Azeem Azhar

My verdict is that it's on the boundary of green and amber.

Probably just into the amber, but if you squint, you might be able to argue that it's a green.

Monetization level is an important gauge.

It's the ratio of Gen AI revenues relative to the capital deployed that year to build out the infrastructure.

It matters because investment must start to earn its keep.

And if coverage is persistently low, this could signal rising fragility.

In the case of the railways, their revenues covered about two thirds of the annual investment at peak.

In the case of the telecoms bubble about 25 years ago, new revenues covered around a quarter, maybe a bit less.

But both of these strained as growth slowed.

If we look at Gen AI today, we think that about $60 billion will be spent on it in 2025.

Compared to that $400 billion of CapEx, that gives us coverage maybe around 15%, maybe a little less, maybe a little bit more.

And the indirect gains are very likely to be undercounted.

There are some analysts and investment banks who have a much higher number for Gen AI revenues in 2025 than we do.

But given our number, about $60 billion in revenues, 15% coverage, I'll say this gauge is in the amber.

Revenue trajectory is also important to keep an eye on.

So this gauge measures the speed and breadth of revenue growth and whether that momentum is accelerating or slowing down.

If strong momentum drives revenues up, it absorbs depreciation, it repays capex, and stagnation has preceded past busts.

Rail revenue growth was weak into the 1870s crash.

Telecoms was growing faster in the 1990s, but not enough compared to the scale of leverage that they had taken on.

The dot-coms were growing, but probably in the high tens of percents.