Friday, May 30, 2025

New AI Industry Might Not Disrupt Legacy Technology Giants

It does appear that a partnership between the U.S. federal government and firms developing artificial intelligence is developing. Some examples include the executive branch championing the $500 billion "Stargate" infrastructure initiative led by OpenAI, Oracle, Japan's SoftBank, and the UAE's MGX.


More recently there were big deals to bring cutting-edge chips and data centers to Saudi Arabia and the UAE. 


Country

Deal Size / Commitment

Key U.S. Firms Involved

Main Components

Timeline / Notable Details

Saudi Arabia

$600 billion+ (total package)

Oracle, Google, Salesforce, AMD, Uber, DataVolt, AWS, Qualcomm

- Oracle: $14B, 10-year commitment

- DataVolt: $20B in U.S. data centers

- $80B in joint tech/AI projects

- HUMAIN: up to $10B AMD, $10B Nvidia AI hardware

- $5B AWS "AI Zone"

- $300B in immediate deals

- $1 trillion corridor by 2030 ambition

Announced May 2025; multi-year rollout 1, 2, 5, 7    

UAE

$1.4 trillion (10-year UAE investment in U.S.); 

$200B in tech/AI package

G42, Microsoft, Nvidia, Oracle, Cisco, OpenAI, SoftBank, BlackRock, Global Infrastructure Partners

- 500,000 Nvidia AI chips/year to UAE through 2027

- 5GW AI datacenter campus in Abu Dhabi (G42)

- Stargate UAE: 1GW OpenAI-led facility

- Reciprocal investment in U.S. data centers

- $100B Global AI Infrastructure Investment Partnership (GAIIP)

Announced May 2025; phased through 2030 1, 24, 6   


President Trump also signed a series of executive orders to hasten the deployment of new nuclear power reactors, with the goal of quadrupling total U.S. nuclear capacity by 2050.


Energy Secretary Chris Wright told Congress that AI is "the next Manhattan Project,” warning that losing to China is "not an option.”


That might closely resemble several past efforts by the government to spur economic growth by supporting targeted industries. 


Industry/Initiative

Era/Date

Government Role/Support

Outcomes/Impact

US Arsenals & Manufacturing

1816–1861

Collaborative R&D, standardization

Advanced machine tools, standardized parts, global manufacturing leadership 2

Erie Canal

1825

State-funded infrastructure

Opened Midwest markets, spurred trade and local development 2

Pacific Railway Act (Railroads)

1862

Land grants, federal loans

Built transcontinental railroad, linked coasts, boosted commerce 2

Federal-Aid Highway Act

1956

Direct federal funding, infrastructure

Created interstate highway system, expanded commerce, advanced construction tech 2

Shipbuilding (WWII, renewed focus)

1940s, 2020s

Direct contracts, subsidies, tax incentives

Rapid industrial expansion, military and commercial shipbuilding 4

Cybersecurity (NIST Framework)

2013–present

Voluntary standards, collaborative development

Improved critical infrastructure security, public-private trust 3

CHIPS and Science Act (Semiconductors)

2022

Large-scale subsidies, R&D funding

Domestic chip manufacturing, supply chain resilience, tech leadership 4


All that might suggest something for technology investors. In addition to the many startups sure to emerge, some of which will have the opportunity to become quite important, existing technology leaders also will be leaned on by government. 


That suggests the normal computing market mechanisms, whereby a new era of computing creates new leaders, might be modified in the early AI era. As legacy firms Microsoft and Apple seemingly survived the transition form the PC era to the present, so other firms such as Alphabet, Meta and Amazon might survive the coming transition to the AI era as well. 


That might be fairly unprecedented, but will be assisted by the need for collaboration and support of the federal government to create a big new industry.


Thursday, May 29, 2025

Is AI a "General Purpose Technology?" Your Assessment Might Hinge on That



Google's chief economist, Fabien Curto Millet thinks generative AI is "the most exciting thing technologically I've seen in my lifetime." 

We might disagree on the degree of importance, or the timing of impact, but lots of us believe AI is going to be a general-purpose technology, and that always leads to disruption. 

AI Chatbots are Displacing Some Search Traffic, but Less Than You Might Think

There now is clear evidence that AI chatbot queries are indeed displacing some amount of traffic to websites, as AI provides direct answers to questions rather than producing a series of links to content sites. 


On the other hand, the amount of displacement remains arguably small. 


Title

Date

Publisher/Author

Key Findings

AI Chatbots vs Search Engines: 24-Month Study on Traffic Trends

May 11, 2025

OneLittleWeb

AI chatbots (top 10) received 55.2 billion visits (Apr 2024–Mar 2025), up 80.92% YoY, but search engines saw 1.86 trillion visits—only a 0.51% drop. Chatbots account for just 2.96% of search engine traffic and about 1/24th of daily visits 2,8.

Chatbots Having Minimal Impact on Search Engine Traffic: Study

May 6, 2025

TechNewsWorld (citing OneLittleWeb)

AI chatbots have barely affected traffic to search engines; ChatGPT sees about 26 times fewer daily visits than Google. Despite growth, search engines remain dominant 1,8.

AI Chatbots Have Yet to Disrupt Search Traffic, Research Shows

May 16, 2025

Cognitive Today (LinkedIn)

Despite rapid adoption, AI chatbots have not significantly disrupted traditional search traffic. Google and other engines still dominate information discovery 5.

Traffic War: Chatbots vs Search Engines

May 19, 2025

MTSOLN

In March 2025, search engines handled about 163.7 billion visits vs. 7 billion for chatbots (23x difference). Chatbot traffic is surging, but search engines still vastly outpace them 7.

ChatGPT Impact on Google Search Traffic: What It Means [2025]

May 20, 2025

Writesonic

ChatGPT had 0.25% of Google’s search volume as of 2025, but is growing fast. Google’s zero-click results are rising, reducing clicks to websites, but chatbot impact on search traffic is still small 6.


It remains to be seen how content providers change monetization strategies. There are some ways they might seek new ways of partnering with search engines, such as “embedding” content within AI replies. 


In other cases, content owners are simply going to have to try to increase subscription revenues as an alternative to advertising support.  


Study/Report (Year)

Main Findings

Impact on Website Visits

Ahrefs & Amsive (2025)

AI Overviews cause 15–35% drop in CTR for organic results; up to 70% drop in specific cases 6,8.

Significant reduction in visits, especially for non-branded, informational queries.

Semrush (2025)

AI Overviews triggered for 13% of queries in March 2025; zero-click rates high for informational queries 4.

Increased zero-click searches; less traffic to source sites.

Forbes (2025)

AI Overviews cause 15–64% decline in organic traffic; ~60% of searches end with no click to a website 7,8.

Dramatic drop in referral traffic for many sites.

Ahrefs (2025)

0.17% of average site’s traffic comes from AI chatbots; some sites get 6–18% from AI referrals 3.

Modest direct traffic from AI chatbots, but large potential for some sites.

SparkToro (2024)

Google handles ~373x more searches than ChatGPT; 60% of Google searches end with no click 8.

Major diversion of traffic from websites to on-page AI answers.

Adobe Analytics (2025)

Generative AI traffic to retailers up 1,300% year-over-year, but still modest compared to other channels 1.

Increased traffic from AI sources, but not yet displacing major channels.


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