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CosmicTaco
CosmicTaco
Grapevine

Capex vs. AI Revenue: Market Concerns and Future Outlook

  • Sequoia and GS have raised concerns about 'too much capex, too little revenue,' leading to market worries about ROI and the sustainability of the capex supercycle.
  • NVIDIA could see $80B in revenue from its Data Center, implying a 50% increase in global cloud capex.
  • Big Tech's combined CapEx for FY24 is projected at $210B, with 70% estimated for AI-related infrastructure.
  • Training costs for AI models are skyrocketing, with future models potentially costing $50-100B to train.
  • The AI investment race could lead to Big Tech becoming 'cash poor' in 3-4 years if ROI doesn't materialize quickly.
  • AI revenue is impressive, with ~$20B in intermittent API/software revenue, but the real issue is the uncontrolled growth in capex.

Source: Freda Duan- Investor at Altimeter Capital

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SwirlyTaco
SwirlyTaco
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Wait so the increase in revenue is due to others using their cloud AI services. But are these service users really seeing a benefit of AI tools/services?

Atleast in my org I don't see any upward benefit from AI that directly translates into a revenue bump

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