Reddit Investor Sells NVIDIA, Alphabet, and Microsoft Over Perceived $2 Trillion AI Gap
A Reddit investor known as 'u/soukstah' recently made headlines by selling his shares in NVIDIA, Alphabet (Google), and Microsoft due to a perceived $2 trillion AI gap. The poster's argument was based on arithmetic showing that the economics of AI spending did not add up.
The investor's math started with return on invested capital (ROIC) for hyperscalers like Alphabet and Microsoft, which is historically around 30%. According to the poster, these companies need $636 billion annually in AI cloud revenues to maintain their ROIC. However, the current run rate is roughly $70 billion.
The investor also considered the spending habits of consumers, who are accustomed to free digital products. This led him to conclude that software sales of the required size aren't coming anytime soon.