a new report says that a special kind of computer called generative ai must make $600 billion every year to pay for the expensive parts it needs. right now, some big companies like google are making a lot of money from search engines, but they need to make even more money for generative ai to work well and be worth it. people are hoping that a special feature, like spreadsheets were during the first computers, will help generative ai become more useful for everyone. Read from source...

In the article `GenAI Must Generate $600B A Year To Justify Hardware Costs, Sequoia Estimates: How Much Does Google Search Make?`, Sequoia Capital's report is brought to light, presenting an estimation that Generative AI must generate $600 billion annually to justify GPU costs.

The author highlights experts' stress on the significance of developing a "killer" AI feature, which could act as a value-add for customers. However, the article doesn't offer any concrete examples of such a feature.

The argument presented seems somewhat illogical. The article mentions AI-related stocks hitting all-time highs, but also notes concerns about this rally being a bubble. Furthermore, it discusses how firms might never be able to recoup hardware costs.

While the article does provide some valuable insights into the world of AI, the logic and coherence in arguments could be improved. In conclusion, it appears as though the article falls short of delivering a comprehensive understanding of AI's impact and future prospects.

bearish

The report from Sequoia Capital suggests that while AI has the potential to be highly profitable, it is currently not generating enough revenue to justify the costs of hardware required for its development. There is a $500 billion gap between revenue and cost, according to the report, and while Alphabet Inc, Microsoft Corp, Apple Inc, Meta Platforms Inc, Oracle Corp, ByteDance, Alibaba Group, Tencent Holdings, and Tesla Inc are expected to generate a combined $100 billion from new AI-related revenue each year, this estimate creates a significant gap that needs to be closed for the technology to become truly profitable. This scenario paints a rather bearish picture for AI's current market standing.

1. Alphabet Inc (Google): Strong market share and profitability. Considered a safe investment, but with limited growth potential in the AI sector.
2. Microsoft Corp: Significant investment in AI with Azure cloud computing platform and AI research. Potential for growth in the AI sector, but profitability may be a concern due to the highly competitive market.
3. NVIDIA Corp (NVDA): Key supplier of GPUs for AI data centers. May benefit from the increasing demand for AI hardware, but the report estimates a large gap between the cost of GPUs and the revenue generated from AI use cases.
4. Tesla Inc: Potential to become a major player in autonomous driving technology, which heavily relies on AI. However, the company's overall profitability and long-term growth prospects remain uncertain.
5. Meta Platforms Inc (Facebook): Large user base and potential to integrate AI into their social media platforms. However, profitability and growth potential in the AI sector remain unclear.

Risks:

1. High hardware costs and potential inability for AI to generate enough revenue to justify these costs.
2. The need for a "killer" AI feature to drive consumer adoption and generate revenue remains uncertain.
3. The competitiveness of the AI market may limit the profitability and growth potential of AI-related investments.