The Meta-Google limit highlights that we’re nowhere near peak AI demand
The market spent last week filled with angst over the pricing tug-of-war between memory suppliers and megacap tech spenders. The worries peaked on Thursday when Apple, XBox and Amazon all announced pricing hikes in large part due to memory chip costs.
On Friday, we saw a relief rally in the megacap names on the thinking that they still control the spending and have levers to pull in terms of pricing. That appears to be continuing today with:
- Alphabet +1.2%
- Amazon +1%
- Meta +1.9%
- Microsoft +1.7%
- Nvidia +0.7%
The chip stocks are also around flat as the market scours for signs of coming supply but there is very little in the pipeline until 2027 so it's tough to sell something like Micron trading at 10x next quarter's annualized earnings when they still sound determined to squeeze buyers for every dollar.
We were inundated with memory and AI takes over the weekend but only one stands out.
The FT reported that Google decided to limit Meta's Gemini AI access because Google itself is compute constrained. The report says that Google told Meta in March it couldn't meet all its requested Gemini capacity and the limits remain in place. The report also says other Google customers have reportedly been affected by similar capacity limits.
The take here is that Google sees overwhelming demand for data. If you used Gemini last year, you would have noticed that it was a great model that was later nerfed. The sense was because it didn't have the compute to properly serve it and that's looking increasingly like the right take.
So the view here is that models are being constrained by chips and infrastructure and that's going to keep the party going. I can get on board with that thinking and I just fail to see how/when megacap executives would pull the plug on AI spending because demand is too high.
Yes, they will need to find ways to be more-efficient and the GLM release from China is notable but it really is looking like the demand is going to be there for a long time because the applications for AI are so wide.
Nasdaq futures are up 1.2%.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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