Big Tech companies’ efforts around artificial intelligence (AI) are reportedly getting a largely negative reception on Wall Street.
In the days since their most recent earnings reports, Amazon, Microsoft and Alphabet have seen their share prices decline, Bloomberg reported Friday (Aug. 2).
These companies failed to show that they are gaining sales from their investments in AI infrastructure, according to the report.
Meta Platforms, on the other hand, reported second-quarter revenue that exceeded expectations, with CEO Mark Zuckerberg saying that the company’s investment in AI has paid off in the form of better ad targeting and content recommendations, per the report.
Meta also surprised analysts by raising its forecast for AI investments, the report said.
Zuckerberg said in a July interview that companies are making rational decisions to invest in AI, as they must position themselves for “the most important technology for the next 10 to 15 years,” per the report.
For the most part, though, the trend is toward growing investor concern that companies’ profits from generative AI may not be enough to justify the investments they have made in AI infrastructure, according to the report.
These concerns have also impacted the companies that make the chips that power AI, the report said.
To turn things around, companies must develop more significant use cases for generative AI, beyond the incremental improvements they have unveiled so far, per the report.
Tech giants and startups alike are both reaping rewards and grappling with challenges amid the AI surge, PYMNTS reported in July. While the industry is witnessing unprecedented growth and transformation, it’s also seeing the increasing apparent cost of innovation and need for careful navigation.
It was also reported in July that a growing number of tech firms are cautioning investors about risks related to their efforts in AI. Bloomberg reported that at least a dozen major tech companies have added or updated AI-related warnings in the “risk factors” section of reports filed with the Securities and Exchange Commission. Companies have noted the possibilities of a backlash to misinformation created by AI, claims of copyright infringement related to AI training and output, and a reduction of demand for other products that may be replaced by AI.
The post Investors Increasingly Skeptical That AI Opportunities Outweigh High Costs appeared first on PYMNTS.com.
