"On the "Decoder" podcast, he estimated that building and outfitting a one-gigawatt AI data center costs $80 billion, with industry plans for 100 gigawatts potentially requiring $8 trillion in capital expenditure. That would demand $800 billion in profits just to cover interest. He pegged the likelihood of achieving artificial general intelligence with current technology at "between zero and one percent.""
"This creates a paradox. IBM's own CEO questions the economics of the AI boom while competitors like Microsoft ( NASDAQ: MSFT) and Oracle ( NYSE: ORCL) bet heavily on it. Microsoft trades at a 35.7% profit margin with overwhelming analyst support, while Oracle commands a P/E of 46.47 near its 52-week high. IBM's 12.1% margin and mixed execution record, including an 11.2% earnings miss in Q4 2024 and a 4.2% miss in Q3 2025, leave traders wary."
Shares of International Business Machines rose about 40% in 2025 while retail traders on Reddit and X remain unconvinced, with social sentiment at 48 and recent lows of 32. CEO Arvind Krishna warned that building a one-gigawatt AI data center could cost $80 billion, and industry plans for 100 gigawatts could require $8 trillion, implying $800 billion in profits to cover interest and a very low probability of AGI with current technology. IBM beat Q3 revenue estimates at $16.30B but has a 12.1% profit margin, recent earnings misses, and trades at about 36x trailing earnings with a PEG above 2.0, prompting valuation concerns.
Read at 24/7 Wall St.
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