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AI is, as it stands, not economically viable for anybody involved other than the construction firms, NVIDIA, and the surrounding hardware companies benefitting from the irrational exuberance of a data center buildout that doesn’t appear to be happening at the speed we believed .
Every AI startup loses millions or billions of dollars a year, and nobody appears to have worked out a way to stop hemorrhaging cash. Hyperscalers have invested over $800 billion in the last three years, with plans to add another $700 billion or so in 2026 and another $1 trillion in 2027 , meaning that they need to make at least three trillion dollars in AI specific revenue just to break even, and $6 trillion or more for AI to be anything other than a wash. I went into detail about this (albeit at a lower, pre-2026/2027 capex number) in a premium piece last year .
To give you some context, Microsoft made $281 billion , Meta $200 billion , Amazon $716 billion , and Google $402.8 billion in revenue in their most-recent fiscal years for every single product combined, for a total of $1.599 trillion. None of them will talk about their actual AI revenues. Yes, yes, I know Microsoft said that it had $37 billion in AI revenue run rate ($3.08 billion a month or so) and Amazon had $15 billion, or around $1.25 billion a month , but both of these are snapshots of single months that are meant to make it sound like they’re going to make that much in a year but in the end, you don’t actually know anything about how much money they’ve made from AI.
AI Is Too Expensive To Ever Pay Off Hyperscalers’ Capex Investments
We do, however, now know that Microsoft has spent an approximate $100 billion on its OpenAI partnership after testimony from an executive during the otherwise-dull Musk-OpenAI trial, per Bloomberg :
That figure includes Microsoft’s original investments in OpenAI, as well as the costs of building infrastructure and hosting OpenAI’s computing, Microsoft deals executive Michael Wetter testified on Monday. It is cumulative through the current fiscal year which ends in June, he said.
This is a fascinating insight for a few reasons:
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