Generative AI Will Not Provide A Meaningful Revenue Boost to AMZN, GOOGL or MSFT
Generative AI Revenue for Microsoft (MSFT), Amazon (AMZN) and Google (GOOGL) is negligible and will not provide a meaningful revenue boost in the near-to-intermediate term. Nvidia (NVDA) is benefitting from the broad Gen AI infrastructure build given that it is the leading Gen AI chip supplier. OpenAI (private) is benefitting as it deploys its Large Language Models (LLMs) which underpin Microsoft Azure’s Gen AI effort.
Gen AI will provide a very modest revenue boost to Microsoft, Amazon and Google in the coming years and will likely generate operating losses for at least the next few years.
Building an LLM infrastructure is very expensive. Sharing the LLM build expense is part of the reason why Microsoft, Google, Amazon and others are partnering with start-up companies that specialize in building LLMs.
Frankly, given that OpenAI is tightly tied to Microsoft (MSFT is the controlling investor), I would want to consolidate OpenAI’s financials with Microsoft’s financials. This would be impossible to do given that OpenAI is a private company. However, I think it would be wise for the SEC to force some type of disclosure around OpenAI’s financials (on Microsoft’s dime). My guess is that OpenAI’s operating losses would be dilutive in a meaningful way to MSFT’s reported Operating Income and Cash from Operations.