Major financial executives are sounding alarm bells about artificial intelligence's unsustainable spending trajectory. HSBC CEO Georges Elhedery and General Atlantic's William Ford warned that the industry's massive capital investments - including $380 billion from Big Tech this year alone - may not generate matching revenues for years, creating conditions ripe for 'irrational exuberance' and capital destruction.
The artificial intelligence gold rush just hit a reality check from some of finance's most seasoned voices. Speaking at the Global Financial Leaders' Investment Summit in Hong Kong, HSBC CEO Georges Elhedery delivered a stark warning that sent ripples through the investment community: the AI industry's massive capital spending spree doesn't match up with actual revenue potential.
"The scale of investment poses a conundrum for companies," Elhedery told the packed summit audience. "While the computing power for AI is essential, current revenue profiles may not justify such massive spending." His comments come as Alphabet, Meta, Microsoft, and Amazon collectively prepare to spend more than $380 billion on AI infrastructure this year alone.
The numbers backing Elhedery's concern are staggering. Morgan Stanley estimated in July that global data center capacity will grow sixfold over the next five years, with hardware costs alone reaching $3 trillion by 2028. McKinsey's April report painted an even more dramatic picture: $5.2 trillion in AI-capable data center capex needed by 2030.
General Atlantic Chairman and CEO William Ford, sharing the panel with Elhedery, didn't mince words about what this spending frenzy could trigger. "There could be misallocation of capital, destruction, overvaluation... and irrational exuberance in the initial stages," Ford warned, invoking the phrase that Fed Chairman Alan Greenspan famously used before the dot-com crash.
The timing of these warnings couldn't be more pointed. OpenAI, the company that sparked the current AI arms race with ChatGPT's November 2022 launch, has announced roughly $1 trillion worth of infrastructure deals with partners including , , and . That's more than the GDP of most countries, all bet on a technology whose commercial returns remain largely theoretical.
