AI Says Buy MSFT

Before AI makes everything for us, it's going to help us make a shit ton of stuff for ourselves. AI is the greatest creative tool ever created and when the means of creation become this magically accessible, my guess is we just won't be able to contain ourselves. As I go about been generating AI-created video, experimenting with AI scripting, generating AI images, and just playing around in this uncanny new world, it seems to me that the rise of a new computer super-cycle is inevitable.

Once you jump into the AI sandbox, one thing becomes abundantly clear: AI demands a mega amounts of computing power. Behind every render, every extrapolation, every AI-generated video, is a massive amount of processing power. In using, Synthesia.io, the tool that allows you to generate virtual spokespeople, my average render time was 10 minutes for 3 minutes of film. That’s a lot of number crunching. And that’s just for one output. Like everyone else, I do a second version. And a third. And...it’s unending.

Curiously, the mass popularization of AI is not unlike how we first experienced Xerox machines. At the time Xerox executives had no idea how many copies the world would need. In fact, at that time, people were even somewhat anti-copy. The general feeling was that duplicates were wasteful, and more copies confused things -- submersing important information under layers of waste. However, as soon as copying became cheap and easy, a familiar cover your ass instinct kicked in, and people went copy crazy. In the article XEROX XEROX XEROX XEROX by John Brooks, Bills Gates’ favorite business scribe, we get this snapshot the phenomenon:

“Largely as a result of xerography, the estimated number of copies (as opposed to duplicates) made annually in the United States sprang from some twenty million in the mid-fifties to nine and a half billion in 1964, and to fourteen billion in 1966.”

AI will trigger a similar content explosion. People will not only generate more stuff, but in doing so they will also experiment more -- spitting out more molecular combinations, more projections, more AI-designed decks, and generally more of everything. We’ve always gained comfort in covering our bases, and the ability to endlessly version plays well into our natural CYA instinct.

When content generation become so facile, it’s not difficult to over-export, over-make, and over-version. Our need to add value compels us to incessantly generate more options. This is not a bad thing. But given the seductive power of the new tool, our tendency will be to over-create rather than under-create.

As things advance, the role of AI as the prime mover in an explosion of content will become clear. With AI, we will equal and eventually surpass the power of Nature herself. ?We will no longer be biology’s fast follower, but instead a sort of productivity coach, patiently coaxing out more of her secrets while trying to conceal our exasperation.

In a relative sense, these startling new powers will come on the cheap. Yet there will be a cost. The AI upgrade cycle will demand faster chips, more robust CPUs, and more memory. ?AI brings with it an almost unending, and ascending, feedback loop. The cosmic hockey stick.

All computer technology companies will benefit, but cloud purveyors will be the first to feel the love. The recent fears that the cloud is being commoditized will soon fade. Cloud computing is critical to our way of life and civilization. Accordingly, cloud companies and cloud consumers will need much improved hardware and software.

Companies that make personal computers and servers will do very well. AI puts two constraints on current PC models. One, live video processing still isn’t fast enough. There will also be powerful must-have applications like Nvidia’s Maxine, which allows users to look anywhere during video calls, but appear to be staring straight forward. Secondly, new web-based AI applications will compel us to have even more tabs open. We will demand even greater processing power to keep our favorite pastime flowing. We will all need new PC, and as always in this commoditized space the winners will be those who do the best marketing.

By far, the biggest beneficiaries will be the large tech platforms such as Microsoft and Amazon who have huge and growing cloud infrastructures. Microsoft is poised to do the best because it won’t have the same non-core constraints on pure AI that, say, Amazon does with getting atoms to people’s doorsteps. As Microsoft splices AI into its DNA, it should do spectacularly well. For the first time ever, we will see the true potential of Word and PowerPoint and we will be astounded. They will no longer be the nerdy kid we make fun of. They will be seamless tools of unending power and delight. Strange days, indeed.

Then, of course, the pure play AI companies like OpenAI will do extremely well. A host of new and currently unknown startups will unseat companies like Google who will have their hands full with Microsoft.

Of course, all of this isn’t news to anyone, especially the chip makers, with AMD most recently getting on the bandwagon. But for those who are questioning the viability of the cloud or the PC industry and are wondering what could spark the next computer super-cycle, we have our answer.