Last week, the tech giants — Apple, Amazon, Alphabet, Microsoft, and Meta — released their quarterly reports, which showed steady revenue and profit growth across the board, pretty much in line with previous ones.
However, except for the results of Jeff Bezos’ company and Amazon stock, the investors were not “fully satisfied.” Mixed forecasts for the next quarter and expected spending were of concern, especially in AI.
Although companies are confident in AI's enormous potential, developing and building the infrastructure to support it is proving costly, and results continue to fall short of expectations.
Right now, the biggest beneficiaries of the AI boom are similar to those in the gold rush — the ones supplying the tools. In today’s terms, that means essential hardware and cloud service providers.
For example, Microsoft Cloud quarterly revenue grew 22% year-over-year to $38.9 billion, with Azure and other cloud services experiencing a 33% increase, about 12% of which was driven by AI services.
Amazon's AWS, in turn, generated $27.4 billion in Q3. Although slightly below expectations, growth in this segment remains strong at 19% (up from 12% last year), underscoring the growing demand for it.
Chipmakers, which drive these AI advances, are also experiencing huge gains. Leading the way is Nvidia, which recently surpassed Apple in market capitalization to become the world's most valuable company.
Taiwan's TSMC, a major chip supplier to giants such as Nvidia, Apple, and AMD, is also thriving. TSMC's technology powers leading-edge products in smartphones and advanced computing systems.
TSMC's third-quarter revenue rose 36% to $23.5 billion, while net profit soared 54.2% to $10.1 billion. Revenue from high-performance computing chips now accounts for 16% of the company's profit.
Who else benefits from the AI boom?
The list is not short: data centers, telcos, and networking companies are all reaping benefits, as are mining companies, driven by increased demand for metals and materials for chips and electronics.
Another big beneficiary could be the energy sector. Following the rise of AI tools such as ChatGPT, the UAE's Minister of Industry and Advanced Technology noted that global energy demand is expected to double.
Apparently, a single ChatGPT query requires ten times more energy than a Google search. As AI usage increases, so will the need for more data centers that do not run on air.
The minister expects a seven-fold increase in the use of solar and wind power, at least a 65% increase in demand for LNG, and a continued reliance on oil for fuel and other products.