of years ago. But whereas there was a ton of attention paid to the crypto ads that year, AI's place in the super bowl ads this time was much more cross cutting. It wasn't just ads for AI features and AI tools, although there were those for things like Copilot, but instead it just showed how AI was starting to make its way into the culture. I think in many ways that reflects how much more significant AI has become in a very short period of time, at least when it comes to regular people's lives, than crypto was even at the peak of its hype. Ultimately, if you are someone who is excited about the future of AI, I think you have to see the super bowl as a good showing between a shift in the messaging from someone like Microsoft to really try to make it feel empowering to the individual, to just the fun, subtle poking fun of it that came out in a number of other ads. It all had the net effect of normalizing it and making it feel less scary perhaps than it did coming into the game. However, that is going to do it for today's AI Breakdown brief. Next up, the main AI breakdown. Welcome back to the AI Breakdown. One of the things that we're starting to see happen quite frequently is the companies that are most involved in artificial intelligence. The big AI labs are starting to share their commitments to helping retrain and reskill the workers of the world for a new AI future. The latest example of this story comes from Google, who has pledged 25 million euros to help European workers learn how to use AI. There are a bunch of different ways that they're going to come at this. First, apparently they have opened applications for non profits and social enterprises that can help teach audiences, particularly who might not otherwise have easy access to that training. In other words, there is an equity portion of this where they're trying not just to train folks at the top of the economic period, but anyone who might be impacted by AI. Reuters also reports that Google is going to run a series of what they call growth academies that will help companies who are implementing AI scale their operations. And they're expanding their free online AI training courses to now 18 languages, said Adrian Brown, the executive director of the center for Public Impact, who is coordinating with Google on these nonprofit and social enterprise applications. Research shows that the benefits of AI could exacerbate existing inequalities, especially in terms of economic security and employment. This new program will help people across Europe develop their knowledge, skills and confidence around AI, ensuring that no one is left behind. Now, of course, part of the reason that companies like Google are investing in this sort of local support is that they're also investing in local infrastructure from a business standpoint. For example, last month Google announced that it was investing about a billion dollars to build a data center outside of London, meaning that this is all part and parcel of a larger plan. You might remember that recently we heard from Microsoft CEO Satya Nadella that the company was planning on helping train 2 million Gen Z workers in India with tech skills. Now, this is obviously not just corporate philanthropy and it's obviously not just pr. Having a more informed public, especially one that is familiar and has adapted to your particular toolset, is quite in the interest of these big companies. Now, big tech is a bellwether for the AI space in a number of different ways. Right now, obviously on the one hand, everyone is watching the products that they're actually putting out. There is an AI arms race between these companies. Microsoft and Google, for example, both, as we just discussed, had AI related ads in the super bowl last night. Google has Gemini and they've just rolled out Gemini Advanced, which is the first GPT4 class model that isn't from OpenAI. And so one way in which the world is watching what these tech companies are doing is just what the state of the art is when it comes to the technology itself. However, another part is that they are a leading indicator, at least they appear to be, of how different industries are going to adapt to the AI revolution. And that includes the scary part of people losing their jobs. The Financial Times published a piece this morning, tech companies ax 34,000 jobs since start of year in pivot to AI. The data comes from layoffs, FYI, and shows that a total of 138 tech companies have laid off staff this year, including Microsoft, Snap, eBay and PayPal. Now, this continues a trend from 2023, where 263,000 jobs were cut across the tech sector in that year. The big question when it comes to these types of layoffs is what's driving it. It is very easy to get scary sounding headlines that say it's just because AI, but there's also clearly other things going on as well. First of all, there is a recalibration after pandemic era growth. During the pandemic, many companies thought there would be bigger fundamental changes to the ways in which people lived and workers worked than have actually shown up. There was also a glut of cheap money as interest rates crashed to zero and monetary and fiscal support were hugely forthcoming, which led to an overall period of overinvestment and overhiring. So one part of the shift over the last couple years is a recalibration to that post pandemic world that is different in terms of expectations and how much has actually shifted. But also in terms of the financial reality of a new post ZIRP era financial world, what investors are valuing, both private and public, looks different than five years ago. The growth at any cost technology era of startups, for example, is increasingly a thing of the past. So to some extent part of these job losses can be traced back to that now. A second part of this does have to do with AI, but not necessarily in a negative way. What I mean by that is that many of these companies are shifting what they spend their time focusing on. They're investing increasingly in generative AI as an area, and that means they need to bring in different types of talent, different types of skills and different types of expertise. In many cases, that's going to mean less focus on other previous things. For example, as Spotify CEO Daniel X said earlier this month, we need to become more efficient by deprioritizing some of the existing things, but we also need to invest in some of the new. Now, of course, deprioritization showing up at layoffs is very difficult for the people who are affected, but it's not AI disruption in the sense that we normally talk about of AI taking people's jobs. It's that the shift to AI is putting a premium on different types of skills and making other things that people had previously been working on relatively less valuable to those companies. There is, however, another part of this which is much more the big concern around AI, which is people's jobs becoming redundant because of the application of AI. This is happening, for example, at Meta and Google, both of whom see a huge portion of their revenue come from advertising and who are in fact increasingly seeing efficiency gains by having AI do things that humans used to do, particularly in the self serve ad platforms that both of these companies offer advertisers. AI can be used to things like help with copy and help with visuals that previously were someone's job. And so in that way, AI really is impacting the nature of the jobs that are available. And tech is sort of acting as a canary in the coal mine for where that might come to bear in other areas. You see this showing up all over the media. The Wall Street Journal, for example, wrote a piece this morning, AI is starting to threaten white collar jobs. Few industries are immune. The piece points out something that we have discussed extensively on this show. Quote Unlike previous waves of automation technology, generative AI doesn't just speed up routine tasks or make predictions. By recognizing data patterns. It has the power to create content and synthesize ideas. In essence the kind of knowledge work millions of people now do behind computers. That includes managerial roles, many of which might never come back, say corporate executives and consultants. Now some people have tried to actually figure out how many of these job cuts are actually directly related to AI. One firm, Challenger, attributes more than 4,600 job cuts to AI, with the majority of those happening in media and tech. That said, they also think that the actual number is probably higher since companies aren't necessarily super keen on tying layoff announcements to AI Adoption Now. @ the same time, the use of generative AI by professionals is also going up. For example, the share of employees who use generative AI at least once a week by industry has jumped up massively between June 23 and November 23. In the technology field it went from around 55% to 75%. In financial services, around 35% to around 60%, in healthcare and life sciences, from around 30% to over 50%. So clearly a lot of bottom up adoption happening. Interestingly, people's self assessment of AI also tells the story of a technology which could have a huge and dramatic impact once again From WSJ According to an Oliver Wyman study, more than half of senior white collar managers surveyed said they thought their jobs could be automated by generative AI, compared with 43% of middle managers and 38% of first line managers. All of those numbers are extremely high given that people are talking about their own jobs now. One of the things I think to watch for this year is where some of these issues actually show up. So far they've been largely theoretical, but as these layoffs actually happen, they will start to give us a little bit of a picture of which roles are being automated away versus which types of tasks are being automated away and what the consequences of those decisions are. Last week I shared with you another study from Rutgers University which found that while 3 in 10 workers in the US are worried about their job being eliminated entirely by AI, 7 in 10 are very or somewhat concerned about employers using AI and human resource decisions. In other words, AI deciding who gets hired, who gets fired, and who gets promoted. Al Jazeera wrote a piece today that also shows how this is starting to come up more and more. It's called as Corporate America pivots to AI consumers rejected for loans and jobs. Now, this isn't about human resource decision making, but it is about AI based systems without easy human recourse making very critical decisions for people's lives without the ability for them to go appeal those decisions. My guess is that we're going to see a lot more of this type of story this year as companies actually start to adopt AI and put it into these particular areas. No matter what, this is going to be a key theme of 2024 and beyond, and so I will continue to share when interesting news about it comes up. For now though, that is going to do it for today's AI breakdown. Till next time.