Suryaa Business Desk: Tech giant Google (Alphabet) has taken a major step forward in the battle for supremacy in the field of artificial intelligence (AI). Artificial... Tech giant Google (Alphabet) has taken a major step forward in the battle for supremacy in the field of artificial intelligence (AI). In order to expand artificial intelligence services, Google has launched AI chips developed by itself to check the dominance of Nvidia. Sales of Google's cloud division jumped faster than expected due to the use of these new chips.
However, the latest quarterly report revealed that Google's Free Cash Flow has decreased significantly as the company is spending heavily on capital to build this state-of-the-art infrastructure. At a time when the demand for AI technology is growing exponentially worldwide, Google is expanding its cloud clusters to give a tough competition to rivals like Microsoft and Amazon. Google's Tensor Processing Units (TPU) as an alternative to Nvidia Graphics Processing Units (GPU) are particularly appealing to cloud customers. Due to this, cloud computing revenue has grown tremendously. But as the company is spending hundreds of billions of dollars on building AI data centers, manufacturing state-of-the-art chips and buying servers, financial experts are analyzing that there is severe pressure on cash flow in the short term.
While investors hope that these huge investments by Google to maintain its monopoly in the tech market will yield positive results in the long run, the current dwindling cash balance is a cause for concern. While Google's strategy to make its own chips to overcome the shortage of hardware needed for the AI sector is paying off, rising operating costs are likely to impact profit margins. It is interesting to see what kind of turn this aggressive strategy followed by Google will take in the context of AI-based services expanding further in the global tech market in the coming days.