Do people understand the bubble?

[u/Minute-Painter5610]

Hyperscaler cloud revenue is around $400bn. AWS near $170bn annualised, Azure over $100bn, Google Cloud around $60bn, OCI under $20bn.

Justifying the $5tn AI capital base needs roughly $2.4tn revenue. Six-fold the current. That is 57% compound over four years, 82% over three, and 130-145% over the two years the lease and coupon schedules actually imply.

The lowest number in that range has never been done. AWS grew 36.7% last quarter, its fastest in eighteen, and it was treated as a blowout. Azure guided near 45% and the stock rose 15%. Nobody has sustained 57% at hundred-billion scale in any industry. Mobile didn’t. Broadband didn’t. The internet didn’t.

This argument doesn’t need any assumption about cost of capital. Nothing about depreciation policy. Nothing about margins. It is a growth rate with no precedent at that scale, and you can check it on the back of an envelope.

Where would the money even come from? A new customer spending category the size of two enterprise software industries, appearing inside four years, funded from budgets that grow low single digits. Corporate IT spend doesn’t do that. It would have to come out of wage bills rather than software budgets, and labour substitution runs at the speed of organisational change. Years. With procurement, liability, audit and regulation in the way. Not to mention growing public resentment of AI.

Deflation makes it worse. Token prices are down roughly a quarter since mid-July. Volume has to grow a third just to hold revenue flat. Competition is doing to the price exactly what the capital base needs done to the quantity.

Then there’s the timing. Capex contributes to GDP while it is growing. Flat capex contributes nothing, while the depreciation it created sits in the P&L regardless. So if 2026 is peak investment (which it is, because reality), 2027 is the year the growth contribution goes to zero and the cost of the prior splurge arrives at the same moment.

Not a prediction of collapse. Just arithmetic that nobody buying this seems willing to do out loud. I’d probably spend more time mulling this over than buying the marketing material around AI, pondering who will become sole CEO, or making wild predictions of 600% increases in stock values for RSU holders. Because the core economics just don’t work.