AI Lesson for Microsoft and Google: Spend Money to Make Money

This illustration picture shows icons of Google's AI (Artificial Intelligence) app BardAI (or ChatBot) (C-L), Open AI's app ChatGPT (C-R) and other AI apps on a smartphone screen in Oslo, on July 12, 2023. (Photo by OLIVIER MORIN / AFP)
This illustration picture shows icons of Google's AI (Artificial Intelligence) app BardAI (or ChatBot) (C-L), Open AI's app ChatGPT (C-R) and other AI apps on a smartphone screen in Oslo, on July 12, 2023. (Photo by OLIVIER MORIN / AFP)
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AI Lesson for Microsoft and Google: Spend Money to Make Money

This illustration picture shows icons of Google's AI (Artificial Intelligence) app BardAI (or ChatBot) (C-L), Open AI's app ChatGPT (C-R) and other AI apps on a smartphone screen in Oslo, on July 12, 2023. (Photo by OLIVIER MORIN / AFP)
This illustration picture shows icons of Google's AI (Artificial Intelligence) app BardAI (or ChatBot) (C-L), Open AI's app ChatGPT (C-R) and other AI apps on a smartphone screen in Oslo, on July 12, 2023. (Photo by OLIVIER MORIN / AFP)

Artificial intelligence is expected to pay off big for tech giants including Microsoft and Alphabet someday. But expect deeper investments before gains trickle to the bottom line, the companies said on Tuesday.
Microsoft said costs rose sharply as it built new data centers to support AI and that capital expenditures will continue to rise as it buys chips from the likes of Nvidia Corp to power those data centers, Reuters said.
The Windows maker's shares were down more than 4% in premarket trading on Wednesday, while Alphabet gained nearly 7%.
Microsoft is bearing AI costs in two ways, analysts said: to power its own products such as its forthcoming $30-a-month Copilot AI assistant, and to serve companies wanting to use its Azure cloud computing services to create AI products.
Microsoft executives said the service will start generating the bulk of its revenue in the second half of its fiscal 2024 ending June 30.
"They're buying a bunch of H100s," said Ben Bajarin, chief executive and principal analyst of Creative Strategies, referring to Nvidia's flagship chips for AI.
"You're probably going to see a similar thing with Amazon , if not this quarter then the next quarter, because both of them are the clouds that the vast majority of the market is using for training (AI systems) right now."
Alphabet, however, kept down costs, though not for long. Chief Financial Officer Ruth Porat, who will become president and chief investment officer, said delays in data center construction are why second-quarter capex was lower than expected.
"As far as AI is concerned, while Google may have spent upwards of $200 billion on AI investments over the past decade, much of that isn't necessarily appreciated by users and investors," said Scott Kessler, global sector lead for technology media and telecommunications at Third Bridge.
One advantage Google has, analysts said, is that it has its own custom chip for handling AI work called the Tensor Processor Unit (TPU), which helps lower costs.
Microsoft may be "aggressively buying Nvidia chips, given Microsoft does not have its own silicon as an alternative," said Atlantic Equities analyst James Cordwell.
But Google conceded that it will buy chips from other companies as well as using its own, and Porat said that spending could put a drag on profit and growth.
"The message on inflection point was the same," from Microsoft and Google, said Gene Munster, managing partner at Deepwater Asset Management, "but the difference was Microsoft investors wanted to see more."



Dubai AI Week 2025 to Host World’s Largest Generative AI Championship with $272K Prize

Vehicles drive on Sheikh Zayed road after it was cleaned from flood water, backdropped by the world's tallest building of Burj Khalifa in Dubai, United Arab Emirates, 19 April 2024. (EPA)
Vehicles drive on Sheikh Zayed road after it was cleaned from flood water, backdropped by the world's tallest building of Burj Khalifa in Dubai, United Arab Emirates, 19 April 2024. (EPA)
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Dubai AI Week 2025 to Host World’s Largest Generative AI Championship with $272K Prize

Vehicles drive on Sheikh Zayed road after it was cleaned from flood water, backdropped by the world's tallest building of Burj Khalifa in Dubai, United Arab Emirates, 19 April 2024. (EPA)
Vehicles drive on Sheikh Zayed road after it was cleaned from flood water, backdropped by the world's tallest building of Burj Khalifa in Dubai, United Arab Emirates, 19 April 2024. (EPA)

Dubai is set to unite the global AI ecosystem and advance its future-readiness during a bold exploration of how artificial intelligence is reshaping our world at Dubai AI Week, taking place April 21 to 25.

The inaugural event will bring together over 10,000 participants, AI pioneers and policymakers from 100 countries to explore AI’s transformative role in business, governance, and society.

Featuring global championships, high-level summits, hackathons and an expo zone, the Week will set the stage for the future of global AI innovation.

With collaboration being integral to the success of the global AI landscape, the event joins forces with key government entities, global tech organisations and industry pioneers including Meta, IBM, Google, Microsoft, Gartner, OpenAI, Swift, Nvidia, Palantir, Cohere, and ElevenLabs.

The week opens with the AI Retreat on April 21, a closed-door gathering of global AI leaders, policymakers, and industry experts focusing on shaping AI strategies and governance frameworks.

The Dubai Assembly for AI takes place on April 21–24, where global policymakers, CEOs, and academics will shape AI’s evolving role in economies and societies.

The Global Prompt Engineering Championship will bring together leading AI practitioners to compete for a $272,000 prize pool during two days of challenges on April 22–23. Finalists will go head-to-head in four categories: Art, Video, Gaming, and Coding, showcasing their expertise in AI-driven content creation.

Advancing AI policy and governance, the Machines Can See Summit on April 23–24 will convene over 1000 participants, 20 keynotes, and expert-led discussions under the theme ‘Good AI: Making the World a Safer Place’. It will be one of the region’s most influential AI policy and ethics forums.

The Dubai AI Festival 2025 on April 23–24 will bring together 5,000 attendees, 500 investors, and 100 exhibitors under the theme ‘Enabling Digital Economies’. The festival will connect AI leaders, investors, and decision-makers to drive AI-powered transformations across industries, fostering collaboration, investment, and the unveiling of pioneering AI projects that will redefine the digital economy.

Beyond industry discussions and competitions, the Week will also focus on advancing AI literacy among students and educators through the AI Week in Schools, running April 21–25. The initiative, taking place across schools in Dubai, aims to equip future generations with fundamental AI skills.