Great article! I don’t think this AI Spend will ever stop. The beginning of the year with those Microsoft warnings , a pullback in CapEx ai spending sounded like it was coming for Hyperscalers. That ideology from just 6 months ago feels like a half a decade ago
Correct. There will be a correction.. but I don’t think there will be a bubble bursting like in 2000. This AI thing is legit and being funded by legit companies like Google, Microsoft and Amazon… your thoughts?
That sounds right. All these companies plus Meta are unprecedented free cash flow machines and are ploughing their own money into these huge investment. currently the cloud hyperscalers say they are responding to excess demand. Meta is a slightly different case. if at some point they find they have overinvested and they have to write them off there will be an opportunity cost in that the free cash flow could have been returned to shareholders via buybacks and dividends.
Super insightful piece, Eric. The acceleration of Azure through OpenAI is stunning, imho feels like AWS’s 2014 moment, but with inference rather than SaaS.
One question: do you think OpenAI are evolving more into infrastructure players or staying in the application layer?
I don’t think they can be separated. Quantitatively OpenAI has more traction at the app layer (chatgpt), anthropic at the model layer (especially for coding).
I understand all the hyperscalers want to spend more on a white space, but when you look at the industrial companies, all of them are speaking of demand 2,3 even 4 years on critical products which says the physical spend is still to continue?
Great read
Great article! I don’t think this AI Spend will ever stop. The beginning of the year with those Microsoft warnings , a pullback in CapEx ai spending sounded like it was coming for Hyperscalers. That ideology from just 6 months ago feels like a half a decade ago
Certainly agree on the last point! Hard to predict what spend will look like; to your point, commentary seems to change by the month
With all these regulations being rolled back along with pro business agenda from this administration, I don’t see anything getting in the way 👌🤝💯
I agree the momentum is strong currently but nothing grows forever.
Correct. There will be a correction.. but I don’t think there will be a bubble bursting like in 2000. This AI thing is legit and being funded by legit companies like Google, Microsoft and Amazon… your thoughts?
That sounds right. All these companies plus Meta are unprecedented free cash flow machines and are ploughing their own money into these huge investment. currently the cloud hyperscalers say they are responding to excess demand. Meta is a slightly different case. if at some point they find they have overinvested and they have to write them off there will be an opportunity cost in that the free cash flow could have been returned to shareholders via buybacks and dividends.
You know what you’re talking about… so I subscribed to you!!! please do the same! 🤝
Super insightful piece, Eric. The acceleration of Azure through OpenAI is stunning, imho feels like AWS’s 2014 moment, but with inference rather than SaaS.
One question: do you think OpenAI are evolving more into infrastructure players or staying in the application layer?
I don’t think they can be separated. Quantitatively OpenAI has more traction at the app layer (chatgpt), anthropic at the model layer (especially for coding).
I understand all the hyperscalers want to spend more on a white space, but when you look at the industrial companies, all of them are speaking of demand 2,3 even 4 years on critical products which says the physical spend is still to continue?