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> A back-of-the-envelope calculation finds that covering aicapex through identifiable ai income requires revenue on the order of $2.5trn per year, more than tec

> A back-of-the-envelope calculation finds that covering aicapex through identifiable ai income requires revenue on the order of $2.5trn per year, more than tech’s entire combined revenue today. … > All these complex calculations roughly tally with a much simpler one: adding up the ai revenue of the firms selling most of the ai. Anthropic pulls in perhaps $75bn, annualised; Openai makes tens of billions; Google, via its ai model Gemini, and Microsoft probably get a bit less. SpaceX may have a few billion dollars’ worth of revenue from enterprise aithis year. Meta also makes a few bucks from ai. Add this up and you land at roughly $150bn a year.

trollbridge 2mo ago
$2.5tn is about 8% of U.S. GDP. So a handful of AI firms really expect that they will become larger than the entire U.S. sectors of manufacturing, government, or healthcare?
- nemomarx 2mo ago
  Investors expect that they will, I guess. If you really believe the strong ai use cases (like exponential improvements, or it replacing hundreds of knowledge workers at every company" then maybe this isn't unreasonable.
  - misterderpie 2mo ago
    If many people lose their jobs, thus consumers having less and less money, where would that money come from?
    - nemomarx 2mo ago
      If you look at recent trends in consumer spending, a lot more of it is from the upper classes and less from the middle. Selling services to the rich can displace the loss of white collar workers. (in theory). as a bonus, ideally you create some more really wealthy people to spend on things during this shift.
      - misterderpie 2mo ago
        I'm yet to see what part of AI really wealthy people would like to spend their money on. It's not like we can get AI Yachts and AI Rockets. What would the premium product for the upper class be?
        trollbridge 2mo ago
        My experience with rich people is they don’t even sign up for ChatGPT Pro. They’re happy to use a free tier or pay $20 a month.
    - ben_w 2mo ago
      Depends how many people, but don't forget that: 1) people like me exist: I don't live in the USA, yet it is possible for me to buy things which are made in the USA 2) fiat money is only created or deleted by laws the government controls (plus a tiny quantity from forgery and damage to coins and notes), so everyone losing their jobs doesn't make the money disappear, just who has it available to spend 3) previous waves of automation have created new business opportunities; while this has not been too good for the people who lost jobs to the automation, it has generally boosted the overall economies this happened in, so it is absolutely possible to wipe out tech employees without it seriously harming consumers collectively
- philipwhiuk 2mo ago
  The share price is based on them eliminating entire sectors yes.
  - trollbridge 2mo ago
    A rather big assumption everyone will keep paying API prices to OAI and Anthropic, though. $3.2tn a year on inference is going to attract a lot of competition.
- polytely 2mo ago
  I guess the bet is that they will become embedded in basically 8% of the tasks in every sector. which I guess could happen long term? thinking about the whole ass economy in this way always make my mind boggle so I don't really feel equipped to talk intelligently about this.
- jcranmer 2mo ago
  I suspect that they believe they can integrate with a substantial portion of not just the US economy, but also most of the European and formal Latin America economies. And I also suspect that the number is quite high because there are so many AI companies planning to snag like 80% market share for AI.
p-e-w 2mo ago
Why would capex need to be covered by income during a time of investment and infrastructure buildup? Did income from the Apollo program cover its expenses?
- richiebful1 2mo ago
  Public investment was responsible for Apollo, so there was no expectation of profitability. Private investment is largely responsible for the AI buildout, and private investment isn't doing that for charity
- nemomarx 2mo ago
  If I give you 5 trillion dollars I want to get that back plus a percentage increase on top for my troubles, right? Government programs might run without the expectation of paying back taxpayers but investors are less generous.
  - jonfw 2mo ago
    Investors can be very generous if they see opportunities for market capture of the next big thing
    - Ekaros 2mo ago
      Also they might not be as smart as they have made out to be. This time it seems they might be spending more to capture market than the market is worth. Still, there are plenty of people who take their cut of the money on the way. So at least those people will be happy.
- bandrami 2mo ago
  Because most of the capital assets depreciate over a period of 5 years or so so you have to make the expenditures back during that time or you can't book any revenue.
- bigmadshoe 2mo ago
  The Apollo program wasn’t for profit and if it was it never would have yielded a return on investment.
Gagarin1917 2mo ago
I thought SpaceXAI was making like $25 billion a year renting out hardware now?
- bandrami 2mo ago
  That's $25B before discounts, and their discounts to Anthropic in the current quarter alone are $12B of that.
  - Gagarin1917 2mo ago
    I’m not sure what you’re referencing, I can’t find any source for this. Why would they offer an 80% discount? Hardware is the limiting factor for many AI companies.
    - bandrami 2mo ago
      The xAI Anthropic deal was pretty widely covered, but the press release is here: https://x.ai/news/anthropic-compute-partnership https://x.ai/news/anthropic-compute-partnership The absurdly large discount was why Anthropic could claim a revenue-positive quarter for the first time. But that discount window ends IIRC in September. The problem remains that xAI announced the discounted revenue as "revenue before discounts".
      - Gagarin1917 2mo ago
        No, no, I get that the general deal was public information. I’m not doubting that Anthropic partnered with SpaxeXAI for additional computer. I said as much in my original comment. What I’m doubting is your claim that SpaceXAI is giving them a 12 billion dollar discount. That link does not say anywhere that SpaceXAI is giving them an 80% discount after charging them $15 billion. That doesn’t make any sense.
apercu 2mo ago
$150bn a year? Awesome. But the investment obligations are in the trillions already so where is all this new revenue coming from? I think that is what the article is saying and what many of us have been asking for a year.

trollbridge 2mo ago

$2.5tn is about 8% of U.S. GDP. So a handful of AI firms really expect that they will become larger than the entire U.S. sectors of manufacturing, government, or healthcare?

nemomarx 2mo ago
Investors expect that they will, I guess. If you really believe the strong ai use cases (like exponential improvements, or it replacing hundreds of knowledge workers at every company" then maybe this isn't unreasonable.
- misterderpie 2mo ago
  If many people lose their jobs, thus consumers having less and less money, where would that money come from?
  - nemomarx 2mo ago
    If you look at recent trends in consumer spending, a lot more of it is from the upper classes and less from the middle. Selling services to the rich can displace the loss of white collar workers. (in theory). as a bonus, ideally you create some more really wealthy people to spend on things during this shift.
    - misterderpie 2mo ago
      I'm yet to see what part of AI really wealthy people would like to spend their money on. It's not like we can get AI Yachts and AI Rockets. What would the premium product for the upper class be?
      - trollbridge 2mo ago
        My experience with rich people is they don’t even sign up for ChatGPT Pro. They’re happy to use a free tier or pay $20 a month.
  - ben_w 2mo ago
    Depends how many people, but don't forget that: 1) people like me exist: I don't live in the USA, yet it is possible for me to buy things which are made in the USA 2) fiat money is only created or deleted by laws the government controls (plus a tiny quantity from forgery and damage to coins and notes), so everyone losing their jobs doesn't make the money disappear, just who has it available to spend 3) previous waves of automation have created new business opportunities; while this has not been too good for the people who lost jobs to the automation, it has generally boosted the overall economies this happened in, so it is absolutely possible to wipe out tech employees without it seriously harming consumers collectively
philipwhiuk 2mo ago
The share price is based on them eliminating entire sectors yes.
- trollbridge 2mo ago
  A rather big assumption everyone will keep paying API prices to OAI and Anthropic, though. $3.2tn a year on inference is going to attract a lot of competition.
polytely 2mo ago
I guess the bet is that they will become embedded in basically 8% of the tasks in every sector. which I guess could happen long term? thinking about the whole ass economy in this way always make my mind boggle so I don't really feel equipped to talk intelligently about this.
jcranmer 2mo ago
I suspect that they believe they can integrate with a substantial portion of not just the US economy, but also most of the European and formal Latin America economies. And I also suspect that the number is quite high because there are so many AI companies planning to snag like 80% market share for AI.

p-e-w 2mo ago

Why would capex need to be covered by income during a time of investment and infrastructure buildup? Did income from the Apollo program cover its expenses?

richiebful1 2mo ago
Public investment was responsible for Apollo, so there was no expectation of profitability. Private investment is largely responsible for the AI buildout, and private investment isn't doing that for charity
nemomarx 2mo ago
If I give you 5 trillion dollars I want to get that back plus a percentage increase on top for my troubles, right? Government programs might run without the expectation of paying back taxpayers but investors are less generous.
- jonfw 2mo ago
  Investors can be very generous if they see opportunities for market capture of the next big thing
  - Ekaros 2mo ago
    Also they might not be as smart as they have made out to be. This time it seems they might be spending more to capture market than the market is worth. Still, there are plenty of people who take their cut of the money on the way. So at least those people will be happy.
bandrami 2mo ago
Because most of the capital assets depreciate over a period of 5 years or so so you have to make the expenditures back during that time or you can't book any revenue.
bigmadshoe 2mo ago
The Apollo program wasn’t for profit and if it was it never would have yielded a return on investment.

Gagarin1917 2mo ago

I thought SpaceXAI was making like $25 billion a year renting out hardware now?

bandrami 2mo ago
That's $25B before discounts, and their discounts to Anthropic in the current quarter alone are $12B of that.
- Gagarin1917 2mo ago
  I’m not sure what you’re referencing, I can’t find any source for this. Why would they offer an 80% discount? Hardware is the limiting factor for many AI companies.
  - bandrami 2mo ago
    The xAI Anthropic deal was pretty widely covered, but the press release is here: https://x.ai/news/anthropic-compute-partnership https://x.ai/news/anthropic-compute-partnership The absurdly large discount was why Anthropic could claim a revenue-positive quarter for the first time. But that discount window ends IIRC in September. The problem remains that xAI announced the discounted revenue as "revenue before discounts".
    - Gagarin1917 2mo ago
      No, no, I get that the general deal was public information. I’m not doubting that Anthropic partnered with SpaxeXAI for additional computer. I said as much in my original comment. What I’m doubting is your claim that SpaceXAI is giving them a 12 billion dollar discount. That link does not say anywhere that SpaceXAI is giving them an 80% discount after charging them $15 billion. That doesn’t make any sense.

apercu 2mo ago

$150bn a year? Awesome. But the investment obligations are in the trillions already so where is all this new revenue coming from? I think that is what the article is saying and what many of us have been asking for a year.