Analyst at Sequoia Capital, David Cahn, noted last September that there was a very significant gap between the revenue expectations implied by the AI infrastructure build-out and.
The big picture: The tech industry is riding a new high amid a frenzy fueled by AI. Big Tech companies have been plowing huge sums to build out the necessary infrastructure to meet what they perceive demand will be for these products in the coming years. One analyst warns however that the industry needs to stop and consider whether the actual revenue generated by AI will be enough to support these investments.
Analyst at Sequoia Capital, David Cahn, noted last September that there was a very significant gap between the revenue expectations implied by the AI infrastructure build-out and the actual revenue growth in the AI ecosystem. He estimated that the annual AI revenue required to pay for their investments was $200 billion.
Fast forward almost a year – a period during which Nvidia has become the most valuable company in the world – and that number has climbed to $600 billion, annually.
This is how Cahn came to his conclusion. He started with the premise that for every $1 spent on a GPU, roughly $1 needs to be spent on energy costs to run the GPU in a data center. In Q4 2023, Nvidia’s data center run-rate revenue forecast was $50 billion.
