A leading venture capitalist says today’s artificial intelligence companies are not simply burning cash on unproven ideas, but already operate businesses with strong margins while continuing to raise money for a larger ambition.
In a new CNBC interview, Hemant Taneja, chief executive at General Catalyst, says the hundreds of billions of dollars in AI capital expenditures (CapEx) will eventually flow into other areas of the economy.
He predicts that the massive AI spend today is reasonable and will bear fruit in the years to come.
“The AI opportunity is the energy opportunity, because there’s so much energy generation that needs to be accomplished over the next 20 to 30 years. How do you really go about doing that?
Then the question is, how do you actually create these compute clusters that are going to drive productivity? Because it’s essentially taking services and melting them into productivity. That’s what AI is going to do.
That is a massive opportunity. That’s trillions of dollars. And so the amount of investment going in, if you think about the value it creates on the other side, the numbers are staggering. But the math is actually compelling.”
Taneja also highlights that if AI companies stopped building today and focused on generating revenue, their models are good enough to rake in profits.
“The main thing is that if you look at these models, they all do have applications that are at scale and with good margins. They’re just investing a lot in this AGI pursuit on top of that.
If you stopped it, they actually have businesses. They do have businesses that I think are going to be durable. But this pursuit of AGI is the thing that keeps attracting more and more dollars…
I mean, Anthropic, for example, went from less than a billion run rate last year to something that’s going to be $8 to $10 billion this year.”
General Catalyst oversees roughly $33.6 billion in assets, with investments spanning a wide range of sectors, including technology, healthcare, financial services, and applied AI.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.