Chapter 1: The Evolution of Technology and AI

Reflecting on the past, the cloud may seem like a dreamland for many. However, let's rewind fifteen years to a time when I found myself in front of a makeshift PC, yearning for a robust Nvidia graphics card to enjoy games like Assassins Creed 2. As a child, discovering that my hardware couldn't support the game crushed my spirit. Asking my father for a new graphics card felt futile; he viewed gaming as an imprudent expenditure, especially while supporting a family of six.

Back then, technology was advancing rapidly, and gaming demanded frequent hardware upgrades. Today, most games can be played on a single console, but the real question is, what happens when we shift our focus from gaming to something even more transformative? Enter artificial intelligence, which is evolving at an unprecedented rate.

As we brace ourselves for the future, investors are increasingly aware of the stakes involved.

PS — A significant portion of my time is devoted to my newsletter (1.3 million views and 34,000 readers). If you're interested, feel free to join my network. When you spot a speeding train, it’s wise to invest in the infrastructure.

The future remains uncertain; it could involve anything from aliens to groundbreaking technologies. The likelihood of extraterrestrial life is slim, and the chance they’re green is even slimmer. However, when investors assert that AI represents the future of humanity, they imply a belief that AI will be integral to the lives of future generations.

Despite the uncertainties, investors approach this landscape strategically, aiming to expand their portfolios. Unlike a casino, where luck plays a significant role, investors refine their strategies to enhance their odds.

The rapid growth of artificial intelligence is evident from the surge in job postings, as highlighted by McKinsey's insights on the future of generative AI.

While you're discussing the latest generative AI tools with friends, investors are contemplating the bigger picture: "What comes next?"

As you start your day, go to work, and chat about technologies like ChatGPT, many investors don't have that luxury. For them, the stakes are high; misplacing their funds could result in dire consequences.

Chapter 2: The Impact of AI on Cloud Computing

The fast-moving train metaphor applies to artificial intelligence, which is reshaping the market dynamics and driving tech stock valuations. Investors recognize a clear trend: as AI demand escalates, so does the need for computing power, which can only be adequately supplied via cloud services.

Consequently, companies specializing in cloud computing, such as AWS, are set to experience significant growth alongside AI.

But before you rush to invest, consider who leads in this arena.

Not everyone opts for Bing; Google dominates the search engine landscape. Similarly, sectors like e-commerce and ride-hailing are often monopolized by giants like Amazon and Uber. Choosing the wrong investment could lead to missed opportunities.

So, who holds the top spot in cloud computing? Currently, Amazon leads the pack, but this position is precarious. A single misstep could result in a swift loss of market share. Investors closely scrutinize the revenue growth of cloud services to gauge where to allocate their resources.

Are users increasingly opting for AWS? Is Microsoft Azure gaining traction?

The answers to these questions can shift billions in capital. For instance, in Q3 2023, Amazon's AWS was projected to grow by 12.2%, and it delivered, adding $88 billion to its market cap—an amount comparable to UBS, Switzerland's largest bank. Microsoft Azure also performed well, with a 29% growth rate, surpassing expectations and gaining $75 billion in market cap, akin to Airbnb's valuation.

Conversely, Google Cloud fell short of its targets, generating $8.4 billion against an anticipated $8.6 billion. While their total revenue slightly exceeded expectations, investors reacted sharply, leading to a $200 billion drop in market cap—equivalent to the valuations of Disney or Nike.

The train of progress won't pause for any company or investor; it continues to advance.

This perspective underscores the crucial role of cloud computing in the growth of AI. What are your thoughts? I welcome discussions in the comments, as much as I enjoy writing these articles.

Do you believe Google is learning from its experiences? Can Amazon and its new generative AI, Claude, maintain its leadership? Are Microsoft's strategies placing them ahead? Share your views, and let’s engage.

I'm Al, a business consultant based in Zurich, Switzerland, dedicated to delivering value to you, the reader. Connect with me on various social media platforms if you're interested in exploring more of my content.

The first video titled "Take large scale AI from research to production with Google Cloud's AI Hypercomputer" delves into strategies for transitioning AI from theoretical frameworks to practical applications, demonstrating how Google Cloud is leading the charge in this arena.

The second video, "AI and cloud are delivering higher quality, more actionable information," discusses how the integration of AI with cloud computing is enhancing data quality and providing businesses with actionable insights.