Derek Thompson
👤 PersonAppearances Over Time
Podcast Appearances
AI revenue, as you've calculated, is closer to $60 billion.
That's a 6x gap.
That is an enormous gap.
How is that not worrisome?
And we're going to get to revenue growth in just a second because the question that's being screamed here is, okay, well, it doesn't matter if revenues are low right now.
If they're going to grow by 300% every year, eventually you're going to catch up.
But I do just want to make sure that we pin this one point because in your entire...
Higher analysis, it seems to me, this is the place where you think AI is most susceptible to, most vulnerable to accusations of being a bubble.
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?