Elon Musk's $1 Trillion Chip Factory | The Brainstorm 147

I did like in the chart, the California rail, you know, the quarter mile of track leading to nowhere is a estimated $125 billion project.

So ROIC, extremely important when putting hundreds of billions of dollars on the table.

You know, and it's actually, I think that, The great IRR in AI is going to dry up financing for these white elephants.

As in, you know, who is going to give the state of California or even the federal government money to waste on something when you have such better return on capital projects that are just sitting out there begging to be funded? And so one of the, you know, things I was posting about over the weekend is the idea that the...

AI and the growth in AI, the amazing economics of AI are going to pull a lot of businesses that don't seem to be contra AI exposed off sides because their ability to finance is going to dry up.

As in the data centers, Tesla's IRR on its terrestrial, sorry, SpaceX's IRR on its terrestrial data centers looks like it's on the order of 75%, meaning they can invest, you know, $30 billion in building a data center and net of all of the costs, the return on that 30 is like 1.75 times 30 going out, compounded.

It's an amazing business.

Clearly, you want to have capital attached to that kind of investment.

If you are over there getting a puny 10 percent IRR on another project, You'd rather have it there.

And so then to finance it, SpaceX might pay a higher rate.

And that's how they'll suck the money out of those projects, including, you know, maybe the government borrowing rate has to go up, accommodating the fact that there's such obviously much better returns in a sector that can soak up huge hundreds of billions leading into trillions of dollars in capital.

I did like in the chart, the California rail, you know, the quarter mile of track leading to nowhere is a estimated $125 billion project.

So ROIC, extremely important when putting hundreds of billions of dollars on the table.

You know, and it's actually, I think that, The great IRR in AI is going to dry up financing for these white elephants.

As in, you know, who is going to give the state of California or even the federal government money to waste on something when you have such better return on capital projects that are just sitting out there begging to be funded? And so one of the, you know, things I was posting about over the weekend is the idea that the...

AI and the growth in AI, the amazing economics of AI are going to pull a lot of businesses that don't seem to be contra AI exposed off sides because their ability to finance is going to dry up.

As in the data centers, Tesla's IRR on its terrestrial, sorry, SpaceX's IRR on its terrestrial data centers looks like it's on the order of 75%, meaning they can invest, you know, $30 billion in building a data center and net of all of the costs, the return on that 30 is like 1.75 times 30 going out, compounded.

It's an amazing business.

Clearly, you want to have capital attached to that kind of investment.

If you are over there getting a puny 10 percent IRR on another project, You'd rather have it there.

And so then to finance it, SpaceX might pay a higher rate.

And that's how they'll suck the money out of those projects, including, you know, maybe the government borrowing rate has to go up, accommodating the fact that there's such obviously much better returns in a sector that can soak up huge hundreds of billions leading into trillions of dollars in capital.