00:00Let's stay in the realm of the AI build-out. According to a new report, AI revenue may have
00:05reached a tipping point. Analysis from Exponential View shows global AI sales, excluding China,
00:12reached $25 billion in the first quarter of this year. Depreciation from data sender and
00:18chips investments, well, that's expected to be just $21 billion. So is the AI build-out finally
00:25paying off? Azim Azhar, founder of Exponential View and an author on that report, as well as a
00:30Bloomberg contributor, joins us now. We've talked about this for so long, the machine where you know
00:36the numbers that are going in, capital expenditures. It's just been very hard to find the numbers that
00:41are coming out the other side. You seem to have found them. Well, thank you for having me on your
00:47show, Ed. And I thought it was really important that we do find them. The supply side is well
00:53understood how many picks, shovels, chips, data centers are being built and how much does that
00:57cost. Piecing together what's happening on the demand side is much harder. The biggest AI companies
01:04are privately held. They don't need to disclose. And the hyperscalers, the big three, AI is only a
01:11small subsegment of a subsegment of their businesses. And so they don't really disclose. But there are
01:17enough clues. And for the last six months, my team and I have been looking at every public disclosure
01:22that we can up and down the supply chain, from the hyperscalers, from well-sourced leaks,
01:27to reconstruct the AI economy and to reconstruct specifically what is the top revenue coming in
01:36from customers, enterprises and consumers without any double counting. And that's what we published
01:42today. And that's the $25 billion in Q1 2026 that you referred to. And I think it's really
01:48critical. This lifts the fog of war. You can also look forward, right? So you're exactly right.
01:55I mentioned a moment in time, and that was that period gone. But if you looked, I guess,
02:00on an annualized revenue run rate basis, you can say, per the report, that actually there is
02:07continued growth, accelerating growth in those revenues too. Absolutely. I mean, we view the,
02:14if you annualized the current month, we're at $170 billion of annualized revenues without any double
02:21counting. That represents a 200% growth rate on the previous point, this time 12 months ago.
02:29But the current growth rate is still at around 200%. And what's really remarkable, Ed, is that you would
02:35expect that growth rate to start to slow down. And in fact, we were caught out by this because we
02:41had
02:41in our modeling from the start of this year, predicted it would slow down. And what turned
02:46out to happen was that Anthropic went on a real tear and kept the growth rate high.
02:51We're just showing the chart that goes back to what I said at the top, the point being quarterly
02:56revenue pace and current number is now exceeding the depreciation on the hardware side. I'm assuming,
03:03Azeem, that you're a great student of history, just as I am. And what's so interesting is like,
03:08you can go back and say, well, what happened at the advent of the smartphone or even
03:12of cloud computing, the internet, if you want? Where does what's happening in AI on those real
03:18revenues stack up against those prior moments in technology history?
03:22Those moments are epic. They were some of the fastest growing business waves we've seen in the
03:28United States worldwide ever in history. AI real revenues is growing roughly three times faster than
03:35the internet grew roughly three times faster than mobile grew. So this is a really fast in-demand
03:42product that enterprises across America and consumers around the world are really buying into at the
03:47moment. Azeem, real quick to end, what happens next?
03:52Well, what happens next is we see more of Main Street trying to get this right. We see more competition.
03:58I think people are concerned with the price of some of the proprietary models. We'll see
04:03large enterprises rotate towards open source, which provides better value for money. But I do think
04:09that as enterprises get better at doing this, as Main Street understands how to use AI, they will double
04:14down more.
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