by winston » Mon Jul 22, 2024 8:00 am
Revenue From AI Investments May Not Arrive Soon (Axios)
What’s our take?
The promise of increased revenues from all this AI investment may take longer to arrive than the market expects.
Reports from Goldman Sachs, Barclays and Sequoia Capital, have cautioned investors on their current optimism by running some numbers.
While companies, in aggregate, are investing hundreds of billions of dollars in AI infrastructure, the segment's biggest revenue generator is from OpenAI, and they’re only generating $3.4bn annually.
David Cahn from Sequoia believes that in order to cover their cost of energy and their margins, companies will need to generate four times in revenue what they’ve spent on Nvidia data centres - which seems incredibly difficult, at least in the medium term.
Axios argues the situation we may have here could be similar to the 2000-2002 period where telecom capacity was overbuilt, lots of investors were then wiped out, but within a few years, that capacity, and more were all used.
Source: Simply Wall Street
It's all about "how much you made when you were right" & "how little you lost when you were wrong"