AI Bubble Close To Hitting Tipping Point As New Report Says Companies Need $600 Billion Each Year To Pay For Infrastructure

Despite the huge number of investments that tech giants have made regarding AI, it now appears that this was never enough.

Thanks to a new report by experts at Sequoia Capital, we are now well aware of how revenue growth that was once predicted for AI is yet to come into play.

There’s a massive gap in the ecosystem value for end users. In fact, one analyst mentioned how AI firms will be required to earn close to $600B every year to pay for the likes of data centers.

As we speak, Nvidia earned nearly $47 billion in data center hardware revenue in 2023 alone but other big names from the tech world did invest heavily in various AI apps like ChatGPT. But the question has to do with whether they would be getting their money back or not?

Today, so many Cloud providers are making big investments in regards to GPU. As witnessed by Nvidia, half of the revenue from data centers arises through big cloud providers while Microsoft alone gives close to 22% of the firm’s revenue for 2024.

The rollout of processors from Nvidia will again drive more investments and produce another shortage of supply as explained by an analyst.

The growth for OpenAI in terms of revenue has been great so far, rising from 1.6 billion to 3.4 billion dollars in just a year. But that might be linked to the firm’s dominant position in the market.

This is much greater than what other startups would be facing as they struggle with hitting the $100M mark. Still, investments in AI hardware keep peaking as we speak.

Some people have some of the most optimistic projections for leading tech giants’ AI revenues who fell short of this figure. The gap is huge and today, that remains at $500B.

So the solution right now is learning how the AI industry earns because the only way out in terms of closing the gap is generating quick profits from advancements made in the world of AI. After all, the last thing we need is a global economic crisis where major investments bring little to no returns. Do you agree?

Image: DIW-Aigen

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