The massive infrastructure investments in AI data centers will not return back to investors anytime soon. In fact, we are looking at one of the biggest capital misallocations in tech history.
The math is brutal:
The Capital Spend: Tech hyperscalers (Microsoft, Alphabet, Meta, Amazon) are on track to spend over $700 Billion on AI capital expenditures.
The Revenue Gap: Analysts at Sequoia Capital point out a staggering $600 Billion annual revenue gap between what is being spent on AI infrastructure and what the actual software market is generating in sales.
Tech giants are building digital skyscrapers before knowing if anyone wants to rent the rooms.
