Accenture's $3B AI Surge: Intel and Salesforce Follow Suit

0:00What can 160 years of experience teach you about the future? When it comes to protecting what matters, Pacific Life provides life insurance, retirement income, and employee benefits for people and businesses building a more confident tomorrow. Strategies rooted in strength and backed by experience. Ask a financial professional how Pacific Life can help you today. Pacific Life Insurance Company, Omaha, Nebraska, and in New York. Pacific Life and Annuity, Phoenix, Arizona. just recently three major tech companies have announced some major investments into ai so today on the podcast i want to break down who's investing into ai why these enormous sums of money are going into it and what these companies hope to get out of it so the first one is salesforce salesforce is well known for the fact that just recently and earlier this year they announced they would be investing 250 million dollars into different ai investments and they have just upped that number to 500 million.

0:57The next one I want to talk about is Lenovo, who just announced edge servers as part of a$1 billion AI push that they're going to be making. And the third is Accenture, the, you know, very famous consulting group, Accenture has just announced that they are going to be investing$3 billion into AI to accelerate their clients reinvention, as they say, but they're going to be investing this$3 billion over the next three years. So today on the podcast, let's break down why exactly these three companies are making such massive investments and what they're planning on doing. So for Salesforce, I think this is a really, this is a big no brainer.

1:36They're hoping to essentially incorporate new tools into their platform to help increase the profitability of their current clients. And you have to think of this from two sides. One is just like the straight up profitability and, and just the ability for them to make more money. But the but the other one is not is, you know, of course, they're trying to make money from sales. But the other one is also their stock price, I think, you know, any savvy publicly traded company can tell at this point that the winners right now on the stock market are ones that have integrated AI. So when you see Google, Microsoft, Nvidia, all doing quite well, and many, many other software companies doing quite poorly this year, year to date, I think that this is kind of a no brainer for Salesforce to make sure they're really focusing on this trend and capitalizing on it.

2:24It reminds me of a famous Microsoft case study that went over, you know, the I believe it was a Harvard Business Review case study. And essentially, they were they're talking about an acquisition that Microsoft made, and they went over all the pros and cons of the acquisition, yada, yada, if it was going to be successful and or if not. and I remember doing this in class in university and this is an old acquisition from I believe the 90s or something but essentially it was a software that could help make websites and it was as you know the web was coming online and Microsoft went and spent a bunch of money to buy this now I believe that they ended up canning the entire software or they incorporated into something else they were doing so no longer was one of their main products however at the end of the day when we looked at the business case study, they looked at the amount that they paid for the company, and then the amount that their stock price increased the next day after they made the announcement.

3:18And their market cap increased significantly more than they paid for the company, you know, maybe 10x what they actually ended up paying for the company. And so I think overall, a lot of these companies investing into AI right now are thinking about similar things, thinking about their market caps, how those are going to improve if they're going to be viewed as forward thinking companies and whatnot. And so because of that, you know, in addition to making their products better and, you know, charging customers more, I think they know that there's also that aspect that they need to focus on. I think what's important with Salesforce in particular is they've honestly had a pretty difficult six months, they've just had a whole bunch of job cuts, they've had a bunch of executives leave the company, they've had public pressure from activist investors.

3:58And right now, I believe that they're trying to kind of win back the faith of a lot of their shareholders. And I would say that this is because a lot of investors right now are kind of concerned about their sales growth. So in May, they did a projected revenues for the current quarter, and they said that they're going to gain 10 % from a year earlier. And that's actually gonna be their slowest jump on record. And that's a significant drop from a time when a 30 % increase was pretty routine for them. So a lot of the executives over there have talked up the potential for AI to essentially just drive expansion within their firm.

4:34They talked about cloud computing and mobile games. Before this, generative AI is kind of the next thing that according to Mark Benioff, he says it's going to spark a massive new tech buying cycle. And so during the earnings call, and kind of after he announced the recent results, this is what he was talking and this is the positive spin he's trying to put on it. And so obviously, he's trying to put a big investment into this space because it's kind of viewed as the way to I don't want to say save his company because obviously Salesforce is doing well and I mean a 10 % growth is still year over year is still growth but this is kind of what he's hoping to supercharge his company and get back into that hyper growth phase that I think he would like to be at.

5:16He did say that customers are going to pay an additional fee to use the new generative AI features built into Salesforce. And I think that they're still testing a bunch of different pricing levels for this. Also, they're testing whether it's going to be included, if it's going to be based on kind of like a flat rate subscription, or as you know, he said, if you're going to have to buy like an AI cloud starter pack with, you know, 50 licenses for unlimited use. So when talking about this, he said that it's going to cost around$360 ,000 a year for Salesforce, Slack, and Tableau. And that is kind of for what they would call their starter pack.

5:57So I think they definitely see the ability to make more money off of this. So this is definitely something they're going to invest into and focus on. But I also think they're really making sure that they want to look like a forward thinking company. And they're definitely paying attention to their stock price right now. Lenovo is a bit of a different story. So Lenovo recently just announced edge servers, which is going to be part of their$1 billion AI push. And apparently, the new Lenovo ThinkEdge servers are going to deliver a lot more processing power where data is being generated, and apparently is going to enable enterprises to run real time inference at the edge.

6:34So essentially, they're planning a major AI push with this billion dollar investment. And they're gonna be focusing this on hardware and software over the next three years. So similar to Accenture, who's, you know, made their new made their public commitment, which is going to be over the next few years, Lenovo is doing this. And to be honest, I think this is a really good move for a lot of these companies in the space. And I think this is really positive for the industry as a whole when we see these, you know, pretty large companies making multi year multi billion dollar investments or billion dollar investments, or you know, the high hundred million dollar investments over over the course of a few years, I think this is important because it shows that they see the longevity in AI and they're kind of committed to this and they see how this is actually changing the future in a large way.

7:17So from Lenovo's end, what they're actually building is what they call a ThinkEdge SE360v2. So essentially it's an edge server designed to provide really advanced computing performance for AI applications. And so that's where, you know, we're talking about like computer vision, voice AI, generative AI, those types of things. And it is built on Intel and NVIDIA's processors. And they also have support from NVIDIA's AI enterprise software platform and from Qualcomm's cloud AI 100 platform. So that's for processing really intense workloads at the data source. So it features a really compact size.

7:57And essentially, it's this ruggedized form factor, which is designed to withstand remote and rugged environments, which I think is very interesting. And then they have a second server, which is more designed for kind of hybrid cloud and modern HCI deployments. So that is going to be more focused on, you know, storage, high capacity storage, and that's going to be coupled with Intel's Exeon Deep processor, which was more of like a mid range performance processor. So it's kind of focused on consolidating workloads, data backup, collaborations, and content delivery. In any case, this is a pretty massive investment from Lenovo.

8:36I think they know that pushing forward in this way is the space for growth. The third company I wanted to talk about is Accenture. So they've, of course, announced they're going to put$3 billion invested into AI. And of course, they're doing that on behalf of a lot of their companies that they work for. And for those that don't know, Accenture is essentially a consulting firm. You know, I've had I've known of people that have worked here before. It's a really reputable company. And essentially, they have consultants, but they also have like in house, you know, developers, for example. So like you could go to them and ask them to help with consulting, but they could also go and get your project done and built out and they have developers that could, you know, work on a tech project for you work on a coding project for you and that kind of thing.

9:17So I think this makes a lot of sense. At a high level, essentially, what they said is that they're going to double their AI talent to about 80 ,000 people. And they're going to do that by hiring acquisitions and training. I think this is interesting, you know, this isn't just obviously hiring, because trying to get 40 ,000 talented people is not always easy. So I think they know they're gonna have to acquire because a lot of these people are gonna be working at companies, they're gonna have to acquire some people, they're gonna have to do some training in house, and then they're going to be hiring people out, you know, outside.

9:47They said that they're going to use it to expand essentially their data in AI practice to offer a lot of new industry solutions and also pre built models that are going to help companies across what they say is 19 different industries. And they're also going to launch AI navigator for enterprises, the platform to kind of guide AI strategy use cases, and as they say, rigorous business cases, essentially, they're trying to help with decision making and responsible policies and using AI in that regard and helping new companies implement AI into their company. So within this, the CEO said, there is unprecedented interest in all areas of AI and the substantial investments we're making in our data and AI practice will help our clients move from interest to action to values and in a responsible way with a clear business case.

10:41companies that build a strong foundation of ai by adopting and scaling it now where the technology is mature and delivers clear value will be better positioned to reinvent compete and achieve new levels of performance our clients have complex environments and at a time when the technology is changing rapidly our deep understanding of ecosystem solutions allows us to help them navigate quickly and cost effectively to make smart decisions so obviously a center is investing pretty heavily into this space. I think they know that this is going to be one of the biggest ways for them to help grow their company and the companies of, you know, everyone that they are currently working for and consulting on.

11:22Now, this is what I think is interesting. This is specifically what they're planning on investing those$3 billion into. They said they're going to invest into assets, industry solutions, ventures, acquisitions, talent, and ecosystem partnerships. Something really interesting that I think it's their group chief executive of Accenture Technology. It's Paul Dowry. What he said just recently is he said, over the next decade, AI will be a mega trend transforming industries, companies, and the ways we live and work as generative AI transforms 40 % of all working hours. I think that's absolutely insane.

11:54You know, Accenture is known for making these predictions and for really studying the market. And the fact that they're predicting that AI is going to transform 40 % of all working hours, I think is very significant. And the reason why they're coming in with such an aggressive investment into AI and focusing on that for their clients. So overall, I think right now companies know that investing in AI, especially right now when this boom is, you know, beginning is the way that they can set themselves on a pathway to success. It's a pretty stark, you know, like the public is responding and the public markets are responding in a very strong way towards companies that are very AI focused, AI driven and are shipping AI products right now.

12:33Those are the ones that are being rewarded on the stock market. Those are the ones that are being rewarded with investors. And so I think that's really where people's focus is on. You know, if for nothing else, for the fact that they know this is, you know, the steps they need to take to stay relevant and to essentially, you know, deliver what their customers and what people are looking for in a time when you can't really get away with not into implementing AI anymore, because it is so prevalent, if you don't, your competitor will, and you'll essentially just become irrelevant without it. So this is a really interesting area to continue to follow to see who continues to invest more money into AI.

13:08These are some big names and some big dollar figures. And so this will be interesting to follow into the future.