Derek Thompson

You write that at the height of the US railroad expansion in the 1870s, CapEx was running about two times ahead of revenue.

In the late 1990s, the top of the telecom bubble, CapEx was running four times ahead of revenue, so a little bit more bubbly by that measure than the railroads.

AI is 6x, AI capex spending is 6x revenue, right?

So I'm sorry to throw a bunch of numbers at listeners, but the bottom line is that by this measure at least, AI is three times more bubbly than the railroads and 50% more bubbly than the telecom build-out.

By this measure at least, you would agree, I just want to make sure that we have this clearly on the record, you would agree this is worrying for now.

Like the situation's dynamic, but this is a little bit worrying for now.

Let's go to the next gauge because it really matters whether the plane takes off.

The question here is, is revenue rising or broadening fast enough to catch up to the infrastructure spending?

If the answer is yes, not a bubble.

You're just talking about an infrastructure build-out and revenue generation that is both growing basically faster than any general purpose technology in human history, so it's not going to be a bubble.

The other explanation would be, or the other prediction would be, nope, the spending is growing way faster than revenue is growing, and that's why we're looking at an obvious bubble.

Why don't you start us off on this point?

What trajectory would the hyperscalers need to keep growing?

Operating income from plummeting in the next few years in a way that essentially caused a huge sell-off of the biggest tech companies.

What kind of revenue growth would be necessary and where might it come from?

As long as we're talking about revenue growth, I think it's absolutely critical that we acknowledge that some folks think we're on the cusp of the last invention, AGI, which if we invent essentially an intelligence in silicon that can do anything, surely one would expect that one of those many things that it does is earn a lot of revenue.

So maybe give me a sense of if this technology really does take a leap in the next two to five years,

and we build what some folks called autonomous agents, essentially AI white collar workers that can do 99% of the job of any white collar human in the next few years, how would that change the picture here?

I do think that one of the disconnects between folks like Paul Kudrowski that are writing about AI being a bubble and folks like, let's say, Dario Amadei, the CEO, or Sam Altman, folks at OpenAI and Anthropic that are building this technology and believe that they are on the cusp of building artificial general intelligence, a true super intelligence, is that, look, if you think that your mere months from inventing God

Like what time do you have for concerns about a brief economic bubble?