The New Chip Crisis: AI Infrastructure Spending Exceeds $1.5 Trillion

Three years ago, Sequoia partner David Cahn was one of the first people to do the math and put a number on the implications of Silicon Valley’s titanic spend on AI infrastructure. In 2023, he was reacting to Nvidia's reported annual GPU revenue of $50 billion. Starting with that figure, and adding in the implied costs of operating the data centers and the margins for their operators, he deduced that $200 billion in revenue would be required to pay back the up-front investment. Now, this figure has reached $1.5 trillion, and the industry needs to earn $3 trillion to justify these expenditures.

The Growth of the AI Industry

■Anthropic has reportedly reached $60 billion in annual revenue.

■OpenAI earned $13 billion in 2025.

Market Risks

■Torsten Slok, the chief economist at Apollo, notes that hyperscalers are predicting massive accelerations in their free-cash flow in 2028.

■However, the shift to cheaper open-source models and falling token prices pose risks.

■Slok warns that if hyperscalers fail to meet their cash-flow goals, the market reaction could be severe.

The markets are highly sensitive to this situation, and any slowdown could lead to a recession and a correction in the S&P 500.