The AI Haves and Have Nots at Goldman's Big Tech Event
At the historic Palace Hotel in San Francisco, Goldman Sachs is wrapping up three and half days of its annual Goldman Sachs Communacopia + Technology Conference.
Attendees were mostly in a buoyant mood, but not because this week is on track to be the biggest of the year for initial public offerings. Instead, the biggest pop during the conference came from Oracle, a 48-year-old tech stalwart, whose stock jumped 36% on news that its future contract revenue would soar 359%, mostly due to a deal with OpenAI.
Nvidia and OpenAI were the two hottest tickets in the Palace Hotel. Both presented shortly after lunch, so eager investors claimed the good seats and sent their colleagues to grab lunch boxes. The main ballroom was full 20 minutes before the presentation and attendees filled three overflow rooms. Meta and Alphabet only filled two overflow rooms.
For companies that don’t build artificial intelligence data centers, make AI chips or develop AI models, the mood was less optimistic. Software makers in particular were put under the microscope for their AI progress or the lack of it.
“We're in a phase where software companies felt that they had to change their narrative very quickly because customers were demanding it,” said Matt Lucas, managing director of Goldman Sachs’ tech, media and telecom investment banking group.
Software companies were given a friendly greeting on stage by Kash Rangan, a Goldman Sachs managing director and software analyst. “AI is not going to kill software, but it's actually going to make software a flourish,” he said Monday when he introduced Confluent, which provides data streaming and analytics services.
Investors don’t share his enthusiasm. Several of them told me they had simple questions for software makers: how are customers using AI and are they paying for it, or will they soon?
Some companies did answer some of those questions. Investors told me that customer engagement software maker Twilio discussed in a closed-door session how revenue will pick up from tools that help power AI agents to transcribe text to speech. It also disclosed $260 million in 12-month revenue from AI startups in its January Investor Day, but didn’t provide an update here or in last quarter’s earnings.
“As of last quarter, our 10 largest AI startup customers that were founded in the last three years, are all spending at a six-figure revenue run rate, and a few have eclipsed a seven-figure revenue run rate,” a Twilio spokesperson said.
Dating app Grindr said its latest AI features would help drive premium subscriptions. CEO George Arison said AI would scan all conversations on the site to generate a list of hot prospects for Grindr’s premium subscriber-only A-list.
“It’s clear that corporates are still figuring out how AI is going to change their businesses and at what pace,” Lucas said in an interview. “That's creating some strategic tension within software companies as they consider opportunities to transform.”
Google’s cloud chief Thomas Kurian grabbed the audience’s attention when he said Google “made billions already using AI.” He gave details about how the company was monetizing AI and showed off who is buying their AI infrastructure and agents’ offerings. The audience took photos of almost every slide Kurian showed.
The other lovefest was between investors and database companies like Databricks, Snowflake and MongoDB. Their role in AI is clear: to support the AI infrastructure, to categorize the massive data AI generates, and query and analyze that data.
Shares of Snowflake are up 43% this year and shares of MongoDB by 37%. Databricks just raised a $1 billion round and disclosed recently passing $1 billion in annualized revenue from AI products.