Technology

AI is, as it stands, not economically viable for anybody involved other than the construction firms, NVIDIA, and the surrounding hardware companies benefitting from the irrational exuberance of a data center buildout that doesn’t appear to be happening at the speed we believed.

Every AI startup loses millions or billions of dollars a year, and nobody appears to have worked out a way to stop hemorrhaging cash. Hyperscalers have invested over $800 billion in the last three years, with plans to add another $700 billion or so in 2026 and another $1 trillion in 2027, meaning that they need to make at least three trillion dollars in AI specific revenue just to break even, and $6 trillion or more for AI to be anything other than a wash. I went into detail about this (albeit at a lower, pre-2026/2027 capex number) in a premium piece last year.

To give you some context, Microsoft made $281 billion, Meta $200 billion, Amazon $716 billion, and Google $402.8 billion in revenue in their most-recent fiscal years for every single product combined, for a total of $1.599 trillion. None of them will talk about their actual AI revenues. Yes, yes, I know Microsoft said that it had $37 billion in AI revenue run rate ($3.08 billion a month or so) and Amazon had $15 billion, or around $1.25 billion a month, but both of these are snapshots of single months that are meant to make it sound like they’re going to make that much in a year but in the end, you don’t actually know anything about how much money they’ve made from AI.