I think the fundamental rebuttal to this is merely that, we’re still so early, the $1.5 trillion number is irrelevant for developing technologies in the same way two women can’t birth a baby in 4.5 months
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The $1.5 trillion number is extremely relevant because it makes the revenue numbers the industry has to hit higher and there's an expectation to see progress sooner before funding starts getting pulled back.
>...it makes the revenue numbers the industry has to hit higher...
Yes. But.
Industry can miss its revenue targets, Oracle can go bankrupt (looking more and more likely) OpenAI, Anthropic and SpaceX might find "true value" at about 10% of current valuations (that feels right to me), all that can happen with the associated economic chaos... and still out of it comes world shaping new technology
Both things can be true
Certainly, but a flop of $1.5 trillion would create a deep and long trough. I think in that situation OpenAI and Anthropic probably don't survive as independent companies (where is the revenue? who would want to put more money in at that point?). In that situation there would definitely be a fire sale in the prices of licensing models (open weights are already pushing this way the hell down), semiconductors, data centers, and compute in general. And like in that situation, who knows what products come out of that dividend of cheap stranded assets? It might not even be AI related. You can do a lot of things with a lot of cheap GPU power. This boom-bust cycle is nothing new, especially to the tech industry. This deep crash outcome is the risk that a bet of $1.5 trillion makes. And it makes the current paradigm of coding agents and chatbots less likely because it is so volatile.
Oracle can go bankrupt? Oracle was a license to print money for decades. If they go bankrupt, that is one insanely bad bet they made.
Oracle has bet the house on AI. Free cash flow is deeply negative with tons more capex guidance on the books. They are currently the largest non-financial corporate issuer of new debt in the corporate bond market. They are literally cutting their headcount to the bone to help fund this build out. If their compute deals do not pan out because their customers have liquidity issues or revenue stalls, they are in dire straits.
Given the advances since 2022 why would funding get pulled back? The endgame is replacing all office workers globally and so you get 10% of that market that's that's easily $1 trillion. A competent AI employee replaces a human the same way the car replaced the horse. Businesses will pay more for an AI employee that doesn't get sick or come in hung over over a human one and never goes to sleep. If OpenAI manages to crack that, and capture even 10% of the market globally, that's trillions.
Total addressable market doesn't pay interest expenses. Even if this technology really did have the potential to be as revolutionary as the move from the horse to the car, if you can't get there with what the world economy's liquidity can provide then you can't get there. Free cash flow is drying up and data centers depreciate. This creates a limit and if that limit is hit before the profit starts coming in it doesn't matter what the potential could be. Paying back interest is financial gravity and it exists today. And this isn't an appeal to Wall Street's short term profit motive, there just is an economic limit to what the capital markets can spend on a bet this big and this risky.
Yes, that's going on optimism. It's also possible that we're 80% there and the rest will take forever, while the loans and investments were taken out now.