Keep in mind wealth is not a fixed thing. If AI makes their businesses more productive, it would allow the creation of more wealth, giving them more money to pay for AI with.

This of course hinges on the big if: does AI create wealth? I think yes, but maybe not $6 trillion of it in five years.

Customers coming up with it is basically fine*, but it's also why the SpaceX IPO chose to use "TAM" as a big number to dangle before investors: if you can do the work of {$6T + markup}/year worth of desk jobs, that's your customers.

However, customers coming up with the money is the easy half of the problem. The hard part is having them pay you.

Wikipedia's valuation is on the small side of {number of people on the internet worldwide} * {peak price of Encyclopaedia Britannica} † despite containing a lot more content.

LLMs can only chase high margins while they're ahead of their competitors; the moment the investment stalls, open weighs catch up, they loose their edge. Cloud compute providers still win on supplying inference, but there too competition will likely lower margins, not justify huge valuations.

NVIDIA may remain as valuable as today, but their P/E ratio will likely shrink a lot even while keeping up the price.

Model makers still have a problem here even if the tech is so useful it rapidly grows the economy: "free" is right behind them almost immediately after they stop.

* under the assumption the tech is real; there's plenty of people here on Hacker News who still dismiss it as a "scam"

† that would be about 13 trillion USD, from what I read

> Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

If they keep replacing employees with AI, that is indeed the direction.

"Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?" Because they will replace people with tools I am guessing?

The global GDP is $126T, a 5% productivity increase would correspond to $6.3T.

So, I have the following thoughts:

How much more productive can AI for knowledge work realistically make the global economy? 5%, 10%, 20%?

What if it also does robotics soon and can be deployed in manufacturing and construction? Can we get 50% more productive, or 200%?

Then there's science, medicine, and so on. Who is to say what happens if AI solves also that?

While I do not know if AI will be capable for these use cases, I see no reason to believe it unlikely that AI could be applicable to eg. robotics and speed up production by factor 3x.

In a recession, too. You have to ask where the money even enters the funnel.

you might make a hypothesis they'd offset operations costs like headcount for this but I think the counterpoint is stronger, if they benefit from increased productivity in your example, why not run more net production from same input.

Still though, the thesis seems based on an assumption that the companies would experience either major growth or major efficiency gain, neither of which really pass the smell test to me. Option 1 growth - money has to come from somewhere ultimately? Option 2 efficiency - put into profit rather than simple offset to AI provider?

Or the AI providers get companies hooked with subsidized pricing that unwinds later and you end up with the Uber/AirBNB situation of market capture and good product reverting to mean level of price/quality over time. Tinfoil hat thinks it ultimately gets squeezed out of retail investors in index funds.

Total software developer comp (worldwide) is ~$1T

No, they are dropping expensive people for cheap people who can steer AI. That will reduce their spend by quite a bit.

> Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

Because spend on "enterprise productivity tooling" (or whatever category they want to place AI spend in) can now increasingly offset human labor cost.

> enterprise productivity tooling market

AI is not a replacement for powerpoint and excel. You can't substitute those.

White collar worker salaries is ~$30T+ global.

anecdotally, my AI aka personal productivity spending has gone up something like that

I think we've barely scratched the surface of available 'evil' applications for AI that will be immensely powerful. Building, for example, an application capable of building personalized emotionally targeted advertisements based on a user profile would be incredibly effective and probably expensive but I bet it would pay dividends.

MSFT office suite alone sells $.1 trillion a year

I truly don't think anyone serious believes that, but if they pretend to believe it and preach it aggressively they might make out with an historic payday and stick the rest of us with the bill. People did the same with Crypto, with NFT's, with a bunch of things for as long as the ball is rolling.

Because they’ll be able to just fire all their employees and redirect the spend to AI. That’s the current delusion.

> Do we really expect all the world’s corporations to suddenly up their annual spend by 1,000% on average? Why?

because AI is gonna make them so much more productive of course. /s

it seems fairly obvious to me that once ai becomes as good as a worker, people will pay a workers wages to use it - 24/7, can't quit, can't complain that badly, no lunch breaks

productivity tooling replaces employees

AI is the second Industrial Revolution! You cannot use outdated notions. The nature of work and value creation itself is changing. Those who do not embrace AI will be left behind. Soon AI will accelerate in its ability to self-improve resulting in general artificial intelligence. This will result in not just our economy reaching the next level but will illuminate the very nature of knowledge and existence. We will ascend becoming beings made of pure energy.