Bubble update: the top 1% of customers make up 80% of spend at the AI labs, and of that 1%, 80% are VC backed start ups!

Bubble update: the top 1% of customers make up 80% of spend at the AI labs, and of that 1%, 80% are VC backed start ups!
byu/Disastrous-Bed-7336 inAIBubble

“These businesses have actually become memes.

In addition to this FT/ Ramp chart.

Apollo’s data shows 80.4% of the top 1% of AI spenders are VC-backed.

Among median AI spenders, it’s just 13.1%.

Meanwhile, spending per employee at the top end is going vertical.

Connect the dots….

VC money funds AI companies. AI companies spend on models, tokens and compute. That spending becomes revenue for other companies in the same ecosystem.

Some of that is genuine demand. But how much is sustainable, independently funded end-customer demand and how much depends on the funding cycle continuing?

Revenue is not the same as independent demand. Usage is not the same as profitability. And circular spending is not a moat.

When VC funding slows we have a problem.

And right now investor appetite for all of this isn’t what it was.

Concentration risk is extremely important and we’ve never seen such concentration in trillion dollar companies.

And that’s another reason why the funding discussion (and the increasing debt costs) is so important for AI stocks. Without external capital, there is no investment case.”

Apollo warns AI spending may depend on venture capital recycling through the industry
https://www.apollo.com/institutional/insights-news/insights/daily-spark/circularity-in-ai-shows-up-in-token-spending-too
Apollo chief economist Torsten Slok highlighted Ramp’s finding that 80% of the top 1% of AI spenders are venture-backed, compared with 13% of the median spender. If startups rely on outside funding to pay AI labs for computing, a venture-capital pullback could hit AI demand and the companies supplying the computing power at the same time. Apollo