AI's $200B Question

This thread by Guido Appenzeller from a16z&#x27;s AI team is a strong rebuttal of the Sequoia article.[1] I personally found Sequoia&#x27;s argument a bit strange, since it not only misunderstands the unit economics of the industry at a basic level, but further misunderstands the ways that AI will be &quot;just another component&quot; of software stacks — not unlike databases, high-level programming languages, network infrastructure, etc.<p>[1]: <a href="https:&#x2F;&#x2F;x.com&#x2F;appenz&#x2F;status&#x2F;1704915400096649696" rel="nofollow noreferrer">https:&#x2F;&#x2F;x.com&#x2F;appenz&#x2F;status&#x2F;1704915400096649696</a>

&gt; What are you going to use all this infrastructure to do? How is it going to change people’s lives?<p>there are some questionable linkages in that article, in the rush to discuss &quot;the big numbers&quot;<p>specifically, core AI &quot;foundation&quot; models are (supposedly) built once, while tuning and interaction follow, with less energy for each activity. If the infrastructure arms-race settles down (not there yet) then what does this technology do .. in markets? to society? for investors?<p>It is difficult to project actual social concern onto SequoiaCap here.. if they had it for a moment I am sure it would pass quickly.. But sure, what is the effect of the use of this money?<p>When people realize that their jobs are being replaced, that suddenly ads for lotteries and junk food are a lot more plentiful, that ads are auto-generated and placed in every conceivable device while human needs are visibly shortchanged (housing). Yes, actually, there might be consequences to all that.. is that the implied question, too?

&quot;The important question to be asking is: How much of this CapEx build out is linked to true end-customer demand, and how much of it is being built in anticipation of future end-customer demand? This is the $200B question.&quot;<p>This is an amusingly incorrect question. It presupposes AI as if it was a technology like any other, which it isn&#x27;t. It&#x27;s deeply transformative. Money actually doesn&#x27;t matter here.<p>AI is not for making money. Money is for making AI.

Good thoughts, really.<p>Author said, people enter BIG race, to buy huge number of GPUs, but at the moment not seen, from where their cost will be paid.<p>I mean, if $200B should been invested, this must consider at least 4 x $200B of returns (including salaries, fees, taxes, etc), so at least $1000B must be somewhere on horizon.<p>If industry will not found source of $1000B, will be just next bubble.<p>Yes, it is possible, to happen some wonder, for example, government could consider this very important, for example for defense, raise taxes and pay these money from budget.<p>But any possible money must appear nearest months.

This struck me as if it was written by an investment banker, so I looked up the author, and confirmed he was indeed an investment banker prior to joining Sequoia.