Derek Thompson
👤 PersonAppearances Over Time
Podcast Appearances
A lot of the data center spending, as Paul Kudrowski explained in our previous bubble episode, is happening off book.
It's happening in special purpose vehicles where the hyperscalers are throwing some money into a box and private capital is throwing some money into that box.
The box is going off and buying a data center, but it's off the books of the hyperscalers.
That makes it easier to demonstrate that these companies are profitable even though they're finding ways to finance the guts of artificial intelligence.
Once again, maybe this works out.
It just sounds incredibly messy to me.
How messy does it seem to you?
Let's try to sum up here, because we've gone through so much.
We've gone through the scale of the investment, the fact that investment is running way ahead of where revenue is right now, the fact that you're hopeful that revenue will continue to grow at a feverish pace to catch up to the spending, that from a stock value standpoint, these companies are very, very healthily priced at the very least, but also they're building something that has enormous demand, and finally, that it's requiring new exotic financing structures, but you consider
the structures to be more exotic than I think what you said, toxic or poisonous.
Tell me if you disagree with this incredibly simplistic, almost embarrassingly basic summary of your analysis.
If AI revenue grows 100% a year for the next five to 10 years, this is not a bubble.
If AI revenue can't grow 100% a year for the next two to three years,
We are looking at a situation where investors will reconsider whether these companies can afford to spend as much as they're spending in artificial intelligence.
And we might see a drawback that is broadly defined as the popping of a bubble.
To what extent is that missing something really, really significant here?
Because it doesn't touch on financing quality, which you just said is often very key to this.
But what does that summary miss?
Azim, I'm grateful that you walked me through your gauges.
The truth is,