As AI Proliferates, What Comes Next?

Katy Huberty: Operational efficiency has become a top priority for the C-Suite, and so when we frame this computing cycle around productivity, really the addressable market is that $40 trillion global labor market.

Stephen Byrd: I was honestly shocked when we actually put all the pieces together to figure out the total CapEx on AI infrastructure, the number is a bit over $3 trillion over the next few years through 2028.

Jitania Kandhari: We've seen similarities in terms of euphoria, investment, falling costs, increase adoption on one end. I think the differences as you mentioned, the CapEx that is being spent this time is multiples.

Just like electricity and Internet is everywhere, AI is going to be everywhere

Enrique Perez-Hernandez: Investors generally have seen that as an opportunity to get into the growth opportunity and the value creation opportunity that these companies can provide for earlier at an earlier stage.

Katy Huberty: So we're a tiny fraction of the way through amassive investment cycle.

Stephen Byrd: I've been in the world of power for 27 years. I've never seen anything like this in terms. Of sudden, incredibly intense demand for power, massive amounts at very specific locations, and so you essentially have the fastest moving sector.

Jitania Kandhari: There is a lot going on in entertainment and travel and music gaming media again who are the leaders there. That are going to use. Personalized algorithms to enhance customer experiences. They have your data, they have your search data, they have your shopping data, they have your hobby, data and how are they going to really monetize that.

Enrique Perez-Hernandez: I think the very near term, the more scale opportunities are going to be around the infrastructure build out.

Stephen Byrd: But the other side of thing is really the embody side, the robotic side. Very exciting to see the potential here and I was astounded when I really looked at the numbers in terms of the cost of robotics.

Katy Huberty: Every compute cycle is about 10 times bigger than the last. And so you're really looking at exponential growth.

Stephen Byrd: Literally every month, as we look at projected growth in both applications, but also infrastructure. The numbers keep going up and we do struggle to really factor in the not that non-linear rate of improvement which is so important so.

Enrique Perez-Hernandez: A lot of it is about information arbitrage and being able to, you know, act quickly. So, it's accelerating decision making.

Stephen Byrd: Our big call has really been look for alpha around those deep bottlenecking companies because the amount of capital that's being employed here and the amount of profit involved can be very large.

Jitania Kandhari: China’s strength is more in the in the consumer facing AI applications at this point given its digital ecosystem. So, I think they are really harnessing that productivity and that TAM. 

Enrique Perez-Hernandez: There is a little bit of an arms race particularly amongst the hyperscalers and the bigger companies and to just keeping up with innovation. So M&A is becoming more… Relevant.

I think you know particularly you see some of the very recent large acquisitions on the price tag is going to be very dependent on who the buyer.

Stephen Byrd: We're able to kind of take these cutting-edge tools and as they get better and better, implement them into their business and it's not a small amount of money in terms of savings. We are talking ultimately about trillions of dollars in savings. So that's very exciting.

Katy Huberty: As a business owner that that has diffused tech through the organization. I daily weekly. I'm looking at the KPIs on adoption, who is adopting, how it's changing their behavior, how much capacity it's building to spend more time with clients, the cost structure of the business

Stephen Byrd: I can't think of any client who currently is not thinking at the C-Suite level at the board level in great detail about how AI becomes part of their strategy.