Editor's take: Normal people are now shelling out hundreds of dollars for modest RAM upgrades, while the companies powering the AI boom are looking forward to even more market hysteria. And despite record spending, spiraling hardware costs, and mounting skepticism from analysts, the CEOs of IBM and AMD insist there is no AI bubble – or at least not one that threatens their business.
IBM CEO Arvind Krishna argues that AI is not going through a financial bubble, despite many analysts, banks, and investors claiming otherwise. Krishna, who has led the former PC giant since 2020, is more concerned with the unsustainable infrastructure investments planned by OpenAI and other AI ventures seeking AGI paradise.
Krishna recently appeared on a Verge podcast, where he discussed quantum computing, the Jeopardy-winning supercomputer Watson, AI, and more. He doesn't believe there is an AI bubble, but warns that many AI-focused companies will never see a return on investment if they keep spending as recklessly as they are now.
The Indian American executive estimates that a single one-gigawatt AI data center requires around $80 billion. If a company wants to commit massive amounts of GPUs, RAM, and power to build a 20 to 30 gigawatt capacity, that cost rises to $1.5 trillion. The entire AI industry has already talked up about 100 gigawatts of capacity in its grand, earth-shaking announcements, which would require $8 trillion to actually build the data-crunching facilities behind them.
No one is going to recoup that kind of money anytime soon. Krishna said AI ventures would need to generate $800 billion in profit just to pay interest on an $8 trillion infrastructure buildout – and no company in the industry is anywhere near those numbers.
HSBC Holdings recently estimated that OpenAI will likely burn hundreds of billions of dollars for years.
The pursuit of artificial general intelligence (AGI) is the driving bet behind this sort of unrealistic financial commitment, Krishna said. But AGI will require much more than a few hallucinating large language models, with the IBM CEO estimating a zero to one percent chance of successfully building the first real AGI in history.
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IBM is mostly focused on the infrastructure and cloud side of the IT business these days, so the company has little interest in pushing GPUs or AI accelerators as the next big thing. AMD, however, is trying to do exactly that. CEO Lisa Su says the industry's growing concerns about an AI bubble are overblown.
In a recent interview with Wired, the head of the x86 chipmaker said she doesn't see any bubble from her perspective. There's an industry that needs massive amounts of chips to build new computing capacity, and AMD is more than ready to supply at least part of that demand.
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The Santa Clara – based company recently struck a major deal with OpenAI, committing to deliver 6 gigawatts of Instinct GPUs over several years. Su isn't worried about an AI bubble so much as she is about AMD's ability to keep up with chip demand from AI ventures.
She said AI has massive potential, and sees no reason not to continue pushing this planet-straining, job-reshaping technology for the foreseeable future. As Rockstar's co-founder recently suggested, the executives promoting AI everywhere aren't necessarily the most human or creative people around.