The math on massive AI capex does work out, because inference revenue and gross margins are being significantly underestimated — likely well over $200 billion in inference revenue this year at 60-70% margins.
Responding to Brad Gerstner's worry that $1.5 trillion in projected 2027 CapEx looks unsupported by ~$300 billion of inference revenue, Gavin Baker argues the revenue and margin figures are actually understated, so the spending math holds up. ✦ AI generated
Gavin Baker · BG2 Pod · 2026-06-11 · original ↗
starts at this moment · 65:10
“So, we're spending 1.5 trillion of CapEx on 300 billion of inference revenue. Does that math math for you?”
I would guess they're probably a little bit higher than that. I might say 60 or 70. But, I mean, that math starts to math, and what I would just say is I think that 300 billion is low, man. I just think it's low. I think we end this year well over 200 billion in inference revenue, well over. And so, I think the math really maths.
verbatim transcript · starts at 65:10
64:50we're spending 1.5 trillion of CapEx on 300 billion of inference revenue. Does that math math for you? And what would cause you, you know, to to get more nervous again about our ability to continue to make these investments? Because the second we get nervous about it, the entire semi complex is going to come down a lot. Well, what do you think the gross margins are on that 300
65:10billion? Yeah, let's call it 50%. >> I I would guess they're probably a little bit higher than that. I might say 60 or 70. But, I mean, that math starts to math, and what I would just say is I think that 300 billion is low, man. >> Yeah. Yeah. >> I just think it's low. >> From your mouth to God's >> Yeah, yeah, exactly. I think I think we
65:29end this year well over 200 billion in inference revenue, well over. And so, I think the math really maths, and I do think we have to give uh Jensen >> Yeah, our friend. >> some credit because he said some things that seemed outlandish. >> Right. >> And he was conservative. He was low. He said a trillion 2 years ago. And I mean, he was really low. >> Right.
65:51>> And so, like, let's give the guy some credit and think about what he is saying right now. >> For sure, for sure. And and listen, I would say consistently, Elon's been taking the over. Sundar's been taking the over. Sam, Dario, you know, Dario did the podcast with Dwarkesh when he was talking about country geniuses in the data center. He said that will be here by 2028. He said revenues will go into
66:16the low hundreds of billions by 2028. So, let's call that, you know, 3 400 billion of revenue by 2028. And he said that a while ago now, so he may even be revising up his number. And he said it's hard for me to see that there won't be trillions of dollars in revenue before 2030. And if you're on that revenue trajectory, if we're on a trajectory to
66:36200 by the end of this year, let's call it 4 or 500 by next year, and a path to trillion plus by 2029, then the math maths. >> And we got to keep in mind that half of the spending is there to you know, for training, maybe a little less than half. What is it, Foxy? >> It's probably that depends on the lab, but it's I would say it's increasingly
66:56less than half. >> Yes. >> Okay. So, we'll call it 35% is spending that's not revenue generating, but it's going to kind of make the next model. So, I think the math maths. >> Right. >> And there's still this prisoner's dilemma where if you opted out, that may be an existential decision. >> And I think like coming into this year, going back to this kind of what