AI cloud computing firms face ‘guppy-level death’, Elon Musk warns; French bonds rally after avoiding downgrade – business live
The Guardian ·
Rolling coverage of the latest economic and financial news Elon Musk’s warning that AI cloud funding could dry up is a reminder that companies may not provide the revenues that hyperscalers and neoclouds are relying on. Steve Daheb , Head of AI GTM Strategy at enterprise software firm Flexera , explains: “We have spent the past few years debating whether AI will replace people. But the more immediate question for many businesses is whether AI could end up costing more than the people and processes it replaces. “Businesses need to remember every decision an AI makes and every action an agent takes has a price tag. The AI people see and the prompt they enter is only part of the story. AI doesn’t just answer questions: it reasons, retries, checks and refines its response, drawing on models, enterprises data and computing power just to complete a single task. That iterative process and response refinement are what drive AI costs. Once agents are embedded across applications and running tasks throughout a business, the metre is always running – yet many companies still have no idea how many tokens they are using or what a particular task will cost because of this AI cost domino effect. Since our previous periodic review of the sovereign rating, slower growth and a higher deficit have pushed France’s debt burden somewhat higher than previously expected. In addition, government bond yields have risen more rapidly than we expected, while widespread social protests have erupted which could constrain fiscal consolidation efforts. The Aa3 rating assumes that a deficit-reducing budget for 2027 will be adopted, while financing costs and social tensions will abate somewhat in the next few months. Continue reading...