Tomasz Tunguz - Profit Dollars per GPU Dollar
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Profit Dollars per GPU Dollar
“AWS’ AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than 3x faster at this stage of its evolution as AWS itself grew, and we felt like AWS grew pretty quickly.” “Our AI business is on track to surpass an annual revenue run rate of $10 billion next quarter, which will make it the fastest business in our history to reach this milestone.” Those quotes from Amazon & Microsoft last week underscore the dramatic transformation in cloud growth rates.
Across the 3 major clouds, the growth rates have increased between 27% and 58% from their nadir about a year ago. But the businesses are 60% bigger today than they were the last time they touched those growth rates.
Plus the operating margins of these companies is massive at around 40% for the top two. GCP’s is the lowest, but accelerating rapidly. It was 3.1% last year. Microsoft & others have said their growth is limited by GPUs which will continue until late next year. Amazon & Google are developing their own chips : “As customers approach higher scale in their implementations, they realize quickly that AI can get costly. It’s why we’ve invested in our own custom silicon in Trainium for training and Inferentia for inference. The second version of Trainium, Trainium2, is starting to ramp up in the next few weeks and will be very compelling for customers on price performance.” And internally, the impacts are real. Google said 25% of new code written is AI generated. AWS quantified it further : “The team has added all sorts of capabilities in the last few months, but the very practical use case recently shared where Q Transform saved Amazon’s teams $260 million and 4,500 developer years in migrating over 30,000 applications to new versions of the Java JDK.” All of these advances are expensive: “We expect to spend approximately $75 billion in CapEx in 2024. The majority of the spend is to support the growing need for technology infrastructure.” In total, these hyperscalers invested about $52b last quarter in data centers & GPUs.
But the chips are now valuable for longer than they were (again from AWS). “We made the change in 2024 to extend the useful life of our servers. This added about 200 basis points of margin year-over-year.” The most important metric for these businesses will be profit dollars per GPU dollar cost. Which chip design will produce the best profits : Google’s TPUs, Amazon’s Inferentia/Tranium, or Microsoft’s Maia and Cobalt? It’s hard to calculate exactly this figure because the public data isn’t granular enough to compare across the three. But over time we should be able to infer major differences. |
Older messages
My AI Rube Goldberg Machine
Tuesday, October 29, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. My AI Rube Goldberg Machine In yesterday's post, I
Productivity One Year from Now
Monday, October 28, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Productivity One Year from Now If AI continues on its current
AI Prompts as PRDs : Why Prompts Will Become Important IP Assets
Monday, October 21, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. AI Prompts as PRDs : Why Prompts Will Become Important IP
Why Lifetime Value is Relevant Again in Software
Sunday, October 20, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Why Lifetime Value is Relevant Again in Software Budget cuts
The Premise of a New S-Curve in AI
Sunday, October 20, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. The Premise of a New S-Curve in AI Since July, have you
You Might Also Like
🗞 What's New: MrBeast's pitch decks leaked, and they aren't pretty
Tuesday, November 5, 2024
Also: Claude AI can see your PDFs ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
The Londoner Trend and Your "Person" 🎡
Tuesday, November 5, 2024
Plus the 2025 trends in funding.͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Here's who I chose this year...
Tuesday, November 5, 2024
Read time: 51 sec. Some people have been asking me... “Pat... who are you voting for?” Today is Election Day in the US, and things are a bit intense 😬 So, once and for all, I'm here to set the
[CEI] Chrome Extension Ideas #165
Tuesday, November 5, 2024
ideas for Wikipedia, Analysts, LinkedIn, and Developers ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
On being funny at work
Tuesday, November 5, 2024
Seven strategies (and some stories) to help you harness the power of humor ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Turn 3 Hours into 90 Days of Marketing Clarity ✨
Tuesday, November 5, 2024
MicroConf Hey Rob! What if you could compress months of marketing experimentation into a single afternoon? 🚀 On November 20th, three SaaS marketing experts will share their hard-won playbooks – the
Our Biggest Sale is Now LIVE! 🔥
Tuesday, November 5, 2024
Unlock 5 powerful bonuses you'll never see elsewhere Hey Friend , In case you missed it—our BIGGEST Black Friday Sale on Foundr+ is live! 🚀 And right now, you have a once-in-a-lifetime opportunity
Oxford startups to watch
Tuesday, November 5, 2024
Plus: How to build a niche audience; latest deals View in browser Sponsor Card - Flagship-34 Good morning there, Capital cities take the lion's share of startup funding in most countries across
X’s plan to interfere with the election
Tuesday, November 5, 2024
Elon Musk's effort to deny Kamala Harris an election victory is already underway. Can it work? Platformer Platformer X's plan to interfere with the election Elon Musk's effort to deny