Subsea Cables & Internet Infrastructure

1. Massive capital expenditures. 2. Extremely high operating costs due to power intensity of AI infrastructure. 3. Low customer switching costs. 4. Huge gap between capex and revenue flows: 2 to 4 years. 5. Heavy dependence on debt financing and hence vulnerability to rising risk premiums and interest rates. 6. Underlying technology, large language models, is fundamentally flawed according to many computer scientists. This is corroborated by persistent hallucinations and weak problem solving abilities. 7. Large language models show sharply diminishing returns to scale. 8. Luck is required because there are only a few customers for these projects and loss of a single customer can kill a project.