From our Fund Manager’s Desk
Waiting for GenAI’s Godot: When will the profits arrive?
The promise of Generative AI (GenAI) has ignited a gold rush within the cloud computing sector, with giants like Microsoft, Amazon Web Services, and Google Cloud pouring hundreds of billions into AI development and infrastructure. Yet, a critical question lingers: when will the promised returns be realised on these outsized investments? Like characters in Samuel Beckett’s ‘Waiting for Godot,’ cloud vendors and investors find themselves in a state of perpetual anticipation, grappling with the complexities of monetising a technology that, while transformative, presents a unique set of financial challenges.
The infrastructure investment surge
The sheer scale and pace of infrastructure investment is a primary driver of the delayed Return on Investment (ROI). The demand for powerful chips and specialised hardware to train and run large language models (LLMs) has led to an unprecedented build-out in data centres. According to Morgan Stanley research, the top 11 cloud players are expected to spend $392bn on capital expenditure (capex) in 2025, an increase of almost 10% from their previous estimate, and roughly equivalent to total cloud capex in 2023 and 2024 combined.
