A popular view of generative AI is that it’s unjustifiably expensive, chronically wasteful, rarely useful, and is being foisted on the general public for ideological reasons even though it makes the services they rely on worse. Governments are sure to be all over it.
So says Barclays:
The initial wave of AI is well under way, largely driven by billions of hyperscale dollars. The concern with Nvidia, and ultimately with the second wave of AI ecosystem, is where the next pocket of dollars comes from once hyperscale capex can’t shift further toward AI or grow meaningfully year-on-year.
In recent months, we have seen a growing initiative from nations around the world to quickly educate themselves and remain at the forefront of AI’s powerful potential. In a practical sense, this has amounted to public announcements for multi-hundred million and even billion-dollar spending plans from several nations (Saudi Arabia, Singapore, Germany, UK, India), which will go toward supporting the AI hardware ecosystem.
Private-sector AI cash burn is already sovereign-sized. The combined capex of Amazon, Meta, Google and Microsoft will be around $200bn this year, according to Bernstein Research.