Technology giants would rather over-invest than invest too little, because in the technology industry, falling behind means having nothing at all.
In the fierce competition of artificial intelligence (AI), executives from Meta and Google recently admitted that their companies may have spent too much on AI infrastructure. However, they also emphasized that the risk of underinvestment is far greater than the risk of overinvestment.
The necessity of investing in AI.
Mark Zuckerberg, CEO of Meta, pointed out in a podcast this week that in order to maintain Meta's leading position in the AI field, the company has spent billions of dollars to purchase NVIDIA GPUs to develop and train advanced AI models. Nevertheless, he also admitted that hype around AI may lead to overinvestment.
Because the consequences of falling behind mean that you will be in a disadvantageous position in the most important technologies for the next 10 to 15 years.
Sundar Pichai, CEO of Google, expressed a similar view this week.
During Google's earnings call on Tuesday, Sundar Pichai was asked when Google's $12 billion quarterly investment in AI would pay off. He also admitted that artificial intelligence products need time to mature and become more useful.
AI is expensive, but the risk of underinvestment is greater. Google may have invested too much in AI infrastructure, including purchasing NVIDIA GPUs. Even if the AI boom slows down, the data centers and computer chips the company has purchased can be used for other purposes. For us, the risk of underinvestment is far greater than the risk of overinvestment.
Competition and market pressure brought by AI make tech giants unable to stop even for a moment.
In addition to Meta and Google, companies such as Microsoft, Amazon, Oracle, and Tesla have all purchased large quantities of NVIDIA GPUs, and these companies have publicly stated that AI investment is a core priority for this year and the foreseeable future.
David Cahn, a partner at Sequoia Capital, pointed out in a blog post last week that the tech giants' crazy spending on AI is a result of dynamic competition, consistent with game theory's dynamic equilibrium, and has formed a "cycle of competitive escalation."
Tech giants believe that artificial intelligence is both a threat and an opportunity, and they do not have the luxury to sit back and watch how the technology develops. They must take action now.