"Despite plenty of shakiness in the market, investors still firmly believe that the trillions of dollars companies like OpenAI, Microsoft, and Oracle are planning to spend on AI infrastructure buildouts will one day deliver a return. But at the same time, economists are warning that those investors are overlooking some glaring problems with their plans to pile graphics processing units into enormous data centers to train and run immensely power-hungry AI models."
""You're investing in something that is a perishable good," economist and author David McWilliams told Fortune, calling AI hardware "digital lettuce" that's "going to go off now." Worse yet, GPUs could also become obsolete as the technology improves. "Technological change suggests that if you buy a GPU today, the chip is going to be outdated next year," McWilliams added. To McWilliams, it's a recipe for disaster."
Nvidia beat Wall Street expectations by reporting soaring revenues while downplaying fears of an AI bubble. GPUs have driven the AI boom and fueled astronomical company valuations despite lagging revenues. Investors expect trillions of dollars in infrastructure spending by OpenAI, Microsoft, and Oracle to eventually deliver returns. Economists warn that constant, 24/7 operation degrades hardware rapidly and that GPUs can become obsolete as technology advances. David McWilliams characterizes AI hardware as a perishable good and warns of a likely crash and limited job creation. Michael Burry cautions that optimistic depreciation assumptions could lead companies to overstate future earnings.
Read at Futurism
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