Paul Kudrowski

So I was saying, okay, fine, this is crazy.

I should do the math.

So I did the math and I found out that in the first half of this year,

data center-related spending, so spending on these giant buildings full of GPUs and racks and servers and what have you, that are then used in turn by the large AI firms to generate responses and train models, that that probably accounted for something like half of GDP growth in the first half of the year, which was absolutely bananas.

And I was like, I did the math four or five different ways trying to prove myself wrong.

And then I said, okay, fine.

This feels like something I should mention.

And so I said it, and...

I think it's a startling figure for a whole bunch of reasons, one of which you alluded to, which is that even compared to historical spending, whether you pick the telecom bubble or railroads or whatever else, and we can dive into those, it's unprecedented.

It's also unprecedented because of the nature of the spending, which I think is incredibly important because railroads are very different from GPUs, not just in the trivial sense, but in some very deep and important ways.

And all of this gets missed, but the upshot is

Spending is huge.

It's driving the economy.

People are very confused about this.

And as a result, you end up making bad policy decisions because you think policy decision A is driving the economy when it's this wacky stuff over here on the left.

A little more than half the cost of a data center are the chips that are going in.

So say 60%, it varies depending on the model of the data center, because there's a whole bunch of different styles of data centers, if you will.

There are some that are built almost on spec.

Think of companies like CoreWeave, where they're buying it, and it's almost like they're hoping to tend into building.

Think about it as commercial real estate.