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Tech Market Values Fall on AI Costs and Recession Fears; Eli Lilly, Berkshire Gain

]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
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Tech Market Values Fall on AI Costs and Recession Fears; Eli Lilly, Berkshire Gain

]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights
]The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, US, November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights

Market values of major tech firms declined in August amid concerns over escalating artificial intelligence infrastructure costs and rising recession risks that would make the stocks particularly vulnerable during a market correction.

Last month, Alphabet Inc's lost 4.7% of its market value as a slowdown in YouTube's advertising sales fuelled concerns about its earnings. A US judge's ruling that Google had violated antitrust laws and the emergence of new competition from OpenAI, which is developing an AI-based search engine prototype, also contributed to its shares' decline.

Amazon.com Inc's market value fell 4.5%, affected by slowing online sales.

Tesla's market capitalisation fell 7.7% last month after weaker Q2 earnings and following the news that Canada planned a new 100% tariff on Chinese-made electric vehicles, Reuters reported.

The world's most valuable automaker started shipping Shanghai-made EV's to Canada last year and Ottawa's plans raised concerns about the potential profit impact of exporting from its higher-cost US production base.

Meanwhile, Nvidia's market value fell in the last week of August by 7.7% to $2.92 trillion, after it projected third-quarter gross margins below market estimates and reported revenues that only met expectations, disappointing investors who were expecting a stronger performance.

Nvidia, which commands more than 80% of the AI chip market, stands in a unique position as both the largest enabler as well as beneficiary of surging AI development.

On a positive note, US drugmaker Eli Lilly's market value surged nearly 20%, leading market gainers, driven by robust sales and the launch of a weight-loss drug that significantly reduces the risk of developing type 2 diabetes in overweight adults.

Berkshire Hathaway's market value closed above $1 trillion for the first time at the end of August, reflecting investor confidence in the conglomerate that Warren Buffett built over nearly six decades into what many consider a proxy for the US economy.

Meta's market value also climbed nearly 10% after it beat market expectations for its second-quarter revenues and forecast strong revenue growth in the July-September quarter, indicating that strong digital ad spending on its platforms could offset the costs of its AI investments.

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Technology

AI Chatbots Must Learn to Say 'Help!' Says Microsoft Exec

A Microsoft logo is seen in Los Angeles, California US November 7, 2017. (Reuters)
A Microsoft logo is seen in Los Angeles, California US November 7, 2017. (Reuters)
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AI Chatbots Must Learn to Say 'Help!' Says Microsoft Exec

A Microsoft logo is seen in Los Angeles, California US November 7, 2017. (Reuters)
A Microsoft logo is seen in Los Angeles, California US November 7, 2017. (Reuters)

Generative AI tools will save companies lots of time and money, promises Vik Singh, a Microsoft vice president, even if the models must learn to admit when they just don't know what to do.
"Just to be really frank, the thing that's really missing today is that a model doesn't raise its hands and say 'Hey, I'm not sure, I need help,'" Singh told AFP in an interview.
Since last year, Microsoft, Google and their competitors have been rapidly deploying generative AI applications like ChatGPT, which produce all kinds of content on demand and give users the illusion of omniscience.
But despite progress, they still "hallucinate," or invent answers.
This is an important problem for the Copilot executive to solve: Singh's corporate customers can't afford for their AI systems to go off the rails, even occasionally.
Marc Benioff, CEO of Salesforce, this week said he saw many of his customers increasingly frustrated with the meanderings of Microsoft's Copilot.
Singh insisted that "really smart people" were trying to find ways for a chatbot to admit "when it doesn't know the right answer and to ask for help."
'Real savings'
A more humble model would be no less useful, in Singh's opinion. Even if the model has to turn to a human in 50 percent of cases, that still saves "tons of money."
At one Microsoft client, "every time a new request comes in, they spend $8 to have a customer service rep answer it, so there are real savings to be had, and it's also a better experience for the customer because they get a faster response."
Singh arrived at Microsoft in January and this summer took over as head of the teams developing "Copilot," Microsoft's AI assistant that specializes in sales, accounting and online services.
These applications have the gargantuan task of bringing in revenue and justifying the massive investments in generative AI.
At the height of the AI frenzy, start-ups driving the technology were promising systems so advanced that they would "uplift humanity," in the words of Sam Altman, head of OpenAI, which is mainly funded by Microsoft.
But for the time being, the new technology is mainly used to boost productivity, and hopefully profits.
According to Microsoft, Copilot can do research for salespeople, freeing up time to call customers. Lumen, a telecom company, "saves around $50 million a year" doing this, said Singh.
Singh's teams are working on integrating Copilot directly into the tech giant's software and making it more autonomous.
"Let's say I'm a sales rep and I have a customer call," suggested the executive. Two weeks later, the model can "nudge the rep to go follow up, or better, just go and automatically send the email on the rep's behalf because it's been approved to do so."
'First inning'
In other words, before finding a solution to global warming, AI is expected to rid humanity of boring, repetitive chores.
"We're in the first inning," Singh said. "A lot of these things are productivity based, but they obviously have huge benefits."
Will all these productivity gains translate into job losses?
Leaders of large firms, such as K Krithivasan, boss of Indian IT giant TCS, have declared that generative AI will all but wipe out call centers.
But Singh, like many Silicon Valley executives, is counting on technology to make humans more creative and even create new jobs.
He pointed to his experience at Yahoo in 2008, when a dozen editors chose the articles for the home page.
"We came up with the idea of using AI to optimize this process, and some people asked 'Oh my God, what's going to happen to the employees?'" said Singh.
The automated system made it possible to renew content more quickly, thereby increasing the number of clicks on links but also the need for new articles.
"In the end," said the executive, "we had to recruit more editors."