AI is moving from an experimental phase to a commercial phase, says Kindred's Steve Jang. Jang says the massive scaling deals like the $100 billion investment by Nvidia into OpenAI for data centers aren't surprising at this moment in AI development.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Steve Jang of Kindred has highlighted a significant transition in artificial intelligence, noting that the sector is moving from experimental phases into commercial adoption. He points to rapid growth in demand for computing resources, with AI tools now widely used by both consumers and businesses in areas such as media creation, call centers, and enterprise reporting. Jang emphasizes that real economic productivity is now being seen from AI, with revenues and adoption rates surpassing previous projections.

Jang also addresses concerns about potential bubbles in AI investment, arguing that while cycles of concentrated capital and talent are typical in technology, the current cycle is distinguished by tangible commercial results. He further notes the growing overlap between AI and crypto, particularly in the use of data centers and the transformation of global payments infrastructure by stablecoins.

AI enters commercial era, says Kindred's Jang

You're operating at a different level of of the curve. Right. I think that's one way of putting it. But I do want to to get your your reaction to that open a deal because it's all of it that's happening in the market right now. Right. And thank you for having me. It's great to be back. It's both surprising in scale but not surprising that it's happening. Number one I think we're undershooting or underestimating how much compute we need for not only training but for inference that growth that growth in demand is scaling out in every direction right now. We're seeing that across early stage startups as well as growth stage startups and public companies. So if you think about what's happening today globally first off every region is now in the competition. The model competition race. Number two they're specialized models in video in audio in voices and speech models. Yes. Physics models medical science models. You look at what DeepMind is doing. You look at what small startups like so fonts are doing in medical sciences. And then you also see what's happening in particular with demand. And so we're just moving from an experimental phase into a commercial application phase. So everything that's happened up until today has just been in that experimental testing phase. And so if you think about Tick Tock and Instagram and YouTube on the consumer level there's double digit adoption right now on creators and users. They're using A.I. tools. And then if you look at enterprises and small businesses they're already starting to use voice A.I. for call centers. They're using it to write reports. They're using it for search and answers. So we're just at the beginning. And I think every single I look back yesterday we came on today and I saw all the projections from a year ago and we're already surpassing that by 10 X today. But inference demand alone. But Steve the reason we come to you is because the prowess of the bets you've already met. And we think about perplexity and we think about play. How do you ensure Steve that you're not part of what some are starting to feel is like a house of cards of everyone giving money to the same sort of players. And ultimately if the productivity doesn't achieve if the money doesn't achieve then suddenly we start to see some real holes. I think what's important here is that you do see the demand and you do see the uptake commercially. You see revenues you see adoption you see usage. I'll give you an example of this. So today in terms of generative media generative video is relatively new. Well let's say it's about a year and a half old. Google by dance and many other small startups are providing these models. The compute just for that which is showing up on YouTube which is showing up in video ads which is now showing up through create a fight on Comcast and Universal Channel video ads now is making real money. It's making real CPMs for real brands. And so as long as there is economic productivity on the demand side that's why you're seeing all this scaling of cost of investment in GPUs data centers and energy. And you see these long term contracts. One hundred billion dollars was an amazing size for a soft bank vision fund five years ago. And today that's just one company making investment for a roundtrip commercial deal. Steve you're in the green room right when Fabrizio Boise was sat in that chair and he talks about the bubble in the context that like well that's normal part of the game. Some failures you'd need to find successes. Do you. Do you think about it in those terms in the context of this such a capital concentration in these few names. There's always going to be an arbitrage between current demand and economic productivity revenue right. And the investment capital and the timeline in between bubbles are necessary for a collection and you know hyper focus of talent engineering talent research talent building talent as well as capital. And that's what creates that enormous growth and velocity in any sort of tech cycle. We saw this every tech cycle. This tech cycle is very different because there's real revenue and commercial application happening. So again look at look at GPUs as just one part of this. Energy is the other part. Data center space is the other. Then there's a software infrastructure layer there. So-called middleware which is a bad word in the last tech cycle but is actually where value capture and differentiation happens now. And so this is really important. You see companies like together a you see companies like foul and generative media cloud space. These companies and core we've a core we've is a company that started out as Bitcoin. Yes. A mining data center. Steve can I go to that. Can I go to crypto because we're talking about a potential bubble. And I know that you've got a lot of experience in crypto. I'm looking at Tether potentially looking at funding with a valuation of 500 billion dollars. Is that a bubble sign to you or not. The stable coins right now and crypto. There's an interesting thing happening right now where fintech as we knew it global payments infrastructure companies like Stripe and many other companies fragmented around the world and effects is getting slowly transformed by crypto especially stable coins. We don't. It is again very easy to underestimate this. I think it's harder to really look at the frontier to say how big could this be. But you see the U.S. government and many other foreign governments. This is an area unlike A.I. where there isn't a concept of sovereign crypto in A.I. we have sovereign A.I. and there's a competition in crypto. Interestingly there's much more of a cross-border collaboration that wants to be on blockchains. This is obviously very recent in terms of government push with the administration. But underlying that is still compute same data centers that are providing A.I. compute high performance compute are also supplying it for crypto.

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AI enters commercial era, says Kindred's Jang

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Rise of AI