Posted on 12/04/2025 7:29:58 PM PST by SeekAndFind
While giant tech companies like Google and Amazon tout the billions they’re pouring into AI infrastructure, IBM’s CEO doubts their bets will pay off like they think.
Arvind Krishna, who has been at the helm of the legacy tech company since 2020, said even a simple calculation reveals there is “no way” tech companies’ massive data center investments make sense. This is in part because data centers require huge amounts of energy and investment, Krishna said on the Decoder podcast.
Goldman Sachs estimated earlier this year that the total power usage by the global data center market stood at around 55 gigawatts, of which only a fraction (14%) is dedicated to AI. As demand for AI grows, the power required by the data center market could jump to 84 gigawatts by 2027, according to Goldman Sachs.
Yet building out a data center that uses merely one gigawatt costs a fortune—an estimated $80 billion in today’s dollars, according to Krishna. If a single company commits to building out 20 to 30 gigawatts then that would amount to $1.5 trillion in capital expenditures, Krishna said. That’s an investment about equal to Tesla’s current market cap.
All the hyperscalers together could potentially add about 100 gigawatts, he estimated, but that still requires $8 trillion in investment—and the profit needed to balance out that investment is immense.
“It’s my view that there’s no way you’re going to get a return on that, because $8 trillion of capex [capital expenditure] means you need roughly $800 billion of profit just to pay for the interest,” he said.
Moreover, thanks to technology’s rapid advance, the chips powering your data center could quickly become obsolete.
“You’ve got to use it all in five years, because at that point, you’ve got to throw it away and refill it,” he said.
(Excerpt) Read more at fortune.com ...
And, as an amateur historian, I dispute the comparison between the Roman empire and the USA today. I don’t think it is a valid comparison.
While this comparison has been made by scholars, commentators, and even in books like Cullen Murphy’s Are We Rome? (2007), there are little to no parallels.
Rome was an agrarian, slave-based empire without modern technology, democracy, or global institutions. America has a resilient economy, innovation (e.g., tech sector), and democratic mechanisms.
While inequality has risen, elites still fund philanthropy, taxes, and social programs (e.g., via billionaires like Bill Gates or government initiatives). No widespread “abandonment” akin to Roman elites fleeing cities has occurred
The better parallel is to the fall of the Roman REPUBLIC, not the Principate or Dominate.
Wow! India’s loss, gain for United States.
RE: Wow! India’s loss, gain for United States.
If you qualify for LEGAL ( emphasis) immigration to the USA from India, chances are, you are the educated, cream of the crop Indian from the country,
Unfortunately, roughly 1 in 5 Indians are STILL illiterate, that’s roughly 280 million who can’t read and write.
But those who qualify to immigrate legally are top tier. In fact Indians constitute the highest earning ethnic group in the USA, earning even more on average than Whites.
RE: Wow! India’s loss, gain for United States.
If you qualify for LEGAL ( emphasis) immigration to the USA from India, chances are, you are the educated, cream of the crop Indian from the country,
Unfortunately, roughly 1 in 5 Indians are STILL illiterate, that’s roughly 280 million who can’t read and write.
But those who qualify to immigrate legally are top tier. In fact Indians constitute the highest earning ethnic group in the USA, earning even more on average than Whites.
Illiterate Indians are mostly farm workers. My dad ran a farm business in India after he retired. There were bunch of farm workers living at the farm. That is their way of life, they do not see the need to go to school.
I bet IBM will keep lagging behind.
Remember the story about Elon Musk wanting one of his data center closed down because it wa costing more than it was making? Two employees were fired over it and for telling Musk it would take months to shut down. Musk went to the center and cut the date feed cable with a pocket knife and shut the center down.
AI will be a winner as an ‘add on’ to make products and inventions. As a ‘stand alone’ it’s not gonna make it.
“After 5 years, a used NVIDIA RTX 3090”
I just upgraded from my 2014 RTX 10XX to a 5080.
“... roughly 1 in 5 Indians are ... illiterate, ...”
Not to worry, our educational establishment is working hard to catch up.
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