Capex vs. AI Revenue: Market Concerns and Future Outlook

• Sequoia and GS have raised concerns about 'too much capex, too little revenue,' leading to market worries about ROI and the sustainability of the capex supercycle.
• NVIDIA could see $80B in revenue from its Data Center, implying a 50% increase in global cloud capex.
• Big Tech's combined CapEx for FY24 is projected at $210B, with 70% estimated for AI-related infrastructure.
• Training costs for AI models are skyrocketing, with future models potentially costing $50-100B to train.
• The AI investment race could lead to Big Tech becoming 'cash poor' in 3-4 years if ROI doesn't materialize quickly.
• AI revenue is impressive, with ~$20B in intermittent API/software revenue, but the real issue is the uncontrolled growth in capex.

Source: Freda Duan- Investor at Altimeter Capital