Media Reports: AI Technologies Are Becoming More Expensive but Aren’t Profitable for Developers

  • SaySay
  • Ai
  • June 20, 2024
  • 0 Comments

According to Bloomberg, despite the rapid advancement of artificial intelligence and its integration into various business sectors, AI-related technologies remain costly. Companies developing AI are struggling to turn a profit from their innovations, unlike hardware manufacturers.

The report notes that software developers often can’t figure out the best way to monetize their AI products. Some use AI features to incentivize higher subscription tiers, others sell “generative credits,” and companies like Zoom Video Communications Inc. offer AI capabilities for free.

Statistics show that the iShares Expanded Tech-Software Sector ETF, a common indicator of the industry’s health, has grown only 3.5% this year after a 59% jump in 2023. On the other hand, hardware manufacturers focused on AI, such as NVIDIA—which recently became the most valuable company in the world—are experiencing significant financial growth.

KeyBanc analyst Jackson Ader explains this disparity by noting that the bulk of AI market spending is currently directed toward developing hardware and cloud infrastructure necessary for training and deploying neural networks.

Skeptics fear that AI might undermine the software industry. The high efficiency of neural networks could lead to job cuts and a slower growth rate for the software market. However, some industry leaders disagree. Adobe CEO Shantanu Narayen, for example, believes that AI will simplify software use and expand the customer base.

This issue is particularly relevant in the USA, where AI integration is rapidly growing, and companies are eager to find profitable ways to harness this powerful technology.

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