Link: AI industry needs to earn $600 billion per year to pay for massive hardware spend — fears of an AI bubble intensify in wake of Sequoia report | Tom's Hardware

David Cahn, an analyst with Sequoia Capital, believes that AI companies will have to earn about $600 billion per year to pay for their AI infrastructure, such as datacenters. Cahn's math is relatively simple. First, he doubles Nvidia's run-rate revenue forecast to cover the total AI data center costs (GPUs are half; the rest includes energy, buildings, and backup generators). Then, he doubles that amount again to account for a 50% gross margin for end-users, such as startups or businesses buying AI compute from companies like AWS or Microsoft Azure, which must make money, too. Even optimistic projections for major tech companies' AI revenues fall short, Cahn says. Assuming Google, Microsoft, Apple, and Meta each generate $10 billion annually from AI and other companies like Oracle, ByteDance, Alibaba, Tencent, X, and Tesla generate $5 billion each, there remains a $500 billion gap. #

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