Hey look, AI is having real business impacts after all
📈 Trending Up: Made in India (BG) … EU EV tariffs … calls for California to scrap or fix its AI bill … China-Philippine tensions … shame …
📉 Trending Down: Boeing’s ability to build airplanes … the value of Twitter’s debts … net neutrality in India? …
🤔 What Else?
Open-source AI is here to stay: In an interview with The Verge, GitHub CEO Thomas Dohmke said that “in the last year, over 100,000 AI projects have been started on GitHub open source.” That’s a lot of AI projects.
That GitHub is seeing lots of developers test, tinker, and build with modern AI models is not a shock. But there is an interesting tension at play. Microsoft owns GitHub, which is clearly a nexus for open-source AI development. And
Microsoft is a large shareholder in OpenAI, which is big on closed-source models.
Is the company competing against itself? Perhaps not. Dohmke argued the following:
I think if you just look at where open source has gone, I would predict the open-source models or the open-weights model will play a very important role in democratizing access to software development. It is too easy to get started and not worry about inference costs or license costs. The other pole of this is the commercial models that try to be the best models on the planet at any given point in time. They offer a different value, which is that you can get the best model but you have to pay a vendor or a cloud provider to run inference on these models, and you don’t get access to the weights or get to see what happens in those models. I think those two polarities will continue to exist, and nothing really in tech is a zero-sum game.
Palo Alto Networks’ AI-powered earnings
In the wake of ChatGPT’s launch, it became fashionable to argue that AI was about to change every facet of our world. If you could spin up an overblown concern or prediction and wear a suit, you could get quoted about the future, it seemed.
The hype became tedious. Later, it became fashionable to disparage modern AI models and tools as overblown, overhyped, and more smoke than substance.
Since then I’ve been waiting for hard results. Enough talk — what’s being demonstrated by companies in the market now? And would the naysayers prove correct?
Good news for you and I: Palo Alto Networks dropped its earnings last night, giving us not only an interesting dive into the state of cybersecurity sales — pretty good, in case you were wondering — but also the top and bottom line impacts of modern AI.
Let’s talk results, AI revenue, and then AI savings.
Palo Alto Networks’ quarter in brief
In Q2 2024 (Q4 of Palo Alto Network’s fiscal 2024), the company reported revenue of $2.19 billion (+12%), and GAAP net income of $357.7 million (+57%). Palo Alto Network’s revenues beat expectations of $2.16 billion in the quarter, and it surpassed profit expectations on a per-share basis.
Shares of the company are up more than 2% in pre-market trading.
How is AI helping Palo Alto Networks grow?
AI demand is strong, Palo Alto Networks CEO Nikesh Arora said during his company’s earnings call: