The AI Investment Bubble: Depreciation, Revenue, and the Diffusion of Risk
Three facts describe the current state of artificial intelligence infrastructure spending, and none of them are matters of opinion. The companies building that infrastructure have, over the past five years, repeatedly extended the accounting assumptions that determine how quickly their hardware loses value on paper — assumptions that flatter today’s earnings regardless of what eventually happens to the hardware itself. The revenue actually being generated by the AI industry falls far short, by any reasonable measure, of what would be required to justify the scale of capital currently being committed. And the financing structure built to bridge that gap has diffused the risk away from the technology companies themselves and onto pension funds, index-fund investors, and, in some cases, ordinary electricity ratepayers — parties who never chose to make a bet on artificial intelligence at all. ...