AI's circular spending problem? Activate CEO Michael Wolf on the circular AI economy

AI Investment & Partnerships - Nvidia, OpenAI, and Oracle have formed a circular network with billion-dollar partnerships, relying on each other amid accelerating AI development [1] - Companies are making significant infrastructure investments, anticipating real demand in the AI sector, leading to partnerships [3] - Some companies may not be able to afford the commitments they are making empirically, lacking the necessary cash [4] - Nvidia is receiving funds from those committing to buy chips, using that money to purchase the chips [5] - AMD's deal involves warrants, expecting stock appreciation to fund chip purchases [5] Market Dynamics & Potential Risks - The market is currently rewarding companies for increased spending, viewing it as a sign of investment and competitiveness [8][15] - There's a risk of market sentiment shifting, potentially disfavoring current spending patterns [8] - Unlike the late '90s, there is real demand, but the question is whether the demand is profitable [10] - The marginal cost of delivering AI-driven answers (like Google with Gemini) is significantly higher [11] - The success of these companies depends on creating more productivity, which could lead to job displacement and impact the economy [17] AI Platform Evolution - ChatGPT is evolving into a super platform, integrating services like DoorDash and Expedia, potentially creating new demand [19] - The app economy, exemplified by the iPhone, demonstrates the potential for new businesses to emerge [22]