What everyone is afraid to say out loud…
Jefferies predicts the boom will end in massive capital destruction in the US
It sounds like a contrarian thesis, and in part it is. Chris Wood has been skeptical of the US market for years and favors Asia, so pessimism about the US is a natural position for him. There’s nothing surprising about it.
The weakest point in the report is the OpenRouter data, since the developers who use this aggregator are mostly looking for the cheapest tokens. OpenAI and Anthropic sell most of their volume directly and through the clouds of Microsoft, Amazon, and Google. So the 76 trillion tokens from Chinese models reflect the price-sensitive segment, not the entire market.
Still, Wood’s arguments shouldn’t be dismissed. Data centers are increasingly being built with debt rather than hyperscalers’ own money, and repayment of that debt is expected to come from sustained demand from OpenAI and Anthropic. If token prices keep falling as fast as they are now, revenue may not be enough to service the loans.
Capital destruction, of course, doesn’t mean AI will fail. Fiber-optic cable didn’t disappear after 2000 either; it’s just that the people who laid it weren’t the ones who made money from it 🧐.
And the biggest risks are still with the lenders.
Jefferies predicts the boom will end in massive capital destruction in the US
It sounds like a contrarian thesis, and in part it is. Chris Wood has been skeptical of the US market for years and favors Asia, so pessimism about the US is a natural position for him. There’s nothing surprising about it.
The weakest point in the report is the OpenRouter data, since the developers who use this aggregator are mostly looking for the cheapest tokens. OpenAI and Anthropic sell most of their volume directly and through the clouds of Microsoft, Amazon, and Google. So the 76 trillion tokens from Chinese models reflect the price-sensitive segment, not the entire market.
Still, Wood’s arguments shouldn’t be dismissed. Data centers are increasingly being built with debt rather than hyperscalers’ own money, and repayment of that debt is expected to come from sustained demand from OpenAI and Anthropic. If token prices keep falling as fast as they are now, revenue may not be enough to service the loans.
Capital destruction, of course, doesn’t mean AI will fail. Fiber-optic cable didn’t disappear after 2000 either; it’s just that the people who laid it weren’t the ones who made money from it 🧐.
And the biggest risks are still with the lenders.