Patel explains the 7% rule limits non-US data centers, benefiting only Microsoft, Meta, Amazon, and Google.
“So, like, it's, like, Microsoft, Meta, Amazon, Google. Right? These four companies have, you know you know, 70 plus percent of their data center AI data center capacity in The US.”
Patel describes a 10,000+ GPU customer whose engineers preferred CoreWeave infrastructure over their acquirer's hyperscaler setup.
“What's what's funny is there was a customer that had more than 10,000 GPUs with you. They got acquired. They had to start using some clusters at their acquiring company, the company that acquired them.”
Patel notes CoreWeave got H100 services online six months before every hyperscaler in many cases.
“Get services online with h one hundreds before every hyperscaler by a factor of, like, as much as, like, six months in many cases.”
Patel observes hyperscaler data centers started in 2023 remain incomplete even with expedited equipment delivery.
“Even if they even if they had the electrical equipment in in you know, not on lead time, they paid a bunch to skip the queue.”
Patel forecasts hyperscaler CapEx at $455-500 billion for next year versus Wall Street consensus of $360 billion.
“The consensus for the banks is $360,000,000,000 of spend next year across all of them. And my number is closer to, like it's, like, $45,500.”
Patel argues neo clouds with long-term enterprise and hyperscaler deals will succeed over on-demand providers.
“And so those are probably less likely to be able to succeed versus those who are locking in these massive deals with or long term deals that may not be massive but with enterprises or with AI labs, or with the hyperscalers who have no capacity because the demand is just so incredible.”
Patel notes Google's $180B and Amazon's $200B capex announcements caused stock declines despite hyperscalers seeing massive AI demand.
“Google announced a 180,000,000,000 of capex. The stock went down. And then Amazon announced 200,000,000,000 of capex and their stock went down like, I wanna say like 10%.”
Patel predicts Google and Amazon will take on debt for AI infrastructure following Meta's example.
“Google and Amazon haven't taken on debt yet for AI infrastructure, but they will. Right?”
Patel says Google spending $180B and Amazon $200B on AI infrastructure represents 4x increase from recent years.
“If we start looking at like, hey, this year, Google spending 2 Amazon spending $200,000,000,000, Google spending a $180,000,000,000 on on AI infrastructure primarily. Right?”
Patel identifies multi-trillion dollar funding gap as hyperscalers exhaust cash flows and raise debt.
“No one is generating that much cash from the business yet. Right? Hyperscalers, they funded all of the growth up until now. Google, Microsoft, Amazon, Meta.”