Jared Bernstein, along with others, calculates the revenues needed to rationalize the AI capital investment in place and planned.

Source: Callum Williams via J. Bernstein.

As Bernstein recounts, this amount of revenue is unlikely to occur within a time frame financial markets are likely to tolerate (i.e., soon). A BPEA paper by Stijn Van Nieuwerburgh on the subject is here. And has been pointed out, financing for these expenditures has been migrating out to more exotic, less transparent, areas of the financial system.

I can’t remember where, but if you believe the revenues are coming, you have to also ask from whence they are coming. Surveys of planned spending on AI services (highly speculative I know) are much smaller.

I don’t doubt there can be a big payoff to the firm or firms that come first in the race to market AI services; however, a big mess can arise from the aftermath for the firms that come in last, or next to last…

One interesting aspect of monitoring the sector: price to (forward) earnings for the Mag-7 (not exactly the AI labs; Mag-7 have revenues coming in from other streams) are pretty low, historically speaking. But then, one has to remember, these are forward earnings, which are analysts “guesses”