Nathaniel (NLW) Whittemore

The real question is whether they want 4% growth rates or 2% growth rates.

Point being that AI has big implications for the economy.

And so in that context, the worrying signs that people are most looking for are about more than anything, a slowdown in demand, which frankly so far we don't have any evidence of.

Take for example how we just covered that Google is now processing 1.3 quadrillion tokens per month.

And to the extent that there aren't clear signals of a decline in demand, that instead people are looking for declines in the rate of progress that could translate to less demand in the future.

In other words, it all comes back to whether there's going to be enough demand to create enough revenue to justify all of this investment.

And so while the most worrisome sign would be a decrease in demand, the next most worrisome sign would be the technology not getting better fast enough to keep high rates of demand growth up.

So that was the setup heading into this weekend where there were a few different things contributing to malaise in the AI space.

The first came in an article from The Information about why Microsoft let OpenAI go their own way on infrastructure.

Had they wanted to, Microsoft could have doubled down on their relationship with OpenAI and built out hundreds of billions of dollars worth of infrastructure, essentially playing the role that Oracle is now in.

The reporting that came out this weekend wasn't anything particularly brand new.

It just sort of spelled out what had been assumed.

Basically, OpenAI's near bottomless appetite for compute was more than Microsoft was willing to supply.

Sources said that all the way back in the summer of 2024, Microsoft CEO Satya Nadella and OpenAI CEO Sam Altman agreed it would be impossible for Microsoft

to be OpenAI's sole provider, they decided to break the exclusivity of their deal.

What was new in the article was the articulation of the amount of discrete tension in the relationship, particularly from the OpenAI side.

According to the information sources, Altman told another AI researcher that, quote, Microsoft's refusal to build new data centers fast enough was the single biggest roadblock to OpenAI successfully developing AGI.

Now, it should be noted that the sourcing is, quote, someone who heard him make the remarks.

But still, the point is that this article clearly articulated a difference between these two partners in what they thought the appropriate amount of tech build out would be.

Now, again, nothing is particularly new here, even if it's built out, but it does just reconfirm Microsoft's stated view that there is likely some AI overbuilding happening.