The AI boom is unsustainable unless tech spending goes ‘parabolic,’ Deutsche Bank warns: ‘This is highly unlikely’

Core Insights - The current AI boom is deemed unsustainable due to the expectation that tech spending will not continue to grow at a parabolic rate [1][6] - AI capital expenditure (capex) is significantly impacting the U.S. economy, preventing a recession [2][6] - There is a projected $800 billion shortfall in the revenues required to meet the anticipated demand for AI computing power by 2030 [2] AI Impact on the Economy - AI spending is currently a major driver of U.S. economic growth, with tech-related investments being crucial to avoid recession [2][6] - Nvidia's substantial investment in OpenAI highlights the scale of capital flowing into AI technologies [1] Revenue and Investment Projections - Bain & Co. estimates that $2 trillion in annual revenue is necessary to support the computing power needed for AI by 2030, yet there remains an $800 billion gap [2] - Goldman Sachs estimates that AI capex reached $368 billion through August 2023, indicating significant investment in AI infrastructure [5] Market Dynamics - The "Magnificent 7" tech stocks have been pivotal in driving market gains this year, largely due to their AI-related spending and revenue generation [3] - There is a divergence of opinions on AI's long-term sustainability, with some firms like Goldman Sachs projecting positive GDP impacts from AI productivity gains [4]