Greetings!

Its not only tech companies that see artificial intelligence as a big new moneymaking opportunity. Its a potential gold mine for investment banks, according to Goldman Sachs CEO David Solomon. Using a newer piece of corporate lingo, Solomon double-clickedelaborated, in plain Englishon the potential of AI while he was speaking on Mondays earnings call. The need for companies and governments to finance the infrastructure and power necessary for AI technologies offered an opportunity on a scale that is, candidly, unprecedented over the next five to 10 years, he said.

Solomons comments perhaps should have been obvious, given the increasing signs that big tech companies and entrepreneurs like OpenAI CEO Sam Altman are planning to spend humongous amounts of money on AI, particularly around chips and data centers. Just on Monday, Google DeepMind CEO Demis Hassabis told a conference that Google was investing more than $100 billion over time in AI, Bloomberg reported. His comment was in response to a question about The Informations report late last month that Microsoft planned to spend $100 billion on one data center for OpenAI. Meanwhile, last week The New York Times quoted Anthropic CEO Dario Amodei saying large language models coming out later this year will cost close to $1 billion to develop.

And as we talked about last week, were already seeing capital expenditures by firms like Microsoft, Google and Meta Platforms rise. Those companies have plenty of cash and can presumably finance the AI capex on their own for the moment, although youd imagine that even deep-pocketed tech firms could turn to Wall Street for help in devising cost-efficient financing techniques as the bill mounts for AI-related spending. Then theres a host of others who dont have such resources, including SoftBank, which has indicated it wants to play in this market, along with Sam Altmans various ventures and smaller tech firms that have been borrowing money to buy AI chips. (For more on that trend, see here.)

On Mondays call, Solomon said the need for AI financing was creating an ecosystem of activity in our investment banking and markets business that weve seen in the context of other areas of significant shift or macro expansion over a long period of time. Tech companies may not yet know what return they will make on their AI investments. But judging by Solomons comments, Wall Street bankers and traders will make money whatever happens.

Teslas Slide

Teslas stock sell-off continued on Tuesday, with the shares falling 2.7% to close at $157.11. Thats the lowest level in 12 months and brings Tesla stock down nearly 37% for 2024 so far.

Our report tonight casts more light on the drama inside Tesla, revealing how Tesla CEO Elon Musk in recent days fired a senior staffer dealing with Teslas expansion of its Austin, Texas, factory after Musk toured the site last week and discovered major delays. Its worth a read.

In Other News

• Google will spend more than $100 billion over time developing its AI technology, said AI chief Demis Hassabis, who made the comments at a TED conference in Vancouver on Monday, according to Bloomberg.
• Another early leader among generative AI startups has cut staff after struggling to make money. Tome, which helps customers use conversational AI to quickly create digital presentations, on Monday laid off 12 of its 59 employees, the company confirmed (more here).
• Microsofts Beijing-based research group published a new open-source AI model on Tuesday, only to remove it from the internet hours later after the company realized the model hadnt gone through adequate safety testing (more here).
• Microsoft said it would invest $1.5 billion in G42, an Abu Dhabibased technology conglomerate that has been under scrutiny for its ties to China (more here).

Recommended Newsletter

"Steve LeVines work over at The Electric has been fantastic and helps me keep in touch with and stay ahead of industry trends." Department of Energy contractor

Industry experts call The Electric, an exclusive publication covering the nascent battery and electric vehicle revolutions, a must-read. Start reading today.

A message from Sigma Computing Sigma is the AI adoption vehicle for your business As AI evolves, you need a tool that integrates the latest data innovations intuitively. Join Sigma on May 2nd for an exclusive preview of the new AI Toolkit for business, featuring AI Functions, AI Forecasting, and Cloud Write-back.

New From Our Reporters

What Were Reading

Why You Can't Build Apple With Venture Capital

Amazon HQ2 Was Supposed to Add Jobs Last Year. It Shed Them Instead

Microsoft Makes High-Stakes Play in Tech Cold War With Emirati AI Deal