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AI’s $600B Question

Jul 03, 2024 - sequoiacap.com
The article discusses the growing gap between the revenue expectations and actual revenue growth in the AI ecosystem, which the author refers to as AI's $200B question. The author notes that despite Nvidia becoming the most valuable company in the world and the easing of the GPU supply shortage, the revenue gap has now increased to $600B. The author attributes this to factors such as the lack of pricing power in GPU data centers, the rapid depreciation of last-gen chips, and the speculative investment frenzies often leading to high rates of capital incineration.

However, the author remains optimistic about the future of AI, stating that AI is likely to be the next transformative technology wave and that a huge amount of economic value will be created by AI. The author also warns against the delusion of getting rich quick because of AGI, stating that the road ahead will be long and will have ups and downs. The author concludes by encouraging those building in the AI space to reach out and join the conversation.

Key takeaways:

  • The AI industry's $200B question has now become a $600B question, indicating a growing gap between revenue expectations and actual growth.
  • While the GPU supply shortage has subsided and stockpiles are growing, the revenue gap in the AI industry is increasing, with OpenAI holding the majority of AI revenue.
  • The introduction of Nvidia's B100 chip is expected to cause a surge in demand, potentially leading to another supply shortage.
  • Despite the speculative frenzy and potential for investment loss, the AI industry is expected to create significant economic value, rewarding those who focus on delivering value to end users.
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