Short answer: Amar Goel says demand exceeds supply, yet AI revenue is perhaps $40 to $50 billion a year against roughly $400 billion of infrastructure spend. Citing the IBM CEO, he says $8 trillion of capex needs $800 billion of profit for interest.
Watch this answer from Episode 23 (starts at 27:56) · Episode 23 notes and transcript
From Episode 23: OpenAI Code Red? The New AI Reviewer Changing Everything, starting at 27:56.
Amar Goel [27:56]: I do think there's this, like, interesting kind of paradox a little bit in the market today, which is, you said Amazon doesn't have that many chips. Right? All the producers of these goods, whether they're chips or models, are kinda saying, hey. There's we're, like, run out. Right? The demand is dramatically exceeding the supply. And then we're certainly see that with a lot of model providers when we try to access their models. We use billions of tokens a day, and we're like, oh, they're like, hey. We don't have that much capacity for you. Know? But then when you look at the aggregate revenue that's adding up here, it's not yet that significant. You know? I mean, we're probably talking about $40 to $50 billion dollars of revenue, a year max that's happening in AI, which, okay, significant in terms of the growth curve. But, when you look at, like, the half 1,000,000,000,000 or whatever, 400,000,000,000 that's being spent on infrastructure, that isn't that much revenue. You know?
Amar Goel [29:02]: So, again, maybe that's just we're early in the investment curve and that's gonna adjust over over time here.
Jordan Metzner [29:10]: Everything's a wrapper. Right? So well, everything's well, let me just finish that. Right? Like, everything's a wrapper. Right? And so, like, all you need is one bottleneck inside this, like, wrapper flow to, essentially limit capacity and whether that's coming, like, from TSMC out of Taiwan or, like, Nvidia out of the chips or out of the data center or the power limitations or even just, like, the pipeline of Internet to be able to get to these data centers. Right?
Amar Goel [29:35]: I mean, it's it's not that dissimilar to, like, maybe in that sense, if you look back to, like, late nineties, early two you know, February you couldn't get servers. That's exactly right. Right? Servers were like this commodity not commodity. I mean, were like this precious good. I actually funny story. My next door neighbor when I was growing up was this guy, Ed Zander, who is the COO of Sun Microsystems. We put the dot in dot-com. And, getting servers from them was like getting GPUs, last year. It was like $100,000 a server, and it was just crazy how much you had to spend and, like, they didn't have them. They were like, we're sold out. You know? And so everybody was, like, trying to get those things. And like you said, and then they were like, we can't produce the chips fast enough. So, when you go through these kind of boom cycles, that's it's like when oil fields are, like, going cranking and people are like, I can't forget enough people to drill the holes.
Amar Goel [30:33]: I don't have enough drills. It's the same thing.
Sam Nadler [30:35]: Well, the IBM CEO says, the math isn't mathing, with this CapEx build out and that, it just the returns aren't gonna make economic sense. I know we just kinda commented on this, but any follow-up thoughts?
Amar Goel [30:53]: Yeah. I mean, I think this is very related to the discussion we were just kinda having, right, which is that, the investment that's being discussed or being committed to, I mean, is really, massive. Right? And, I mean, I think, he says in this article here, 8,000,000,000,000 of CapEx means you need 800,000,000,000 of profit, not revenue, profit just to pay for the interest. Right? So that means you probably need, 1 and a half or $2,000,000,000,000 of revenue, to pay for the pay you know, to get that profit to then, just pay the interest cost to cover. So that's not actually, like, even giving you excess profit that you can put in your, log below your expense line. Right? So, I mean, that, seems like we're pretty far from that. And again, this is a super huge investment market and whatever. I mean, I think the interesting thing a little bit is, like, do you need to go down this path? Right? So if you look at Anthropic, I think, the New York Times or the Wall Street Journal, somebody just had a big maybe Forbes. Somebody had a big interview with him, with Dario just a day or two ago. Well, I mean, he was kind of, they're take playing a different game, and he was just kinda, like, poking fun at, or a jest or whatever at OpenAI being like, yeah.
Amar Goel [32:21]: Do you really need to spend all this money? I mean, again, they're spending quite a bit of money too, but it's literally an order of magnitude less. I mean, I think their loss this year is supposed to be $2,000,000,000. I think OpenAI is probably like a 10 or 20. And so they're kinda like, hey. Do you really need to spend, that much money to train your models? And so it does appear that there are other approaches you could, kinda take. I mean, if you look at what's coming out of the Chinese labs, like DeepSeek and Moonshot and all that, I mean, they're training mean, I they're probably making fun of Anthropic. Right? They're training models at one hundredth the price of those models or at least one tenth. So, yeah, I'm not I look. I'm not an expert on this. So, and everyone loves to be an armchair quarterback, but, it does seem like we're getting a little bit over our heels here, or skis, I mean.
Sam Nadler [33:15]: Amar, thank you for joining. Jordan, thank you so much. It was a great episode. If episode 23, if you have a chance, like and subscribe, and we'll see everyone next week.
