The numbers are staggering. Microsoft, Amazon, Google, Meta have poured hundreds of billions into data centres and GPUs. But the returns aren't showing yet. Revenue from AI services is growing, but nowhere near enough to justify the capex. Investors are starting to ask hard questions. The recent earnings calls had a different tone. Less bravado, more caution. Some analysts are cutting their capex forecasts for next year.
The fundamental problem is supply and demand. Everyone ordered the same chips at the same time. Now the lead times have collapsed. You can get H100s in weeks, not months. That means the scarcity premium is gone. The hyperscalers are sitting on a lot of idle capacity. They're not going to admit it, but utilisation rates are lower than expected.
This doesn't mean AI is dead. It means the spending cycle has peaked. The next phase is about efficiency, not expansion. The companies that can deliver real applications will win. The rest will write down assets. The bubble isn't bursting tomorrow, but the air is leaking out.
Paul