There is essentially zero chance of an AI compute glut over the next two to three years, because demand from converting general-purpose computing to accelerated computing hasn't been exhausted, and buildout is going to the hyperscalers with the strongest balance sheets.
Recounting his interview with Jensen Huang, Gerstner relays that Huang sees essentially no chance of a near-term compute glut until general-purpose computing has fully converted to accelerated/AI computing. ✦ AI generated
Jensen Huang · BG2 Pod · 2025-10-14 · original ↗
starts at this moment · 20:34
“What is the percentage probability that you think we'll have a glut, we'll run into a glut in the next three or four or five years?”
Until we fully convert all general purpose computing to accelerated computing and AI. Until we do that. Yes. I think the chances are extremely low.
verbatim transcript · starts at 20:34
20:34percentage probability that you think we'll have a glut, we'll run into a glut in the next three or four or five years? Until we fully convert all general purpose computing to accelerated computing and AI. Until we do that. >> Yes. I think the chances are extremely low. Okay. So, here's a question I have for you. Did you hear anything in the last couple of weeks that caused you to
21:04believe that we're on the verge of some bubble bursting or we're greatly overbuilding or or anything else? Or is it just the flags are up and now it's a wait and see? Yeah, sure. It's funny, they had Howard Marks on CNBC this morning. I'm a huge Howard Marks fan, and they asked him this question, and he he said, "Look, multiples are too low to for this to be
21:26you can't be on bubble watch if the multiples aren't high enough." And you've been making this point for a long time. And I would say like you'd have to be a fool not to notice that these numbers you're talking about are so remarkably unprecedented from anything we've ever seen before. They are massive. You know, I I've talked about, you know, to see the Mac 7 go from
21:49being massive cash producers to where they're many of them are taking the majority of their free cash flow and the CapEx. It's it's it's totally new, and clearly everyone believes that this wave is maybe bigger than the previous waves we've seen that have led to so much value creation. So, all that's happening. I like to believe that it's okay to recognize that the market's great and still think that these
22:18transactions shouldn't happen this way. And I'm I'm able to keep both those things in my head at the same time. I I I think I I think it's a super fair point. By the way, you just mentioned it, so we'll include this chart. This is Mag 5 CapEx as a percentage of their operating free cash flow bill. And if you look at it in 2025, so that's this year, they'll spend about