alt Hacker NewsThe logic here is so flawed it suggests to me a significant lack of financial understanding. For example:
>If the AI industry has to pay off 5 trillion dollars over the course of 20 years, that's 250 billion dollars a year. For context, Alphabet (parent company of Google and Youtube) reported earning almost 162 billion dollars of revenue just in 2019. Adjusted for inflation, that's an even more impressive 213 billion dollars.
Alphabet's REVENUE was $162B, not earnings! You can't use all your revenue to pay off your debts because you have to use some of your revenue to pay operating and other expenses. So even if AI generates as much revenue as Alphabet did in 2019 (adjusted for inflation), there is no chance it could pay back $250B/year.
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Nearly every bit of logic here demonstrates a gross misunderstanding of the entire industry.
No acknowledgement of rising energy costs and problems accessing it.
Thinking you can just “turn off free users to save costs” (screw having a pipeline, I guess).
Not understanding the bespoke nature of data centers as it relates to the finite-living chips they’re designed for.
No acknowledgement of interest rates to service the massive debt they take on over the extremely long build times of the data centers.
No recognition of open weight models severely undercutting the American leaders.
This whole thing seems to be written on vibes.
Your point is valid, but there is a flaw in the premise. They don't need to pay off the $5 trillion in 20 years. They just need to be able to service it. If they can use that debt to bootstrap the company, as long as they can pay the interest and issue new debt, they can keep that $5 trillion on the books longer than either of us will be alive
I suspect if you go back to look at say, Microsoft's books from when they went public to today they have never been debt free