AIeatstheworld

BenedictEvans

November2025

BenedictEvans––November20252

Thenextplatformshift

Mainframes

Smartphones

GenerativeAI

Every10-15years,aplatformshiftreshapestechnology

PCs

Web

BenedictEvans––November20253

Whathappensinaplatformshift?

Whoisaffected,andhowmuch?

Insidetech

Newgatekeepers,

newvaluecapture

Newandbigger

markers

Outsidetech

Isthisanewtool,newrevenue,oranexistentialthreat?

TheNewThing!

Alltechinnovation,

investmentand

companycreation

switchesover

BenedictEvans––November2025

4

Source:Apple,Google,Gartner

Dominanceiswonandlost

MicrosoftdominatedthePCera,butwhenthecentreofgravityshiftedtosmartphonesitbecameirrelevant

MicrosoftOSshareofglobalcomputerunitsales

100%

75%

50%

25%

0%

19751980198519901995200020052010201520202025

Source:Gartner

5

BenedictEvans––November2025

Earlyleadersoftendisappear

The‘first’wasnotthewinnerinPCs,browsers,search,socialorsmartphones

GlobalPCunitsalesshare

IBM-compatibleAllothers

Apple

100%

75%

50%

25%

0%

197519801985199019952000

BenedictEvans––November20256

Howwillthenewthingwork?Wedon’tknow

Foreverynewplatform,weforgethowmanyideasfailedandhowuncleareverythingwas

Internet

AOL,Yahoo,

Pointcast,Flash,plugins,portals…

Sun?Netscape?

Mobileinternet

GenerativeAI?

i-mode,J2ME,WAP,

Browsers?Agentic?

Voice?MCP?

Wearables?GEO?

mesh,DVB-H,

keyboards…

Nokia?RIM?

Noise,hype,anti-hype

Whenthingsareexciting,peoplegetexcited

BenedictEvans––November20257

Thisoftenbringsbubbles

Peopledrawstraightlinesonlogscalecharts

Theyforgetthatexponentialgrowthisgenerallyanexponentialcurve

Andalwayssay“thisisdifferent”

Thetroubleis,they’regenerallyright-everybubbleisdifferent!Butitcanstillbeabubble

BenedictEvans––November20258

Source:RosenfeldHCMST

9

BenedictEvans––November2025

Butwhenthedustsettles,theworldhaschanged

TheinternethasgonefromtheNewThingtoabasicpartofdailylife

60%

50%

40%

30%

20%

10%

0%

USheterosexualcoupleswhometonline,byyearofmeeting

199520002005201020152020

*Source:ProductivBenedictEvans––November202510

Newplatformsmeannewtools(andnewrevenue)

SaaSmeansthetypicallargeenterpriseintheUSAnowuses4-500apps

Mainframes

Oneapp

SaaS

4-500apps*

LLMs

Whatcanwe

automate

next?

PCs

Dozensof

apps

Onewaythisplatformshiftisdifferent,though

ForPCs,theweborsmartphones,weknewthephysicallimitsofwhatcouldhappennextyear

WithLLMs,wedon’tknowhowmuchbetterthiscouldget

BenedictEvans––November202511

“TheracetoAGIisafoot”SergeyBrin

“AGIneedsmultiple

furtherbreakthroughs”DemisHassabis

BenedictEvans––November202512

Anotherplatformshift,ormore?

?

Mainframes

Smartphones

GenerativeAI

Weknowthiswillgetbetter,butwedon’tknowhowmuch

PCs

Web

BenedictEvans––November202513

Sohowwillthenewthingturnout?

Ifthisis‘only’asbigasmobileortheinternet,thatseemslikeenough

Howwillthis

work?

Whereisthe

distribution,

valuecapture,

andvalue

destruction?

Howwillthisbeuseful?

BenedictEvans––November202514

Insidetech

“Theriskofunder-investingissignificantlygreaterthantheriskofover-investing”

SundarPichai,Q22024

BenedictEvans––November202515

“Theveryworstcasewouldbethatwehavejustpre-

builtforacoupleofyears”

MarkZuckerberg,Q32025

BenedictEvans––November202516

ThreeyearsofFOMOinBigTech

“Thisisahugenewmarket,ahugethreattoallourexistingbusinesses,andwecan’tmissit”

“Thisisahugeopportunityand

threat

Wecan’tmissit”

Howmuch

better?

Howmuch

capex?

“Itkeeps

gettingbetter

withmore

capex”

FOMOdrivesacapexsurge

~$400bnin2025forthebigfouralone(forcomparison,globaltelecomsis~$300bn)

Capex($bn)

CoreweaveOracle

Meta

AlphabetAWS*

Microsoft

500

400

300

200

100

0

2010201120122013201420152016201720182019202020212022202320242025e

Source:Companies,companyguidance.IncludescapitalleasesBenedictEvans––November202517

*AmazondoesnotbreakoutAWScapexdirectly

Source:Companies,companyguidance.IncludescapitalleasesBenedictEvans––November202518

*AmazondoesnotbreakoutAWScapexbutreportsitas‘themajority’

Planned2025growthalmostdoubled-in2025

~$350bnin2025forthebigfouralone(forcomparison,globaltelecomsis~$300bn)

Capex($bn)

CoreweaveOracle

Meta

AWS*

AlphabetMicrosoft

500

400

300

200

100

0

2010201120122013201420152016201720182019202020212022202320242025eJanestfor2025

Anewinvestmentcycle

USdatacentreconstructionovertakingoffices

USconstructionvalue(2025$bn,seasonallyadjustedannualrate)

Offices

Retail

Warehouses*Datacentres**

125

100

75

50

25

0

Jan1995Jan2000Jan2005Jan2010Jan2015Jan2020Jan2025

Source:USCensus.*Excludesmini-storage**ExcludescomputeBenedictEvans––November202519

NB:dataafterJuly2025delayedbyUSgovernmentshutdown

Source:Companies

20

BenedictEvans––November2025

Nvidiacan’tkeepup

TryingtobuildanewSunMicrosystems(thoughChinaandhyperscalers’ownchipsarecomingupbehind)

Quarterlyrevenue($bn)

Intel

Nvidia

60

50

40

30

20

10

0

200020052010201520202025

Source:Companies

21

BenedictEvans––November2025

Nvidiacan’tkeepup(neithercanTSMC)

TSMCunwilling/unabletoexpandcapacityfastenoughtomeetNvidia’sbook

Quarterlyrevenue($bn)

Intel

NvidiaTSMC

60

50

40

30

20

10

0

200020052010201520202025

BenedictEvans––November2025

22

Source:SchneiderElectricindustrysurvey

USpowerbacklogsbecomingamajorissue

USpowerdemandgrowthis~2%,andAImightadd1%that’shardtobuildfast(thisisnotanissueinChina)

Mainconstraintstodatacentreconstruction,USA(February2025)

SomewhatsignificantVerysignificant

Extremelysignificant

100%

75%

50%

25%

0%

LandPublic

Accesstonaturalgas

UtilitypowerAccesstochipsFibrePermittingWater

opposition

availability

BenedictEvans––November202523

“It’sbeenalmostimpossibletobuildcapacityfastenoughsinceChatGPTlaunched”

KevinScott,MicrosoftCTO

BenedictEvans––November202524

“WenowexpecttheFY26growthratetobehigherthanFY25”-Microsoft

“Capexdollargrowthwillbenotablylargerin2026”-Meta

“Weexpectasignificantincreasein2026”-Alphabet

Source:Companies

25

BenedictEvans––November2025

Datacentrecapacitytriples?For$3tr?$5tr?More?

Someverylargenumbers(althoughsomeofthe‘bragawatts’maybemoreperformativethanreal)

Globaldatacentrecapacityestimates,H12025(GW)

Current300

Est.of2030plans

200

100

0

Omdia/IEABloombergBNEFGoldmanSachsMorganStanleyBainBCGMcKinsey

Source:ITU,IEA,ONSBenedictEvans––November202526

“Threetrilliondollars!”

AnnualisedAIcapexaspirationsareasimilarmagnitudetomatureglobalcapital-intensiveindustries

Globaltelecoms~$300bn

USprivate

sector

~$20.1tr

GenAI

$500-750bn

annual?

Oil&gas‘upstream’~$540bn

Source:Companies,consensusestimates.Calendaryear.BenedictEvans––November202527

Thehyperscalerscanaffordit…

BigTechcashflowhassurgedsincethePandemic,andmostofthatgrowthisgoingonAIcapex

AnnualCapexandFreeCashFlow,2010to2025e($bn)

CashcapexFCF

200

150

100

50

0

-50

AlphabetAmazonMetaMicrosoft

Source:Companies,consensusestimates.Calendaryear.BenedictEvans––November202528

Thehyperscalerscanaffordit…uptoapoint

Capitalleasesarenotnew,butthey’vegotalotbigger

AnnualCapexandFreeCashFlow,2010to2025e($bn)

Leases

CashcapexFCF

200

150

100

50

0

-50

AlphabetAmazonMetaMicrosoft

Uptoapoint

Hyperscalersaddleasesanddebt,whilesomeanalystssuggestOracle’scloudcapexmightbe>100%ofrevenue

BenedictEvans––November202529

OpenAIjoinstheclub

Announcedcommitmentsfor30GW+ofcapacityat$1.4tr

Aspirationfor1GW/weekofnewconstructionat$20bn/GW=~$1trannually…

Source:OpenAI,October282025BenedictEvans––November202530

Equivalentto2/3oftotalcurrentglobalbase,everyyear

“Circularrevenue”

Withoutitsowncashflows,OpenAIpartnerswithNvidia,Oracle,Softbank,petrodollars…

OpenAIisbuyingNvidiachipswithNvidia’scashflow…

Whichcomesfromthehyperscalers…

andusingNvidia’scashtoturnAMDintoanNvidiacompetitor,andpayBroadcomtomakeitsownchips…

BenedictEvans––November202531

*Source:NvidiaBenedictEvans––November202532

Rationalactors?

Whatwouldyoudoifyourcompanywassittingonabubble?

Nvidiahas$72bnofTTMFCF*andTSMCcan’tkeepupwithdemand

Useyourexcesscashtobuydemand,FOMOandplatformlock-in

OpenAIhasmindshare

andexpensivestock,butnoplatform,infraormoat

Swapyourpaperforhardassetsandmarketposition

Oracleisacash-generativelegacybusinesslosingsharetocloudandnowtoAI

Gearupandburnyourwayintothenewthing?

BenedictEvans––November202533

Yes,butwherehasallthismoneygotus?

Afterthreeyears,lotsmorescienceandengineering,butnorealclarityontheshapeofthemarket

Noapparent

moats

Noclarityon

productorvalue

capture

Modelsstill

improving

Farmoremodels,

China,OSS

Lotsofnew

acronyms

Source:ArtificialAnalysis

34

BenedictEvans––November2025

Farmoremodels

Everyweek-newmodels,new(problematic,gamed,saturated)benchmarks,newacronyms

Modelsbyaggregatebenchmarkscore

OpenAI75

Allother

50

25

0

Nov2022Nov2023Nov2024Nov2025

BenedictEvans––November2025

35

Source:LMArena,ArtificialAnalysis

Modelsconvergeandleaderschangeweekly

Dozensof(saturated)benchmarkstochoosefrom,butonthemostgeneral,theleadersareveryclose

Bestscoringmodelrelativetoleader,October2025

Anthropic

Google

OpenAI

Other:China

Other:Western

NBtruncatedaxis

100%

95%

90%

LMArenaTextMMLU-Pro

Source:ReutersInstitute

36

BenedictEvans––November2025

Techversusbrandversusdistribution?

Themodelsmaybeclosetocommodities(especiallyforgeneraluse),butmarketpositionisnot,sofar

WeeklyactiveusersofgenerativeAItoolsasshareofthepopulation,June2025

ChatGPT

GoogleGemini

MetaAI

MicrosoftCopilotGrok

Claude

30%

20%

10%

0%

USAUKFranceDenmarkJapan

Source:OpenAI.NB:roundnumbersreportedatscheduledeventsBenedictEvans––November202537

“Everyoneisalreadyusingthis!”

800mweeklyusers,butapparentlyonly5%arepaying-andwhyannounceWAUandnotDAU?

ChatGPTglobalweeklyactiveusers(m)

1,000

750

500

250

0

Dec2022Jun2023Dec2023Jun2024Dec2024Jun2025Dec2025

Stillmoreexperimentationthandailyuse

Sofar,manymorepeopleusechatbotsoccasionallythanmakethempartoftheirdailylives

MonthlyWeeklyDaily

60%

50%

40%

30%

20%

10%

0%

ConsumergenerativeAIchatbotuse:USA

202320242025

ConsumergenerativeAIchatbotuse:UK

202320242025

Source:Deloitte.SurveysconductedinJune.BenedictEvans––November202538

Definedas“Useofapurpose-builtGenAItool,likeChatGPT,MicrosoftCopilot,GoogleGemini,etc”

Source:ConsumersurveysconductedasofdateshownBenedictEvans––November202539

Mostdatashowsthesamepicture

Surveysareearly,scatteredandinconsistent,butanengagementgapseemsclear

HowmanypeopleusegenerativeAIchatbotsintheUSA?

WeeklyactiveDailyactive

50%

40%

30%

20%

10%

0%

Pew,

Aug2024

CCIA,

Nov2024

BlicketalRPS,Nov2024

Bain,

Dec2024

Hartleyetal,Dec2024

YouGov,Mar2025

Hartleyetal,Jun2025

ReutersInst.,Jun2025

Deloitte,Jun2025

Bain,

Sep2025

BenedictEvans––November202540

Isthisjustearly?Oraharderproblem?

WhydomostusersofChatGPTonlyuseitalittlebit?

Howmanyuse

casesarean

obviouseasy

fit?

Foreveryone

else,doyou

needtowrap

thisintooling

andproduct?

Whohasa

flexiblejob…

Andconsciously

looksforwaysto

optimise?

BenedictEvans––November202541

“Peopledon’tknowwhattheywantuntilyoushowittothem”

“You’vegottostartwiththeexperienceandworkbackwardstothetechnology”

SteveJobs

BenedictEvans––November202542

Sowheredoesamodellabcompete?

Whereisthevaluecaptureforaresearch-heavy,capital-intensivecommodity?

GoupthestackWinonnetworkeffects&product? (See:software)

Ifthemodelsarecommodities?

Anddon’thavenetworkeffects?

Godownthe

stack

Winonscale?(see:aircraft,AWS,chips)

BenedictEvans––November2025

43

Source:Microsoft.Includescapitalleases

Microsoft’sshiftawayfromnetworkeffects?

Fromcompetingonnetworkeffectstocompetingonaccesstocapital?

Microsoftcapex/sales

50%

40%

30%

20%

10%

0%

Mar1995Mar2000Mar2005Mar2010Mar2015Mar2020Mar2025

BenedictEvans––November202544

ForOpenAI,“yes!’toeverything

Everything,everywhere,yesterday(onotherpeople’sbalancesheets),beforethemarketslipsaway

Infradeals

withOracle,

Nvidia,Intel,

Broadcom,

AMD…

Appplatform,socialvideo,webbrowser

RobotsJonyIveBiotech

Ecommerce

integrations,

ads,vertical

datasets

BenedictEvans––November202545

“Therearetwowaystomakemoney.Youcanbundle,oryoucanunbundle”

JimBarksdale

OpenAIbundlesandunbundlesusecases

What’stherightexperience?Therightdistribution?Andwhyisn’titjusttheChatGPTapp?

BenedictEvans––November202546

Source:YCombinator

47

BenedictEvans––November2025

Startupsexisttounbundleusecases

ThecomingwaveofAIstartupstryingtounbundleGoogle,Excel,emailandOracle…andChatGPT

YCombinatorstartupsbyfield

OtherAI

500

400

300

200

100

0

W2015W2016W2017W2018W2019W2020W2021W2022W2023W2024F2024S2025

BenedictEvans––November202548

Whereisthevaluecapture?

Ifmodelsarenear-commodities,andwedon’tknowtherightproduct,wherewillthevaluebe?

Bestmodel?Mostcapital?

Distribution

>M?

Product?

UX?

Building

‘normal’

software

companies?

Proprietaryverticaldata?

BenedictEvans––November202549

Outsidetech

BenedictEvans––November202550

“What’sourAIstrategy?”Well,what’sthepattern?

Howdowealwaysdeploynewtechnologies?

Innovate

Newproducts,bundlingandunbundling

Absorb

Disrupt

Redefinethequestion

Automateobvious

use-cases

Makeitafeature

BenedictEvans––November202551

Sofar,mostsuccessfuluse-casesare‘absorb’

WhereisiteasyandobvioustousegenerativeAI?

Coding

Customersupport

Automation

Marketing

AIcodingasthenewAWS

“Vibecoding”asthenewabstractionlayer,afterAWS,libraries,operatingsystems…

Anewstepchangereductioninsoftwarecreationcosts

BenedictEvans––November202552

Source:Accenture

53

BenedictEvans––November2025

Howdoyouknowwhattoautomate?

Stepone:askyoursystemsintegrator

Accenturereportednewquarterly‘generativeAI’contracts($m)

2,000

1,500

1,000

500

0

Feb2023Aug2023Feb2024Aug2024Feb2025Aug2025

Source:Palantir

54

BenedictEvans––November2025

Howdoyouknowwhattoautomate?

Steptwo:buysomeSaaSfromDrEvil

Palantirquarterlyrevenuebysegment($m)

Enterprise

Government

1,250

1,000

750

500

250

0

Mar2020Mar2021Mar2022Mar2023Mar2024Mar2025

Source:McKinsey

55

BenedictEvans––November2025

Pilotscomefirstanddeploymenttakestime

“Agentic!’is2025’sbuzzword,butdeploymenttakeslonger

AI‘agent’usebybusinessfunction,whereGenerativeAIisalreadyused.June2025

ExperimentPilot

Deploying

Deployed

30%

20%

10%

0%

ITKnowledgeMarketingServiceProductSoftwareHRSupplyManufacturing

managementdevelopmentchain

BenedictEvans––November202556

Noteverythingworks?Welcometotech

“WhydidourAIpilotfail?”That’saCTOquestion,notanAIquestion

Security,

privacy,IPR,

errorrates,

legal

Findingthe

rightsolution

fortheright

people

Thesame

issuesas

deployingany

newtech

Data

integration&legacysystems

BenedictEvans––November2025

57

Source:MorganStanleyCIOSurvey

Thefuturecantaketime

AquarterofCIOshavelaunchedsomething-but40%don’tplananythinguntilatleast2026

CIOexpectedtimingforfirstLLMprojectsinproduction,September2025

Alreadydeployedatleastoneproject

H22025

2026

Laterornoplan

0%25%50%75%100%

BenedictEvans––November2025

58

Source:GoldmanSachsCIOSurvey

Butthefuturealwaystakestime

Cloudisoldandboring-butstillonly30%ofworkflows

Enterpriseworkloadsinpubliccloud

Today

Expectedin3years

60%

50%

40%

30%

20%

10%

0%

2013201420152016201720182019202020212022202320242025

Source:FMIBenedictEvans––November202559

Sometimes‘automation’aloneisabigdeal

UPCs,barcodesanddatabasesletretailersmanage5xmoreSKUs

AverageSKUspersupermarket,USA

60,000

Grocerybarcodeslaunchedin1974

50,000

40,000

30,000

20,000

10,000

0

19501960197019801990200020102020

BenedictEvans––November202560

But…

“We’veallseenlotsofAIpresentations now,andwe’vedeployedabunchofstuff.Isthatit?What’snext?”

F100RetailerCMO,summer2025

BenedictEvans––November202561

Whatnext?

Whatcomesafterautomatingtheobvious,easythings?

Absorb

Innovate?

Newproducts,bundlingandunbundling

Disrupt?

Redefinethe

question

Automateobvious

use-cases

(20yearsmore

deploymentto

come!)

BenedictEvans––November202562

Wheremightwelookforchange?

WhatcanLLMautomationunbundle?Whatthingsdidwenotrealisewerebundles?

Internet

unbundlingcreated

newaggregators

HowdoLLMsdo

thatbetter?

Onlinedistribution

unbundledphysical

assets

WhatdoLLMsunbundle?

BenedictEvans––November202563

“AIgivesyouinfiniteinterns”

BenedictEvans––November202564

Howdoweuseautomationthatmakes‘mistakes’?

Wehavenoindicationthaterrorrateswillgoaway,sowhere’sthehumanintheloop?

Do‘errors’matter?

Ishumanverificationefficient?

Howmuch

doweneed

towrapthe

LLMin

software?

Canyou

automate

verification?

BenedictEvans––November202565

Whatdo‘automatedinterns’change?

TheJevonsparadox-appliedpriceelasticity

Doyoudothe

sameworkwith

fewerpeople?

Ormorework

withthesame

people?

Whatbecomes

possiblewhen

youdon’tneed

millionsofpeople

todothat?

Wasemploying

lotsofpeople

yourmoat?

Source:Landes

66

BenedictEvans––November2025

300minterns?Jevonsparadoxatwork

SteamenginesgaveBritaintheequivalentlabourof(veryroughly)5xitstotalpopulationby1900

UKpopulationandsteamenginelabourunitequivalent(m)

Population

Steamengineequivalent

300

250

200

150

100

50

0

184018701896

BenedictEvans––November202567

Where’sthehumanintheloop?

Allrecommendationsystemstodayworkbydriving,capturingandanalysinguseractivity

GenAI?

Pre-internet

Humaneditors,forbothretail&media

Physicalassetsas

moat

Internet

CananLLMdo

Allofusare

thisbetter?

mechanicalturks

CananLLMdoit

feedingalgorithms

withoutneeding

Networkeffectsas

auserbase?

moat

Valuetocapture!

Brandsspendatrilliondollarsayeartotalktoconsumers-plusrent,shipping,marketing,returns…

Globaladrevenue,2024($bn)

GogoleNetwork

YouTube

Amazon

Allotherex-China

China

Meta

GoogleSearch

01002003004005006007008009001,0001,100

Source:Companies,WPPMediaBenedictEvans––November202568

NB:‘China’representsspendinginChina,notglobalspendingbyChinesecompanies

“OurnewAIrecommendationmodeldrove5%moread

conversionsonInstagramand3%onFacebook”

Meta,Q22025

BenedictEvans––November202569

“AdvertisersthatactivateAIMaxinSearchcampaigns

typicallysee14%