Nvidia's AI chips may be flying off the shelves, but they don't seem likely to pay for themselves by generating higher corporate revenues any time soon.

Why it matters: The U.S. stock market continues to hit new highs driven by optimism surrounding the coming AI revolution.

• In the best-case scenario from skeptics and cautious optimists, the promise of AI will take much longer to materialize than the current investment frenzy suggests.
• In the worst case, it never will.

Between the lines: Either way, billions of dollars in capital are almost certain to be incinerated.

The big picture: Newly published reports from Goldman Sachs, Barclays and Sequoia Capital have crunched the numbers on how much has been and will be spent on AI-related infrastructure, and how much extra revenue companies will need to make all that spending worth it.

Between the lines: "Overbuilding things the world doesn't have use for, or is not ready for, typically ends badly," Goldman Sachs head of global equity research Jim Covello warns.

• Sequoia's David Cahn cautions against "the delusion that we're all going to get rich quick, because [artificial general intelligence] is coming tomorrow."

Follow the money: Goldman Sachs projects that companies and utilities will spend about $1 trillion on AI capex in the coming years.

Zoom in: The lack of revenue is at the core of the skepticism.

• Cahn notes that OpenAI is still generating the bulk of AI-related revenue right now, and its annualized revenue has been pegged at a mere $3.4 billion.
• Even his generous predictions of $5-$10 billion in annual revenue from Big Tech (from Google and Meta to Tencent and Tesla) still leave a giant hole of $500 billion in revenue just to make up for 2024's infrastructure investment.

Reality check: Barclays estimates that AI capex by 2026 will be sufficient to support 12,000 AI products of the scale of ChatGPT.

• "We do expect lots of new services that will bring some of this bull case to light, but probably not 12,000 of them," Barclays analysts write.
• Meanwhile, Goldman's Covello points out that even Salesforce, which has been aggressively spending on AI, showed little revenue boost in its Q2 financials.

Zoom out: Other unknowns include whether AI tech will become cheap enough to generate significant cost savings, whether it'll solve the kind of highly complex problems that would make it worth the price, and whether we'll be able to supply the energy needed to keep up with AI's growth.

The other side: Tech leaders don't see "overbuilding" as a dirty word.

• They remember how the dot-com bubble overbuilt telecom capacity before the bust of 2000-2002 wiped out legions of investors. But within a handful of years, all that capacity — and plenty more — was put to good use.

The bottom line: Generative AI's topline benefits are not arriving anytime soon, realists argue.

Nvidia data centers will be sold at a pace of about $150 billion per year on an annualized basis by the final quarter of 2024, estimates David Cahn of Sequoia Capital.

• Cahn's rule of thumb is that companies in aggregate will need to generate about four times in revenue what they spend on Nvidia data centers to cover the cost of energy and their margins.

In the past couple of weeks, Tesla has been hit by a slew of bad news. Somehow, however, its share price has soared 32% since June 24.

• Earlier this week, it was up 47%.

Why it matters: Tesla is the prime example of a stock and the associated company being two very different things.

What happened: Tesla revealed that its total deliveries continue to decline. Its share of the U.S. EV market has dropped below 50%, with its domestic sales falling and secondhand valuations plunging even as the EV market continues to grow.

• On Thursday, Bloomberg reported that Tesla's much-vaunted robotaxi announcement had been pushed off from August to October — the only piece of bad news from the company that seems to have been bad for the stock price, too.

Follow the money: The increase in Tesla's valuation since June 24 is more than $185 billion, or more than three times the market value of Ford.

The big picture: Tesla's corporate valuation is so much higher than its value as a carmaker that fundamental analysis of the stock is all but impossible.

• Instead, Tesla trades on a mysterious combination of vibes, memes, and hopes that, in the future, the company will somehow manage to monopolize a massive self-driving robotaxi industry.

By the numbers: Tesla stock has always been volatile. One measure of that, its 30-day rolling volatility, topped 50% last week, per YCharts, and was as high as 75% in May. Companies like Ford, GM and Toyota, by contrast, have volatility of about 25%.

• And for all that Tesla shares have risen sharply in the past couple of weeks, they're still down 42% from the highs they reached in late 2021.

The bottom line: Tesla is a day trader's dream stock.