"AI chips become obsolete in 3-5 years"...Tether CEO warns of cracks in big tech investment

▲ Artificial Intelligence (AI), Big Tech, US Tech Stocks/AI-generated image

A bubble warning has emerged amidst the artificial intelligence investment frenzy, where big tech is pouring hundreds of billions of dollars. The CEO of Tether pointed out four cracks, stating that AI chips become obsolete in 3 to 5 years, while the investment recovery structure presupposes a much longer period.

According to crypto-specialized media BeInCrypto on July 6 (local time), Tether CEO Paolo Ardoino warned of four structural mismatches in big tech's AI infrastructure investment race: cost vs. revenue, investment period, and competitive landscape. Ardoino cited AI service pricing, timing of revenue generation, capital financing maturity, and open-source AI competition as key issues.

The first problem is AI computing prices. Ardoino observed that companies are supplying AI services at prices lower than the actual cost of provision to acquire customers. He pointed out that raising prices could weaken demand, while maintaining low prices would keep profitability under pressure.

The gap between massive upfront investment and the timing of revenue generation is also a cause for concern. While large sums of money are initially invested in data centers, graphics processing units, and power contracts, it may take longer for AI revenues to fully materialize. AI chips can become obsolete within 3 to 5 years, posing a risk that expensive equipment may need replacement before investments are recouped.

The growth of open-source AI also threatens the pricing power of commercial AI companies. Chinese hedge funds, including Wealspring Asset and Shanghai Banxia Investment Management Center, have also warned of a potential bubble in AI stocks. Wealspring characterized global AI stocks as a "super bubble," while Banxia suggested that factors that could trigger a market correction may have already appeared.

JPMorgan projected that global AI-related spending would reach $5.5 trillion by 2030. Alphabet, Amazon, Meta, and Microsoft are expected to spend up to $720 billion this year, while Morgan Stanley estimated that approximately $3 trillion in AI infrastructure investment would be injected into the overall economy by 2028. Ardoino warned that if AI service pricing, revenue, hardware lifespan, and competitive landscape do not align, it may be difficult to convert AI demand into sustainable investment returns.

[Article Summary]

-Tether CEO Paolo Ardoino warned of four structural mismatches in big tech AI investments.

-AI chips can become obsolete within 3-5 years, but the AI infrastructure investment recovery structure presupposes a longer period.

-JPMorgan projected that global AI-related spending would reach $5.5 trillion by 2030.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*