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We estimate $414 billion in overall AI ARR by the end of this year (ex-China)
1. $187 billion in ARR from Anthropic and OpenAI (split between the labs and clouds who resell their models).
2. We estimate that ad-based ARRs for the two internet giants - Meta and Google - have been boosted by $95 billion over the past 2.5 years thanks to AI (based on the excess of their realized, high ad growth rates vs normalized growth rates). We estimate that this will increase to $108 billion by year end.
3. The various clouds - excluding frontier lab revenue - should be about $66 billion in AI ARR by the end of this year.
4. AI native apps and SaaS are generating $33 billion in AI revenue.
5. Smaller line items such as other frontier AI (Grok, Gemini subscriptions, etc.) and how AI is benefitting other ad networks (such as Amazon, Applovin, Unity, etc.) add another $20 billion in ARR.
Taking reasonable assumptions, such as a 6 year life for the equipment, this should give an overall 12% IRR on the $931 billion in AI capex made over the past 3.5 years.
Link with the details below
1. $187 billion in ARR from Anthropic and OpenAI (split between the labs and clouds who resell their models).
2. We estimate that ad-based ARRs for the two internet giants - Meta and Google - have been boosted by $95 billion over the past 2.5 years thanks to AI (based on the excess of their realized, high ad growth rates vs normalized growth rates). We estimate that this will increase to $108 billion by year end.
3. The various clouds - excluding frontier lab revenue - should be about $66 billion in AI ARR by the end of this year.
4. AI native apps and SaaS are generating $33 billion in AI revenue.
5. Smaller line items such as other frontier AI (Grok, Gemini subscriptions, etc.) and how AI is benefitting other ad networks (such as Amazon, Applovin, Unity, etc.) add another $20 billion in ARR.
Taking reasonable assumptions, such as a 6 year life for the equipment, this should give an overall 12% IRR on the $931 billion in AI capex made over the past 3.5 years.
Link with the details below
