AI's $10 trillion buildout: is the economy too dependent on one industry?

[SuperPosition24]

Another doom-mongering look at the scale of the AI infrastructure boom, and the numbers are staggering. It cites a forecast from Fox Business's The Bottom Line that around $10 trillion will be spent on AI infrastructure through the early part of next decade. That works out at roughly 3.6 percent of annual GDP. Presenter Madison Alworth summed it up with the line that our economy has never been so dependent on the buildout of one industry

The recent quarterly spending figures show where the money is going. Amazon spent $54.2 billion on capital expenditure, Alphabet $44.9 billion, Microsoft $35.8 billion, Meta $30.1 billion and Oracle $28.5 billion. Together that is close to $194 billion in a single quarter, mostly on data centres, chips and the power to run them

The article raises several risks. Power is a big one, with concerns that there simply will not be enough electricity for all this computing by the end of the decade. Debt is rising too, with Meta's long term debt at around $83.7 billion, and free cash flow is falling at several of these firms. There are also worries about off balance sheet financing, which can make it harder to see the full size of the commitments

I think the comparison with past booms is fair. Railways, telecoms and the dot com era all saw huge investment followed by painful corrections, even though the technology itself turned out to be important. The internet did change the world, but plenty of companies still went bust along the way. The question is whether AI revenue grows fast enough to justify what is being spent

On the other hand, these are some of the most profitable companies in history, not start ups burning venture money. They can absorb a lot before anything breaks. Do you think this is a bubble, or a sensible bet on the next era of computing? And where does the electricity come from?

AI's $10 Trillion Buildout Will Reach 3.6% of GDP. Who's Going to Pay for It?finance.yahoo.com