By the fourth quarter of 2024, tech companies will be spending $150 billion a year on Nvidia's data center chips, according to an analysis published in June by David Cahn, a partner at venture capital firm Sequoia Capital. After accounting for operating costs such as electricity and salaries, Cahn said Sequoia estimates companies will need to generate $600 billion annually to break even on their AI investments.

Sequoia further predicts tech companies will make a combined $100 billion a year in the near term, Cahn said, amounting to a shortfall of about $500 billion. To earn back that money, tech companies must build smarter AI systems and actual physical infrastructure.

Current AI systems do a poor job of reasoning. While chatbots such as ChatGPT contain a wealth of knowledge and write grammatically sound sentences, they cannot take on complex projects alone. Meanwhile, training and deploying AI models takes a massive amount of electricity. Data centers may account for as much as 9% of U.S. power demand by 2030, according to a report published in May by the Electric Power Research Institute—up from 3% in 2022.

Despite the hype, Census Bureau surveys show that just 5% of American companies say they are using AI to produce goods or services. Moreover, about 95% of companies using AI say that the technology has not changed their total employment levels.

While AI has dominated headlines over the last two years, people and companies using the technology regularly today are, in fact, early adopters. Only 23% of American adults have used ChatGPT, according to a survey conducted by the Pew Research Center in February.

Nvidia is set to ship its Blackwell Ultra chips later this year, which promise 2.5 times the performance at only a 25% increase in cost. In June, the company also announced a Rubin AI platform utilizing as-yet-unreleased HBM4, the next iteration of high-bandwidth memory.

Even AI pessimists must concede that the gold rush has at least one more cycle to run.

Story editing by Nicole Caldwell. Additional editing by Kelly Glass. Copy editing by Kristen Wegrzyn.