Alibaba Chairman Says Investors Pumping Billions Into AI, No Proof Of Return Yet | 'But No Bubble'

Yeah. Cham just raised a very interesting point which is there's no bubble. If you take these models operate on the current path of trajectory and if but there's some breakthrough change then the underlying energy infrastructure, all that stuff is going to that becomes a bubble in itself. It's sort of a bubble that happens because conditions have changed. That's I think that's I wouldn't call it a corner case but that's something that people should think about.

Yeah, but I think if you look at right now the massive amount of capex investment that all the hyperscalers, all the model companies are making. I mean the latest quarter of reports that people are doubling their capex. It used to be last year these hyperscalers are making 60 to 80 billion per company per year of capex and now it's doubled like 120 to 150 billion per year. It's astounding just within a year right. But here's the thing, I think a few things are driving it. Number one, people still believe in the scaling law. And now also the idea that inference time scaling is important because more compute resources will be allocated to inference and inference is where everybody that uses AI will touch influence as opposed to the few model companies that only do training, right? So a lot of capex that's going toward inference. And then finally, you have people making multimodal models that deal in generative rich media, videos, images, that will burn a lot of GPU resources. So people seeing this scaling law and multimodal world and we haven't even talked about world models yet and that's I think the validation that there will need to be more compute that need to be invested in. I don't think these trends are going to reverse or veer off in the future. People will still continue to, for example, are people going to consume less videos? I don't think so.

And so in that sense there's no bubble but having said that people are investing anticipating future demand as opposed to I think there could be in certain sectors you see like memory, you see shortages today but the just the massive amounts of investment it's kind of hard to think about ROI. I hate to be the CFO of one of these companies because they have to face having to explain ROI to investors. You can't do that.