Wall Street to Silicon Valley: “Show Me the AI Money”
Earlier this year, we discussed how we were entering a new phase of AI mania in which more attention would be given to products and competition. The idea that a higher AI tide would lift all boats would become more nuanced. Wall Street, referring to a collection of different market participants, had given their OK to aggressive capex projections in exchange for this greater focus on product, and presumably, revenue and profit.
Due to ongoing questions on the product front combined with signs of some management teams possibly becoming intoxicated with AI mania, Wall Street appears far less willing to give Big Tech a financial pass.
In looking back over the past few months, we see that AI products have indeed received more attention. In addition, there has been a more serious discussion regarding competition. While there is evidence of text-based chatbots and generative media finding their way into the mass market, it’s been far short of transformational change.
Scattered AI-generated content like event fliers and fundraiser notices are appearing on social media feeds, pointing to growing casual usage of generative media models.
Many writing verticals have been infiltrated by AI assistants and text chatbots. It didn’t take long for education to fall victim to the creative writing killer.
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Big Tech Should Be Spending Big on AI
It is OK that Big Tech is pouring huge amounts of cash into AI-focused capex.
As I am one of the more outspoken critics of generative AI mania, the following statement may come as a surprise: It is OK that Big Tech is pouring huge amounts of cash into AI-focused capex. I would go so far as to say that Big Tech is doing the right thing. While Wall Street and Silicon Valley are still grappling with how generative AI will be used by the masses, the big picture regarding how AI will eventually come to define all computing is flying under the radar. Big Tech capex exploding higher is a necessity, and free cash flow projections need to be reexamined as a result.
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Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
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The Lines Between Public and Private Infrastructure Investment Will Blur
One of the defining ideas behind starting Inside Orchard was chronicling how the technology industry would become hard to delineate as its influence on society expands nearly unchecked. Ten years ago, tech was a defined sector. Ten years from now, most of society including industry, education, and healthcare will fall under the “tech” umbrella.
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Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special bundle pricing is available for Above Avalon members.
Subscriber Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are 1,000 words and sent via email on Mondays. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. A sample essay can be viewed here.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a paid subscriber, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.