Big Tech Struggles to Turn AI Hype Into Profits

16 November 2023

October 9, 2023: As AI continues to captivate the global tech industry, giants like Microsoft, Adobe, and Amazon push the envelope with innovative AI tools, drawing significant investor interest. GitHub CoPilot, a notable success story, has amassed 1.5 million subscribers, showcasing AI’s potential to streamline software development. However, the financial sustainability of such AI ventures remains uncertain; the high data processing costs and the development of usable datasets from large language models (LLMs) are still at odds with their profitability.

Tech leaders are exploring new pricing strategies to counterbalance these expenses. Microsoft has raised its Office 365 subscription fees, aiming to create a viable financial model for its AI investments, including those in OpenAI. These adjustments have yet to bridge the gap between investment and return, reflected in the losses reported by Microsoft with GitHub CoPilot, despite its large user base. With the AI hype set to normalize, the tech industry may see a pivot in 2024, with companies either finding innovative ways to cut costs or scaling down investments to align with profitable returns.

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