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

mkrishnan

not really, stop these BS

Insanity

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/

missedthecue

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

The sooner it pops the better

riazrizvi

Feels right and sustainable, ballpark.

bunderbunder

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?

godbox

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.

mococa

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

godbox

To put this into perspective, healthcare, real estate and banking each earn ~$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

> 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__

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.

bmoathn

Such an interesting dilemma. Arguably an incredibly transformative new industry for which the market cannot fundamentally bear the costs. (or IDK, does it actually work now?) How will it play out?? I don't care how good AI is at something like software development or whatever task. If customers were paying real prices for usage would any of us be using it? Any data out there on how far off enterprise API pricing is from actual compute COGS for these models right now?

ItsMattyG

as ai becomes an actual replacement for workers, costs will rise to what you would pay a worker, and $6T will be easy

ThePhysicist

Then again, investments in AI are 1-2 % of worldwide GDP I think, if you think that this technology can probably increase efficiency at least a couple of times in anything that has to do with information processing it doesn't seem so ridiculous. The electric grid, railroads and other large-scale infrastructure required similar amount of investments, though they took much longer. I guess the main risk here is the speed at which everyone races to capture this market as unlike electricity or railroads this revolution is entirely digital so competition happens nearly on a global scale and everything is much faster. That is probably the main risk, going this fast will definitely cause overshoots in one or the other direction.

bryanrasmussen

it does seem a lot like the whole AI thing is the market staying irrational a lot longer than the naysayers can afford not to go along with it, but still, nobody can stay irrational forever.

IronWolve

The high end sectors using these servers are paying way more than joe consumer and his 30 bux a month. We are already seeing justification for the boom, and I'd expect even more advancements to come in multiple sectors. That number is missing from the article.

jollyllama

What's total US annual payrolls? I don't think it's beyond the order of $20 trillion. So they're going to have to replace something on the order of magnitude of half of all jobs OR "create" the difference, in terms of jobs going to AI.

runako

This is like sitting in 1997, confidently assuming all future Internet services would run on one of Sun, Compaq/HP, DEC, or SGI, and projecting costs accordingly.

gortok

To avoid this becoming a “tail wags the dog” scenario, folks who have money would need to spend it. We told people for 20 years to “learn to code”. Technology is, outside of healthcare, the leading profession for upward economic mobility. What happens when the adoption of AI destroys the middle 60% of the bell curve of programmers and technologists? How will the middle class of people spend money on products/services if they don’t have a job? We can’t both create wealth and destroy jobs with nothing to replace them. America has little to no manufacturing base. Technology and finance has been its differentiator economically speaking for job creation. Both are at risk from AI adoption. Businesses have to sell to someone, and at the moment it’s not clear — if the stated goals of revenue are to be believed, how that can happen.

jimmyjazz14

I can't think of any use case for AI that is a necessity for myself (or people I know), even if coding agents (which I use every day) disappeared tomorrow it would only be a minor inconvenience that I had to write my own code again. Now lets contrast that with electricity or internet, if either of those went offline I would be on a call trying to get them restored asap, now as far as I know neither of those industries bring in $6T in revenue.