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AI Spending Worries Cast Gloom over Alphabet, Microsoft

An AI (Artificial Intelligence) sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023. REUTERS/Aly Song/File Photo
An AI (Artificial Intelligence) sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023. REUTERS/Aly Song/File Photo
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AI Spending Worries Cast Gloom over Alphabet, Microsoft

An AI (Artificial Intelligence) sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023. REUTERS/Aly Song/File Photo
An AI (Artificial Intelligence) sign is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China July 6, 2023. REUTERS/Aly Song/File Photo

Investors appear to be losing patience with Big Tech's prodigious artificial intelligence investments this week after Meta Platforms signaled deeper spending and a long road to profitability.
The concession from Meta in its quarterly report late on Wednesday cast a cloud over Microsoft and Alphabet , which will both report quarterly earnings on Thursday, Reuters said.
Meta's stock sank 15% in extended trade after it forecast higher AI spending next year, while Microsoft was down 2%, Alphabet fell 3% and Nvidia dropped 1.4% in reaction.
Wall Street's heavyweight tech-related companies have been locked in a fierce battle to advance generative AI, which can create text, videos and photos from prompts and is seen as the next frontier in tech.
During Meta's earnings conference call, analysts peppered CEO Mark Zuckerberg with questions about how the company was pacing its AI investments. One analyst asked whether Meta was spending more because it saw an even bigger opportunity from AI.
"I think we've gotten more ambitious and optimistic on AI," Zuckerberg responded, pointing to Meta's recent launches of new AI models. "So all of that basically encourages me to make sure that we're investing to stay at the leading edge of this."
Alphabet and Microsoft both said earlier this year when they reported fourth-quarter results that they expected rising AI costs. The investor reaction on Wednesday indicated deepening concerns.
In a research note on Monday about Alphabet, analysts from New Street Research said the potential for materially higher capital expenditures was a worry ahead of results on Thursday.
The research firm said it now expects Alphabet's full-year capital expenditures to be $45.9 billion, up from its previous estimate of $42.7 billion.
Google has been working to catch up in the generative AI race and released Gemini, a model that can understand and create different types of information including text, audio and video.
Creating content with generative AI is energy-intensive, and Zuckerberg cited the cost as a reason for Meta's higher expenses.
Meanwhile, Microsoft has positioned itself to be a winner in AI due to its partnership with OpenAI, which kicked off the generative AI craze last year with ChatGPT, said analysts from Jefferies in a note on March 31.
Microsoft has integrated chatbots into its suite of Office products and is planning to invest more in data centers.
Industry-wide, shareholders are now focused on looking for revenue, including pricing models and whether customers can find use cases that justify the cost of generative AI, Jefferies wrote.
"Last year was spent dreaming of gen AI's potential," the analysts wrote. "This year will be about moving forward with concrete steps."

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Technology

Amazon Says Blocked 1,800 North Koreans from Applying for Jobs

Amazon logo (Reuters)
Amazon logo (Reuters)
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Amazon Says Blocked 1,800 North Koreans from Applying for Jobs

Amazon logo (Reuters)
Amazon logo (Reuters)

US tech giant Amazon said it has blocked over 1,800 North Koreans from joining the company, as Pyongyang sends large numbers of IT workers overseas to earn and launder funds.

In a post on LinkedIn, Amazon's Chief Security Officer Stephen Schmidt said last week that North Korean workers had been "attempting to secure remote IT jobs with companies worldwide, particularly in the US".

He said the firm had seen nearly a one-third rise in applications by North Koreans in the past year, reported AFP.

The North Koreans typically use "laptop farms" -- a computer in the United States operated remotely from outside the country, he said.

He warned the problem wasn't specific to Amazon and "is likely happening at scale across the industry".

Tell-tale signs of North Korean workers, Schmidt said, included wrongly formatted phone numbers and dodgy academic credentials.

In July, a woman in Arizona was sentenced to more than eight years in prison for running a laptop farm helping North Korean IT workers secure remote jobs at more than 300 US companies.

The scheme generated more than $17 million in revenue for her and North Korea, officials said.

Last year, Seoul's intelligence agency warned that North Korean operatives had used LinkedIn to pose as recruiters and approach South Koreans working at defense firms to obtain information on their technologies.

"North Korea is actively training cyber personnel and infiltrating key locations worldwide," Hong Min, an analyst at the Korea Institute for National Unification, told AFP.

"Given Amazon's business nature, the motive seems largely economic, with a high likelihood that the operation was planned to steal financial assets," he added.

North Korea's cyber-warfare program dates back to at least the mid-1990s.

It has since grown into a 6,000-strong cyber unit known as Bureau 121, which operates from several countries, according to a 2020 US military report.

In November, Washington announced sanctions on eight individuals accused of being "state-sponsored hackers", whose illicit operations were conducted "to fund the regime's nuclear weapons program" by stealing and laundering money.

The US Department of the Treasury has accused North Korea-affiliated cybercriminals of stealing over $3 billion over the past three years, primarily in cryptocurrency.

Technology

KAUST Scientists Develop AI-Generated Data to Improve Environmental Disaster Tracking

King Abdullah University of Science and Technology (KAUST) logo
King Abdullah University of Science and Technology (KAUST) logo
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KAUST Scientists Develop AI-Generated Data to Improve Environmental Disaster Tracking

King Abdullah University of Science and Technology (KAUST) logo
King Abdullah University of Science and Technology (KAUST) logo

King Abdullah University of Science and Technology (KAUST) and SARsatX, a Saudi company specializing in Earth observation technologies, have developed computer-generated data to train deep learning models to predict oil spills.

According to KAUST, validating the use of synthetic data is crucial for monitoring environmental disasters, as early detection and rapid response can significantly reduce the risks of environmental damage.

Dean of the Biological and Environmental Science and Engineering Division at KAUST Dr. Matthew McCabe noted that one of the biggest challenges in environmental applications of artificial intelligence is the shortage of high-quality training data.

He explained that this challenge can be addressed by using deep learning to generate synthetic data from a very small sample of real data and then training predictive AI models on it.

This approach can significantly enhance efforts to protect the marine environment by enabling faster and more reliable monitoring of oil spills while reducing the logistical and environmental challenges associated with data collection.

Technology

Uber, Lyft to Test Baidu Robotaxis in UK from Next Year 

A sign of Baidu is pictured at the company's headquarters in Beijing, China March 16, 2023. (Reuters)
A sign of Baidu is pictured at the company's headquarters in Beijing, China March 16, 2023. (Reuters)
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Uber, Lyft to Test Baidu Robotaxis in UK from Next Year 

A sign of Baidu is pictured at the company's headquarters in Beijing, China March 16, 2023. (Reuters)
A sign of Baidu is pictured at the company's headquarters in Beijing, China March 16, 2023. (Reuters)

Uber Technologies and Lyft are teaming up with Chinese tech giant Baidu to try out driverless taxis in the UK next year, marking a major step in the global race to commercialize robotaxis.

It highlights how ride-hailing platforms are accelerating autonomous rollout through partnerships, positioning London as an early proving ground for large-scale robotaxi services ‌in Europe.

Lyft, meanwhile, plans ‌to deploy Baidu's ‌autonomous ⁠vehicles in Germany ‌and the UK under its platform, pending regulatory approval. Both companies have abandoned in-house development of autonomous vehicles and now rely on alliances to accelerate adoption.

The partnerships underscore how global robotaxi rollouts are gaining momentum. ⁠Alphabet's Waymo said in October it would start ‌tests in London this ‍month, while Baidu ‍and WeRide have launched operations in the ‍Middle East and Switzerland.

Robotaxis promise safer, greener and more cost-efficient rides, but profitability remains uncertain. Public companies like Pony.ai and WeRide are still loss-making, and analysts warn the economics of expensive fleets could pressure margins ⁠for platforms such as Uber and Lyft.

Analysts have said hybrid networks, mixing robotaxis with human drivers, may be the most viable model to manage demand peaks and pricing.

Lyft completed its $200 million acquisition of European taxi app FreeNow from BMW and Mercedes-Benz in July, marking its first major expansion beyond North America and ‌giving the US ride-hailing firm access to nine countries across Europe.