IBM CEO Arvind Krishna argues that at current infrastructure and energy costs there is effectively no way for the current wave of AI data center spending to earn an adequate return. Using back-of-the-envelope math, he estimates about 80 billion dollars to build and fill a 1 gigawatt data center, implying around 8 trillion dollars in total commitments if the world builds roughly 100 gigawatts of AI compute capacity.
• He says 8 trillion dollars of capex would require roughly 800 billion dollars of profit just to cover the cost of capital, and notes that AI chips depreciate over about five years, meaning they must be heavily utilized and then replaced, further straining economics.
• Krishna openly disagrees with Sam Altman’s belief that such spending will be paid back, framing it as a belief or bet rather than something he accepts.
• He is very skeptical that current large language model technology alone will reach AGI, putting the probability at only 0 to 1 percent without a new breakthrough. He thinks AGI will require additional technologies, such as combining LLMs with more structured or hard knowledge, and even then calls it only a “maybe.”
• Despite this, he is bullish on present-day AI, saying current tools can unlock trillions of dollars of productivity in enterprises, even if they fall short of true AGI.
11 replies (most recent on top)
He is a silly goose
IBM does an RA in March and often follows up with June and October RAs
@f6 As usual, Alvind is full of sh-t. no surprises there.
Link to full podcast (looks like ~1hr.) referenced in the OP --
IBM CEO Arvind Krishna says there is no AI bubble after all
https://www.theverge.com/podcast/829868/ibm-arvind-krishna-watson-llms-ai-bubble-quantum-computing
@OP Want to hear Charman Alvind pontificating about AI and the Data Centers in the future ? Link is below:
https://www.msn.com/en-us/money/other/ibm-ceo-warns-there-s-no-way-hyperscalers-like-google-and-amazon-will-be-able-to-turn-a-profit-at-the-rate-of-their-data-center-spending/ar-AA1REbsM?ocid=msedgntp&cvid=3f0eb6d27923404ee98228100fb3bd03&ei=16
Same old garbage from a so-called genius who cannot make his company's technology work profitably. So now he takes aim and throws rotten eggs and tomatoes at more profitable companies than IBM. LOL.
@cd You are witnessing IBM partner out everything except mainframe essentials. Expect even more partnering out of non mainframe entities as time moves on as IBM’s overhead can’t support non-mainframe development anymore. It’s IBM going back to what it knows best (eg mainframe) Why? Because it holds a monopoly in mainframe and continues to invest heavily in it due to its excellent margins. Everything else will eventually be partnered off with IBM taking an IP and an established customer fee.
Arvind and IBM stopped making great things 4-1-93 when the G Man Gerstner came in and raided IBM for $400,000,000. Arvind is whining and looks very dull trying to suggest investing with the Big Boys for AI leadership is not smart. How many WRONG things has IBM done and not done for the last 30+ years? A little teeny weeny online book store in Seattle is now massively larger and better than IBM. A teeny weeny graphics card maker whose CEO worked at Dennys for 6 years as a dishwasher is now massively larger and better than IBM. MSFT. Google. Etc etc. Arvind is complaining because HE and all the CEO's from Gerstner onward have raided IBM and now IBM is like a terminally ill patient with both dementia and cancer. It cannot and will not survive. IBM can no longer play with the big boys and make the massive AI investments needed to MAKE THINGS and BE A LEADER because our financials are engineered and propped up with huge dept and the next external acquisition of another dying company.
@OP IBM no longer owns or manages Data Centers, so why is Alvind ranting about the costs ? IBM is not even a major player in AI. Everything in the former IBM Data Centers was moved to Equinix, who are making loads of $$$ by hosting IBM workloads, while IBM is moving slowly and steadily towards insolvency. Alvind and his Indian crooks are taking everything down, sooner not later. IBM Management incompetency wins out always.
When the entitled Indian gets into a position of power, the entitled Indian will exercise extreme prejudice against non-Indians, doing all they can to replace the non-Indian with the Indian, and the non-India with the India.
The entitled Indian believes the Indian is superior to all non-Indians, and is justified in lying, cheating, stealing, scamming all non-Indians, even Indians who do not share the entitled Indian's view, because the entitled Indian can have no opposer to their entitlement.
Is your company run by an entitled Indian? This is how you tell!
AK said privately: “AI is just a buzzword / scapegoat to transfer jobs from rich western countries to India, lower cost countries “
@OP I wouldn't trust Alvind (Mr. Vindaloo In Da Loo) to sit the right way on a toilet seat let alone explain how he and IBM will make a sustainable profit with AI. Isn't Krabanaugh just fudging the numbers and cooking the books as usual ?