CNBC Television
Tech trade's at a significant inflection point, says GQG Partners' Brian Kersmanc
11/4/2025, 9:22:46 PM
Economic Summary
- Despite roughly $600 billion invested in AI infrastructure, realized AI-related revenues are only around $20–$30 billion, raising questions about the path to sustainable monetization and returns for investors and suppliers (e.g., NVDA beneficiaries).
- Cloud pricing has become highly competitive with smaller/cloud rivals undercutting incumbents by large margins; observed rental quotes show Blackwell chips at ~$3.70/hour vs historical AWS quotes near $10/hour, implying downward price pressure on AMZN and MSFT.
- Evidence from an MIT study and consultant surveys shows low hit rates for AI projects (95% and ~15% success metrics cited), suggesting adoption and productivity gains may lag expectations and could depress demand for related capital expenditures.
- The AI narrative has broadly influenced global markets—semiconductor/memory stocks, European industrials, utilities, and banks—so a recognition that AI monetization is overstated would create widespread repricing and sectoral spillovers.
Bullish
- Insatiable demand for computing capacity could drive future monetization.
- Firms will continue building infrastructure in anticipation of future AI use-cases.
- Cloud and chip leaders retain scale advantages that could benefit long-term winners.
Bearish
- Massive infrastructure spending (~$600 billion) has yielded only ~$20–$30 billion in revenues, suggesting weak monetization.
- Aggressive cloud price competition (Oracle and others undercutting AWS/Azure) is eroding pricing power and margins.
- AI project success rates appear low (MIT and consultant data), implying many deployments deliver little value.
- Channel discounts on chips (H200 selling 30–40% off; Blackwell rentals ~$3.70/hr vs AWS ~$10/hr) indicate overcapacity.
Bullish tickers
NVDAAMZNMSFT
Bearish tickers
NVDAAMZNMSFTORCLMETA
NVDA
Bullish
Large share of AI infrastructure demand benefits NVIDIA given its chip leadership and widespread adoption.
Bearish
High concentration of AI spending into NVDA creates risk if AI monetization disappoints and multiples re-rate.
AMZN
Bullish
Continued insatiable demand for cloud compute could sustain AWS revenue growth despite pricing pressure.
Bearish
AWS faces aggressive price undercutting from other cloud providers, pressuring margins and growth economics.
MSFT
Bullish
Scale and ecosystem advantages position Microsoft to capture ongoing cloud and AI workloads over time.
Bearish
Azure is vulnerable to aggressive cloud pricing, which could erode enterprise margins and market share.
ORCL
Bullish
Oracle's lower pricing may win share in cloud markets and accelerate migration to its services.
Bearish
Oracle's aggressive pricing tactics contribute to sector-wide margin compression and price deflation.
META
Bullish
Continued investment in AI could create future monetization avenues across Meta's platforms if use-cases mature.
Bearish
Heavy spending on AI initiatives may not translate into proportional revenue gains, risking returns on investment.
People mentioned
Brian Kirschman