Is AI a Bubble? | Gavin Baker on Data Centers, GPUs, and the AI Economy

**David George** (0:00)
Are we in an AI bubble?

**Gavin Baker** (0:02)
I do not believe we're in an AI bubble today. I was, depending on how you look at it, the privilege and the misfortune of being a tech investor during the year 2000 bubble, which was really a telecom bubble. And I think it's really helpful to compare and contrast today to the year 2000 The year 2000 internet bubble or telecom bubble was defined by something called dark fiber. At the peak, 97% of the fiber that had been laid was dark. Contrast that with today.
There are no dark GPUs.

**SPEAKER_3** (0:30)
The headlines change. The underlying questions don't.
As AI investment continues to reshape the technology landscape, founders and investors are still grappling with the same core issues. Are we building too much infrastructure? How durable are today's economics? And where will the long term value accrue?
David George sits down with Atreides Management's Gavin Baker to unpack the AI pool, from GPUs and data centers to frontier models, software and robotics. Whether you're an investor, founder, or simply trying to understand where AI is headed, this conversation offers a thoughtful framework for thinking about one of the greatest technology shifts in decades.

**SPEAKER_4** (1:13)
And that brings us to our opening fireside chat. We're going to start with a taboo question right out of the gate. Are you ready for it?
If AI is the biggest trend in the world right now, where is the evidence for it? Why is it only just beginning to show up in the economy? And as Andre Carpathi asked, are agents really just ghosts?
To kick this off and to help us answer this question, please join us in welcoming Gavin Baker, managing partner and CIO of Atreides. Now, some of you may know Gavin as that really thoughtful guy on Twitter. Anytime some big piece of AI news comes out, I know more than a few people who count on Gavin to explain what the F is really going on. So a huge thank you to Gavin for being with us today. Joining him is our very own David George, general partner at A16z.

**Gavin Baker** (2:18)
Who knows what that music was from?

**David George** (2:21)
Glad they got our pump up music right.

**Gavin Baker** (2:23)
Yes.
Battlestar Galactica, the original 1977 one. In case we have to all fight Cylons in a few years.

**David George** (2:31)
Yeah, good segue into the topic, I guess. So thank you for being here.
I always love talking to you.

**Gavin Baker** (2:37)
Same, really grateful to you for inviting me, grateful to your colleagues for having me here.
I'm really looking forward to the next two days. I think I'm going to learn a lot, so thank you. Yeah.

**David George** (2:46)
Okay. All right. So the big topic is AI bubble, kind of macro view of things. So maybe just to start with a couple stats to set the stage, and then I want to get your take on where we're at. So we have about a trillion dollars of data centers in the US. The plan is to add three to four trillion dollars in the next five years.
Over the past three years, we have already built out in data center capacity, a larger amount of dollars than the entire US interstate highway system, which took 40 years, just in terms of dollars, and that's inflation adjusted. OpenAI alone, I think, has more than a trillion dollars of deals set up that they've committed to, and we can talk about that. But at the same time, so those are all like big numbers on infrastructure, and they're scary, and they say, oh, bubble. And Google released a stat recently that they have seen a 150x increase in the amount of tokens processed in the last 17 months.
So on the one hand, you've got this crazy, scary sounding build out. On the other hand, you actually have a bunch of usage that's happening. So are we in an AI bubble?

**Gavin Baker** (3:53)
I do not believe we're in an AI bubble today. I had, depending on how you look at it, the privilege and the misfortune of being a tech investor during the year 2000 bubble, which was really a telecom bubble. And I think it's really helpful to compare and contrast today to the year 2000
First, I think Cisco peaked at 150 or 180 times trailing earnings, Nvidia is at more like 40 times. So evaluations are very different. Most important, however, is that the year 2000 internet bubble or telecom bubble was defined by something called dark fiber. And if you're a veteran of the year 2000, you will know what that was. But dark fiber was literally fiber that was laid down in the ground and not lit up. Fiber is useless unless you have the optics and switches and routers that you need on either side. So I vividly remember companies like Level 3 or Global Crossing or WorldCom would come in and they say, we laid 200,000 miles of dark fiber this quarter. This is so amazing. The internet is going to be so big. We can't wait to light these up. At the peak of the bubble, 97 percent of the fiber that had been laid in America was dark.