[IMAGE CREDIT: Dean Drobot and ภาพของoselote via Canva]
Key Takeaways
- Chamath Palihapitiya estimates that 70 to 75 cents of every dollar spent on AI right now is venture money, spent by AI companies that don’t make a profit.
- Much of that money ends up at Microsoft, Amazon and Alphabet, and they can survive a shakeout far better than the AI labs paying them.
- Amazon’s capital spending rose from $52.7 billion in 2023 to $132 billion in 2025, and Alphabet’s rose from $32.3 billion to $91.5 billion.
- Next week’s earnings reports from the three will show whether cloud growth is holding up.
Citadel founder Ken Griffin thinks AI is a bubble. Chamath Palihapitiya has a number for who’s paying for it, and the money leads straight to Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOG).
On Bloomberg Talks, Griffin said “all of corporate America is looking at their bills from Anthropic and OpenAI and going, okay, we need to think about how to make sure we’re getting productivity out of this.”
Palihapitiya, the Social Capital founder and All-In podcast co-host, replied on X with the math:
“1% of companies represent 90% of AI spending. Of that 90%, 80% of this spend are from unprofitable VC backed companies. So, roughly, $0.70-75 of every dollar of AI spending right now comes from AI companies spending VC investment dollars.”
(80% of 90% is 72%, which is where the range comes from.)
His verdict: “the revenue quality in AI is currently poor.”
That’s a lot of other people’s money.
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The money lands at three companies
The labs don’t hold on to venture money for long. They spend much of it renting compute, and most of the landlords are hyperscalers.
Steve Eisman, the investor made famous by The Big Short, put a figure on it on last week’s episode of The Compound and Friends: “if you go to the hyperscalers 70% of their AI revenue is from Anthropic and OpenAI.”
Josh Brown, CEO of Ritholtz Wealth Management, cut the whole trade down to two conditions on Tuesday’s episode of the same show: “the labs have to go public and raise money and the hyperscalers have to continue to put up big revenue growth numbers in their cloud division and that’s it.”
Wall Street expects Microsoft to hold up its end. Analysts see revenue climbing from $332 billion in fiscal 2026 (the year ended June) to $469 billion by fiscal 2028.
That would be faster growth, from 18% in fiscal 2026 to about 20% in fiscal 2028. Griffin is worried about what corporate America gets back for its AI bills, and that gives analysts no reason to cut Microsoft’s numbers before next week’s report.
Building for customers on someone else’s dime
Amazon and Alphabet are spending as if that demand is here to stay. Amazon’s capital spending went from $52.7 billion in 2023 to $132 billion in 2025, about 2.5x in two years…
…and Alphabet’s nearly tripled over the same two years, from $32.3 billion to $91.5 billion.
If Palihapitiya and Eisman are right, customers paying with venture money will fill a big chunk of that new capacity.
Chamath’s own analogy is the bull case
Palihapitiya says this has happened before: in cloud, “early users of AWS were mostly venture backed startups.” Before AWS could “pull thru GCP and others as legitimate cash machines,” he writes, “there were a few clearing events to sort out these brittle revenues.”
Think about who came out of those clearing events. Plenty of startups didn’t. AWS did, and so did Google Cloud and Azure.
Levi Strauss got rich selling to Gold Rush miners, whether or not they struck gold. Same deal here.
The labs need fresh money to keep paying their bills. Microsoft, Amazon and Alphabet are already public and profitable, and they have huge businesses outside AI. (All three are also investors in the labs: Microsoft in OpenAI, and Amazon and Alphabet in Anthropic.)
Bet on the landlords
The risk is Brown’s first condition. If the labs can’t raise money, Eisman’s 70% works against the hyperscalers, and the money on those capex charts is already spent.
My take: the bubble risk sits with the labs. Microsoft, Amazon and Alphabet are cashing the checks today, and they’re built to survive the clearing event Palihapitiya expects.
Of course, next week’s reports are the first real test. Watch whether cloud growth holds up while corporate America takes a harder look at those AI bills.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
