Gerstner reports some AI models are already priced below cost due to hyper-competitive market dynamics.
“the second thing people said was that the runtime models are just highly competitive and many people think that some of the models are already priced under cost, which goes back to the credit investment theme that you and I have talked about.”
Gerstner identifies four ingredients to compete in AI: capital at $40B/year, data scaling, compute infrastructure, and distribution.
“I think there are four important ingredients to compete in this market. Number one, you have to have capital, and the leaders are spending $40,000,000,000 a year.”
Gerstner argues closed AI models will struggle to get funding as large CapEx spending clears the market of competitors.
“So I think to your point, by throwing down on the CapEx that you're going to spend, you are clearing the market of potential competitors.”
Gerstner states Google was dominant in 10 blue links but is not dominant in the new AI era.
“They were dominant in 10 blue links. They are not dominant in this. There are a lot of other players in the age of What”
Gerstner asserts Google lost its dominance in the AI era despite dominating traditional search.
“They were dominant in 10 blue links. They are not dominant in this. There are a lot of other players in the age of”
Gerstner states China adds six to eight reactors yearly and will surpass US nuclear production by 2030.
“China who's adding six to eight new fission reactors per year, it's gonna add upwards of 25 or 30 over the course of the next, you know, five or six years, is expected to surpass The United States in nuclear power production by 2,030.”
Gerstner's analysis shows Google page views decline 8-11% year-over-year for users who subscribe to ChatGPT.
“And you can see peak to trough is down 8% year over year. Peak to trough is, let's say, down 11. So clearly, page views are going down,”
Gerstner argues focusing on slowing China distracts from accelerating US competitiveness.
“And I think by if we focus too much on how do we slow down China, we take the eye off the ball on how to accelerate our own race.”
Gerstner claims Anthropic has executed the largest revenue explosion in technology history over the past ninety days after being written off last year.
“Anthropic was literally counted out of the game last year, and they've kicked OpenAI's a** over the last 90 days. Bam, you have the largest revenue explosion in the history of technology,”
Gerstner says frontier model revenues are needed to fund $1-2T annual capex buildout of American AI
“Narrative violation. Have been hearing for 18 months frontier models dead. Competition w open source is not zero sum. If you want American AI to win u should cheer for open & closed - we need these revenues to pay for the $1-2 T annual capex build out of American AI. 🇺🇸🚀💰 https://t.co/5swFA78sel”
Gerstner says frontier labs still capture roughly 90% of AI economics despite open source token share gains
“@Jason Agree. Grt competition! Share of tokens increasing at open source models (tho both still early in growth curve & growing rapidly). But share of wallet / AI economics continues to be ~ 90% to closed / frontier labs despite dire forecasts. The question is if / when changes. 🧐💰”