Tether CEO Questions Sustainability of Big Tech AI Spending, Citing Profitability Concerns
Summary
- Paolo Ardoino, Tether's CEO, said AI big tech companies are continuing to spend heavily to win users rather than prioritize profitability.
- He said the problem lies in a structure built on subsidized computing costs and large-scale infrastructure and capital expenditure (CAPEX) that can lose value quickly.
- He also raised concerns about mismatches between token prices and underlying value, the timing of revenue generation and investment recovery, funding costs and investment horizons, as well as revenue erosion caused by open-source AI.
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Paolo Ardoino, chief executive officer of Tether, said major artificial intelligence companies are continuing to spend heavily to win users rather than prioritize profitability.
Writing on X, formerly known as Twitter, on July 4, Ardoino said AI big tech firms are subsidizing computing costs to expand their user bases while building large-scale infrastructure and capital expenditure programs whose value could decline rapidly within three to five years.
He cited several problems with that structure, including a mismatch between token prices and underlying value, a gap between when revenue is generated and when investments are recouped, and a mismatch between funding costs and investment horizons.
Ardoino added that open-source AI is also taking a growing share of revenue from large AI companies.
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