CEO will boost operating budget of team tasked with evaluating code and product to avert discrimination.
3 min
Alphabet Inc.’s Google plans to double the size of its team studying artificial-intelligence ethics in the coming years, as the company looks to strengthen a group that has had its credibility challenged by research controversies and personnel defections.
Vice President of Engineering Marian Croak said at The Wall Street Journal’s Future of Everything Festival that the hires will increase the size of the responsible AI team that she leads to 200 researchers. Additionally, she said that Alphabet Chief Executive Sundar Pichai has committed to boost the operating budget of a team tasked with evaluating code and product to avert harm, discrimination and other problems with AI.
“Being responsible in the way that you develop and deploy AI technology is fundamental to the good of the business,” Ms. Croak said. “It severely damages the brand if things aren’t done in an ethical way.”
Google announced in February that Ms. Croak would lead the AI ethics group after it fired the division’s co-head, Margaret Mitchell, for allegedly sharing internal documents with people outside the company. Ms. Mitchell’s exit followed criticism of Google’s suppression of research last year by a prominent member of the team, Timnit Gebru, who says she was fired because of studies critical of the company’s approach to AI. Mr. Pichai pledged an investigation into the circumstances around Ms. Gebru’s departure and said he would seek to restore trust.
In addition to straining the existing team, those personnel changes have frayed Google’s relationship with external groups focused on AI such as Black in AI and Queer in AI, which released a joint statement Monday criticizing Google for setting a “dangerous precedent for what type of research, advocacy, and retaliation is permissible in our community.” The statement was earlier covered by Wired.
Ms. Croak called those exits a tragedy and said she agreed to fill the position because she thought she could help provide some stability in what has been a distressing time. A Princeton University graduate, she has a doctorate in social psychology and quantitative analysis and said she plans to bring her user-focused approach to engineering and concern about societal issues to the role.
“I thought, maybe, I could make a difference and carry on the work and have a larger impact,” Ms. Croak said.
Health will be one area of focus for the group, she said. The AI team recently assisted in the development of an algorithm that can detect abnormal heart rhythms by scanning fingertips on an Android phone. During its development, she said the ethics team helped determine that darker-skinned people had more variabilities and errors in testings, which had to be addressed before the product’s release.
Ms. Croak is one of very few senior Black executives at Google, where Black women account for 1.2% of the workforce. She has served as chair of Google’s Black Leadership Advisory Group and has been active in calling for Silicon Valley companies to improve their diversity.
“They’re disappointing numbers and I think that’s true for so many companies in Silicon Valley,” Ms. Croak said of the percentage of Black employees in Google’s workforce. “Fortunately, in the last year or so, we’ve made a more concerted effort in attracting Black talent, but those numbers are pretty dismal.”
She said that Google has been more proactive in providing mentorship to young Black staffers and said that it would take changing the culture across Silicon Valley to improve opportunities for people of color in tech.
“Sometimes I think it’s the mind-set where you’re very competitive and individualistic in your pursuits in the workplace and that sometimes can foster, not racism, but at least exclusion,” Ms. Croak said.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 11, 2021.
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Nvidia’s earnings will test Wall Street’s confidence in the AI boom.
3 min
Chip makers are fighting to assure investors that the artificial-intelligence boom is racing forward. Wall Street might not believe it until Nvidia’s NVDA -0.98%decrease; down pointing triangle Jensen Huang says so.
When Huang steps up to the mic for his company’s earnings call Wednesday, he will have the world’s attention. What he says about Nvidia’s present will preview the future of AI, dictate the path forward for a tech-crazed stock market and influence an American economy increasingly tethered to hopes that the boom won’t go bust.
The $5 trillion chip maker has provided the key building blocks for AI since the launch of ChatGPT in 2022 set off a race for dominance among OpenAI, Anthropic and established Silicon Valley giants. Now, as Nvidia backstops sprawling data-center projects and an exotic money pipeline to boost chip demand, the company’s influence is arguably bigger than ever.
But there are signs of trouble ahead. Political pushback to AI is growing. A bond selloff propelled borrowing costs to their highest levels in years. The hyperscalers that include some of Nvidia’s key customers—once cash-printing machines—are relying more on debt. OpenAI recently told investors its revenue rose by a tepid 18% in the second quarter while its losses deepened.
Nvidia is increasingly stepping in to shore up potential weak points across the market. Earlier this month, the company teamed up with six of Wall Street’s biggest firms on a $500 billion AI-financing plan, pledging to backstop lending to customers that can’t afford its chips otherwise. The chip maker last week also took a stake in Cloverleaf Infrastructure, which arranges power for data centers, and struck a $6 billion deal with startup Poolside aimed at developing a powerful open-weight AI model.
After watching shares in other chip makers and the so-called Magnificent Seven tech companies swing wildly in recent months, Wall Street is hoping Nvidia can beat expectations—again. The countdown is on.
“It’s kind of becoming more and more like the World Cup final than the Super Bowl at this point,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “It’s just gotten to be that big.”
The company has smashed analysts’ earnings estimates for each of the 14 quarters since the AI boom kicked into high gear. Nvidia posted 210% annual growth in net income in its last three-month period, according to FactSet, making Wall Street’s 126% projection look pedestrian.
Expectations for a blowout second quarter have risen rapidly over the course of this year. All Nvidia will have to do to beat this target: outrun 95% annual earnings growth to more than $51.5 billion. Analysts project the chip maker will report record sales of $92 billion for the period, up from a forecast of $78 billion at the start of this year.
In July, big-tech earnings sparked volatility. Concerns about runaway capital spending spread across the sector after Alphabet’s and Tesla’s results, driving a $890 billion wipeout that contributed to the unwind of hedge fund Situational Awareness. Microsoft posted the largest one-day gain in market capitalization by any company, ever, after a quarter proving that it could still show investors the money. SpaceX rocketed higher after a record-breaking initial public offering, only to see $1 trillion in value evaporate.
Surging memory prices and borrowing costs have fueled fears that those and other companies will be unable to keep plowing more money into supplies including Nvidia chips. Shaia Hosseinzadeh, founder of OnyxPoint Global Management, has recently bought dips in AI-infrastructure stocks when Wall Street has strained to absorb massive debt issued by Silicon Valley.
“The macro data is really quite robust,” he said. “Of course, there’s a level at which everything breaks.”
Investors have kept pumping money into the AI trade despite concerns around chip consumers—and to the benefit of chip producers. That is why Nvidia’s outlook for semiconductor demand could send ripples through counterparts such as Micron Technology and Sandisk, developers of the data centers in which their chips reside, and a supply chain of power producers, contractors and other specialists that underpin the globe-spanning AI build-out.
“We joke internally that we’re all Nvidia analysts now,” said David Lefkowitz, head of U.S. equities at UBS Global Wealth Management.
The irony is that investors have tended to sell Nvidia stock immediately after blockbuster earnings, with shares falling each trading session after its four past quarterly reports. Some are betting that will be the case this time around, too.
The options market is pricing in a 5.3% swing, higher or lower, in Nvidia shares during the session following earnings, according to Option Research & Technology Services. That is higher than the 4.8% average move in Nvidia’s stock over the last 12 months after the company reports quarterly results.
In recent days, some of the most actively traded Nvidia options have been put contracts tied to the stock falling from its Friday value of $214.75 to $205 and $210 apiece, according to Cboe Global Markets data. Put options give the right to sell a stock by a set price and typically represent a bearish wager.
Many analysts remain optimistic. Frank Lee, global head of tech hardware and semiconductor research at HSBC Global Investment Research, recently raised his price target for Nvidia shares to $360 from $325, citing, among other things, Nvidia’s strategic partnerships with suppliers and its role as a top contributor to open-source AI.
