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You couldn’t miss the disconnect in the AI discussion among major tech figures on Wednesday. Microsoft co-founder Bill Gates warned in a lengthy essay about the dangers posed by the technology, noting that he would support a global slowdown in AI advances if someone had a “credible plan” for doing so. Then Nvidia, the dominant seller of AI chips, reported that its revenue more than doubled in the July quarter to $96 billion. CEO Jensen Huang’s explanation: “AI has become useful.”
Huang didn’t address Gates’ essay, but, as is usually the case, his commentary on the company’s earnings call emphasized AI's benefits for business. Much of those benefits currently accrue to Nvidia, of course, although its quarterly update demonstrated just how far it is going to help potential buyers of its chips. On top of the investments it’s making in a variety of firms buying its chips or developing AI, and financial support for data center developments, and measures like this one, Nvidia in the July quarter also extended payment terms for some buyers of its chips.
Nvidia said it allowed “certain investment-grade customers” to pay over 60 days rather than 45, contributing to a 55% increase in accounts receivable—amounts due from customers who have bought a product. (Who’s betting SpaceX is one of those investment-grade customers?) You have to wonder why on earth a company that supposedly has the money to buy Nvidia’s chips needs a little more time to make its payment. Whatever the reason, this move cut Nvidia’s operating cash flow in half from the preceding quarter (more details on the quarter here).
On the call, Nvidia finance chief Colette Kress addressed the widespread criticism that all of Nvidia’s moves to help its customers amount to “circular financing.” Nvidia’s view is that “we’re going through a major computing platform shift, the creation of one of the most important technologies in human history” and that the returns on the money invested will be “excellent, and our risk is limited,” she said. Nvidia’s financial risk may be limited—that’s a matter for debate—but as Gates made clear, there’s also a risk that AI’s social harms will outweigh its benefits.
Meta’s Concessions
Meta Platforms’ legal settlement with the states suing it over alleged harm caused by its apps got headlines on Wednesday for the $18 billion price tag. In reality, that payout is the least important part of the agreement.
Meta pays the money out over a decade (and only 70% is definite, with the rest depending on whether YouTube and TikTok make concessions of their own). Even if it makes all of the payment, that amounts to $1.8 billion a year. In the June quarter alone, Meta generated $32 billion in cash from operations. True, it is spending most of that on AI-related capital expenditures right now. But that doesn’t change the fact that this legal settlement isn’t expensive for the company in the bigger scheme of things.
What could be meaningful are the changes in how Meta operates its apps. Notably, it agreed to turn on by default a number of measures aimed at limiting teen use of its apps. These include a two-hour daily time limit on teen use, an overnight block for teens, a muting of notifications during school hours, and the hiding of likes.
Leaving these options on by default means users have to take action to turn them off. That’s a big deal. People are much less likely to turn something off that is already on, particularly if it requires going into settings and fiddling around to change it.
As we reported in this 2023 story, Meta has previously shied away from giving teen-safety modifications a default status. In 2020, for instance, Instagram chief Adam Mosseri announced a plan to hide the number of like counts on Instagram, but he backed off on that. State attorneys general claim he did so because of concerns that such a move could reduce how often people visited Instagram and thereby hurt its ad revenue, we reported in that story. (For more on the legal implications of Meta’s settlement, see our story here).
In Other News
• Salesforce stock rose more than 13% in after-hours trading Wednesday after the enterprise software giant reported 11% growth in July-quarter earnings and boosted its full-year revenue guidance to as high as $46.4 billion from $46.2 billion, meaning revenue could increase as much as 12% in Salesforce’s fiscal year ending next January from the previous year.
• Chinese AI developer MiniMax said its annualized revenue run rate jumped to $800 million this month from $150 million in February, thanks to demand from enterprise customers for its new AI video model and large language models.
Today on The Information’s TITV
Check out today’s episode of TITV in which we speak with our San Francisco bureau chief about Meta settling a number of its social media addiction cases.
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