AI. The money is going round in a loop.
Billions flow into AI and billions flow out, but most of it is the industry paying itself. On paper that is growth. In practice, barely any of the money leaves the circle.
THE GIST ON AI: "The loop"
Where is the AI money actually going?
Microsoft gave OpenAI billions, and OpenAI spent much of it back on Microsoft's cloud. Nvidia sells the chips every AI startup needs, then invests in those same startups.
Even the AI platforms are struggling to find real customers, with ad money often ending up on AI spam sites instead of in front of real people.
Why does that matter?
Wall Street is valuing AI companies as if this is real demand. Most of it is circular spending, and investors are paying for growth that doesn't exist yet.
This isn't a new economy. It's a loop. If real customers don't show up, those sky high valuations collapse.
Who makes money in a gold rush?
The people selling the picks and shovels. Here, that's the chip makers and the cloud giants, while many AI apps will be left with no real business model at all.
Is AI a real boom or a bubble?
Your take. One tap, then see how everyone else voted.
Quick answers
What is circular spending in AI?
Companies paying each other. Microsoft gave OpenAI billions and OpenAI spent much of it on Microsoft's cloud, while Nvidia invests in the startups that buy its chips.
Who makes money in an AI gold rush?
The chip makers and the cloud giants, the people selling the picks and shovels. Many AI apps may be left with no real business model.
See you on the next one.
What should the next one be? Suggest a topic for Huw to explain
The conversation
Comments
Nothing here yet. Start the conversation: Huw reads every comment before it is published.
