The cost of intelligence?
We're building $trillions in AI factories. We have no idea if they're worth it.
Why it matters
As AI infrastructure costs explode, enterprises and investors face an uncomfortable gap: we measure AI consumption obsessively but have almost no systematic way to measure whether AI actually creates economic value. This measurement failure could become AI's biggest economic constraint — and is reshaping what boards, investors, and communities will demand from AI deployments.
The key facts
9 to knowAI described as software but is increasingly a capital-intensive industrial system (chips, power, data centers, cooling, talent)
Companies can measure GPU utilization, tokens, power consumption, cloud costs precisely — but NOT incremental economic value from AI
AI infrastructure costs (capex, electricity, water, land, talent) must be absorbed by consumers (higher prices), enterprises (higher tech spend), shareholders (lower margins), or governments (subsidies)
Physical scale of AI creates asymmetry: costs concentrated locally (communities hosting data centers), benefits distributed globally (tech companies, cloud providers, shareholders)
Author proposes 'technology economics' discipline with metrics: IT intensity, IT inflation, AI expense per share, AI value per share, margin per unit of IT intensity, gross domestic intelligence
Traditional accounting systems not designed to measure technology or intelligence as productive resources or factors of production
Communities will increasingly demand 'social license to operate' for data centers — evidence that benefits justify resource consumption
Pattern mirrors past infrastructure booms (railroads, electricity, telecom, Internet): investment runs ahead of sustainable economic returns
Critical divide may be between companies that understand economics of intelligence vs. those that simply consume more of it
Go to the source
CIOcio.com
Publisher excerpt: Artificial intelligence may prove to be one of the most transformative technologies in human history. But amid the excitement over smarter models, autonomous agents, enormous data centers and seemingly unlimited computational power, we may be overlooking a much simpler question: Does AI create more…