YHK - yet another hacker news clone

AI needs $6T in annual revenue to justify data centre boom

60 points Betelbuddy 48 minutes ago 30 comments

mkrishnan 29 minutes ago | parent

not really, stop these BS

Insanity 29 minutes ago | parent

Zitron has been talking about this for some months now. The numbers fluctuate, I think $6T is the highest I've seen but low-end is about $1T that doesn't exist today.

His latest newsletter (from today) also talks about this: https://www.wheresyoured.at/dead-money/

simianwords 24 minutes ago | parent

Knowing that Zitron wrote about this makes me think that 6T will actually be reached, given Zitron's abysmal track record.

KronisLV 22 minutes ago | parent

> Zitron's abysmal track record

https://danluu.com/zitron/

I kinda hope corpos with a bunch of money and plenty of normies adopt AI so developers don't get bled (as) dry, esp. given the recent OpenAI changes which I feel like Anthropic is soon to follow.

gyanchawdhary 13 minutes ago | parent

Zitron is the Greta of tech.

breakyerself 10 minutes ago | parent

What's that mean?

snapplebobapple 6 minutes ago | parent

Obviously means greta and this guy are negative indicators. They are so wrong you can do the opposite of what they tell you and profit reliably.

jchw 5 minutes ago | parent

I think Zitron's biggest mistake is making too many concrete and confident assertions without enough backup. Yet the AI safety doomers have basically never been right either, but nobody seems to mind that; clearly they'll be right when they're right, just wait for it?

Just for fun, I'll join in myself and make two bold half-hearted predictions that will surely be wrong:

- Zitron is wrong about the details, but right about the ultimate fate of the AI companies. Turns out AI is useful after all, it just isn't able to justify trillions of dollars in expenses. Shit falls through hard. Probably not an AI winter, but more like the dotcom bubble, as many have already predicted for years. Everything looks rosey right up until the first domino falls.

- The AI safety doomers are right, just not any time soon. Turns out our depth of understanding what intelligence really means was severely lacking; it's hard to quantify and we never had so many things testing it. Eventually, we really do discover why LLMs emergent capabilities really are inherently limited in ways that just make their ability to meaningfully "escape" less scary, and maybe architectures emerge without these limitations, just not yet. The fight with LLMs and malicious use winds up looking a lot more like a supercharged version of the current fights we have with dumber bots. Everyone winds up having to fight LLMs with LLMs, and this new world eventually pushes both good and bad new legislation in its wake, finally actually pushing responsibility for AI misfires, but probably in a way that is at least as bad as it is good, creating chilling effects and harming competition unnecessarily, because that's just how things go. Maybe we eventually do crack true super intelligence where it's a full superset of human mental facilities, and then geopolitics maybe gets as interesting as it ever has been in history. Probably not in a way that is fun for people living through it.

I can't blame Zitron. It's fun to pretend to be able to predict the future. I still broadly agree that the financials don't really seem to make that much sense even if he clearly keeps getting the details wrong.

missedthecue 18 minutes ago | parent

That segment would include innovations in search, advertising, autonomy and physical AI, analysts at Boston-based Bain said.

Consumer-focused services, which includes subscriptions and advertising revenue, is seen to contribute $200 billion to $400 billion

So not $6T of ARR subscription sales, but $6T of "economic enablement". By 2031, the global economy is estimated to add another $40T of economic activity to GDP. So AI needs to account for 15% of that.

lousken 17 minutes ago | parent

The sooner it pops the better

riazrizvi 16 minutes ago | parent

Feels right and sustainable, ballpark.

bunderbunder 15 minutes ago | parent

They talk a bit about where the AI companies are supposed to get their revenue from. I’d like to see these analyses go a step further and talk about how those AI customers are supposed to come up with that money as well.

For example, the article suggests $1T from enterprise productivity tooling. A quick Google suggests the global enterprise productivity tooling market is only worth about $0.1T right now.

Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

zero_shift 11 minutes ago | parent

In a recession, too. You have to ask where the money even enters the funnel.

tw04 11 minutes ago | parent

Because they’ll be able to just fire all their employees and redirect the spend to AI. That’s the current delusion.

rf15 4 minutes ago | parent

Even if they were right... they don't really understand mass unemployment of that scale, right? Hungry people with a lot of time on their hands are known to get particularly inventive to entertain those who own too much.

SlightlyLeftPad 4 minutes ago | parent

[delayed]

EA-3167 10 minutes ago | parent

I truly don't think anyone serious believes that, but if they pretend to believe it and preach it aggressively they might make out with an historic payday and stick the rest of us with the bill. People did the same with Crypto, with NFT's, with a bunch of things for as long as the ball is rolling.

kingstnap 7 minutes ago | parent

> enterprise productivity tooling market

AI is not a replacement for powerpoint and excel. You can't substitute those.

White collar worker salaries is ~$30T+ global.

bmoathn 5 minutes ago | parent

you might make a hypothesis they'd offset operations costs like headcount for this but I think the counterpoint is stronger, if they benefit from increased productivity in your example, why not run more net production from same input.

Still though, the thesis seems based on an assumption that the companies would experience either major growth or major efficiency gain, neither of which really pass the smell test to me. Option 1 growth - money has to come from somewhere ultimately? Option 2 efficiency - put into profit rather than simple offset to AI provider?

Or the AI providers get companies hooked with subsidized pricing that unwinds later and you end up with the Uber/AirBNB situation of market capture and good product reverting to mean level of price/quality over time. Tinfoil hat thinks it ultimately gets squeezed out of retail investors in index funds.

herf 4 minutes ago | parent

Total software developer comp (worldwide) is ~$1T

godbox 12 minutes ago | parent

Enjoy the bredth of choice you have with LLMs. Most models will fail and disappear, and those that don't will become a lot more expensive.

pkulak 6 minutes ago | parent

If the market crashes, and I can buy a TB of TPU on the cheap, I can host 4.1 flash myself. :D

mococa 7 minutes ago | parent

Them AI must make more jobs than the opposite, nobody unemployed will spend cash with shit

godbox 6 minutes ago | parent

To put this into perspective, healthcare, real estate and banking each have ~$1.5T in revenue annually. This is REVENUE, not profit which is obviously lower than the revenue in every industry. I fail to understand how AI can achieve $6T in annual revenue when the TAM for healthcare and banking is a quarter of that in the US.

6thbit 6 minutes ago | parent

  > forecasts that annual spending on AI infrastructure might hit $1.5 trillion by 2031. 
  > ...
  > sustaining this level of investment would require an AI market approaching $6 trillion annually
This is a 2031 projection of a 6T market, but somehow the article editorializes this into 'justifying' a boom?

__MatrixMan__ 4 minutes ago | parent

It's gonna have to be so good that it creates entire industries that didn't exist before. That would be awesome, but I'm not seeing it so far.