Morgan Stanley Warns AI Infrastructure Buildout May Be Unsustainable
Morgan Stanley reports that AI data center costs may exceed revenues, potentially leaving massive infrastructure investments underwater as output prices decline.
Morgan Stanley released an analysis suggesting that the current buildout of artificial intelligence infrastructure may be financially unsustainable. The investment bank calculated that a fully optimized data center using the latest Nvidia chips could cost $25 billion annually to rent, while generating only $23 billion in output.
The bank expects the selling price of AI output to continue to decline, which could leave these significant investments underwater. According to the report, profitability is heavily dependent on hourly pricing. In a base case scenario of $8.50 per hour, the bank projects $22.9 billion in revenue and a 31% return on invested capital.
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