Microsoft's Big Bet: Investing Hundreds of Millions in ChatGPT & OpenAI Cloud Setup

0:00Microsoft has just said that they have spent hundreds of millions of dollars on a chat GPT supercomputer. This is super interesting and we're going to break down what exactly this means and why they would have done that. So flashback to 2017, Microsoft invests a billion dollars into OpenAI. And that's actually a pretty significant amount of money when you look at a lot of other startups that have been going around. A billion dollars is massive. And what's even crazier is just this year, they dwarfed that by investing$10 billion into OpenAI. Now, obviously, these are some pretty massive numbers and the 10 million makes the 1 billion or the 10 billion makes the 1 billion seem small but this was actually a very big deal for Microsoft.

0:42Essentially what happened was what they saw back in 2017 was big enough for them to completely switch their focus and to hyper focus on what they viewed as the next big thing and their investment and their gamble there really paid off. What they said that they ended up doing was connecting tens of thousands of nvidia a100 chips and they essentially reworked their server racks to build the hardware behind chat gpt and their own bing chatbot so microsoft actually just came out um with a like a new blog post pretty much where they kind of outline exactly how they created azure's which is their which is their like cloud computing thing um how they created azure's powerful artificial intelligence infrastructure which is currently used by open ai and they also talked about how its systems are getting even more robust in the future.

1:33This is a very big deal and to me I actually think this is pretty important to know because I recently heard from an ex-employee who just left AWS, Amazon's cloud platform, and they said that new management that has been brought into AWS really is not doing good for AWS and they think that it's going to be a flaming pile. Now, that being said, full disclosure on my current projects, I'm still using AWS. I don't think the whole company is going down. It's the biggest and so far is the best. But this is really important to notice because if you also just look at what has been happening in cloud computing lately, AWS has significantly slowed in its growth and you're seeing the rises of Azure and Google Cloud coming up and some other players.

2:20So this is really interesting. Did Microsoft accurately predict how powerful AI was going to be? because what they've been saying straight from Microsoft's vice president of AI and cloud, which is Scott Guthrie, he said that the company spent several hundreds of millions of dollars on this project they did for OpenAI. And that is demonstrating that it's really willing to throw even more money into the AI space. And it shows just how confident they are that AI is going to continue to grow and take over every area, right? Because if they can really nail AI, which is something that's very heavy in computational power, they're going to take over a massive part of the market, right?

3:03Even if their platform is only 10 or 15 % better at computing AI for the same cost as AWS, that actually adds up to a lot over the long term for some of these massive companies. And it looks like they're trying to make it more like 20%. So it's pretty interesting. they've you know obviously been trying to make it a lot more powerful with the launch of its new virtual machines that they use nvidia's h100 and a100 tensor core gpus as well as their quantum two infinity band networking and a project that both companies openai and microsoft teased last year so according to microsoft this is going to allow openai and other companies that want to jump on board, right?

3:44They're not exclusive with OpenAI. They want all of the AI companies coming on because this is going to be really big for their Azure platform. But they want them to rely on Azure to really train larger and more complex AI models. They saw how powerful this is. And specifically a quote from Eric Boyd, who works there, said that we saw that we would need to build special purpose clusters focusing on enabling large training workloads. And OpenAI was one of the early proof points for that. So Microsoft's corporate vice president of Azure and AI said in a statement as well, on separate quote, we worked closely with them to learn what are the key things they were looking for as they built out their training environments and what were the key things they needed.

4:26So this is so critical. And I think a lot of people are missing this. This is really big. Essentially, back in 2017, when Microsoft started getting serious with OpenAI, they didn't just say look here's the platform we have they literally saw how much potential open ai and chat gpt and these tools would have and they said what do you need they worked with them to build out their training environments specifically to help opening i they saw opening ai is like the first player but obviously when you have a technology that's powerful there's gonna be a lot of competitors and a lot of people are gonna come and try to compete with this so microsoft literally said what do you need and how can we make this as powerful as possible knowing that this wasn't just you know safeguarding their one billion dollar investment in open ai this was going to help them dominate the cloud computing landscape as a whole so this is some really massive news from microsoft it's going to be interesting to see how this continues to play out is um you know amazon and aws are they going to be able to come up with something that is just as compelling how is google going to play into this um you know i'm kind of worried that google's just so backlogged trying to build a chat gpt competitor that they completely missed this whole wave and then they're going to have to update their um you know their google cloud to be able to do this kind of stuff so i personally think google may have missed the boat on this i know they're they're playing catch up they're big company you can't ever write them you know write them off but uh it looks like microsoft has been pretty much secretly planning and preparing for this moment for almost five years now and it looks like they have really just come to a point where you know they put bing back on the map they put microsoft azure is a massive player in the cloud and now they're supporting and you know own 50 % of one of the hottest tech tools of our time which is chat GPT so it's gonna be really interesting to see how this plays out and how people and other big companies respond to this