Business
US-led AI investments risk capital destruction: Chris Wood
Drawing parallels with the past boom-and-bust cycles such as the dotcom in late 1990s and British Railways in the 19th century, Wood, in his newsletter Greed & Fear, said, “…..a lot of capital will be destroyed in this AI capex cycle and that capital is most likely to be destroyed by US players given the Chinese AI capex of “only” Rmb 841 billion ($124 billion) this year.”
The Chinese investment is equivalent to 18% of the projected US$680 billion of capex by the four hyperscalers, he said, referring to Amazon Web Services, Microsoft Azure, Google Cloud Platform, and Meta, which dominate the cloud and data-centre operations.
Despite the rapid adoption of artificial intelligence technologies, Wood cautioned that the pace of investment may not be sustainable.
“The reality is that the world is now adopting Artificial Intelligence at breakneck speed; though Greed & fear’s base case is that adoption will be slowed down in due course by an over-investment bust in the US, if not in China,” said Wood.
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