My takeaway here: 3.XT $ of US salaries are the TAM for AI companies.
Apple, a very successful company, makes 300B/y revenue? (ish)
~10% is all you need to be Apple.
And, it can work by taking all of 10% of the jobs and collecting the whole salary (the AI employee -- dubious proposition),
or by taking 10% of everyone's salary and automating part of everyone's job (the AI "tool" -- much more plausible).
If "part" being automated is >10%, we all win in the long run, every company gets productivity growth without cost growth, etc etc.
If you add in data center costs, and multiple competing AI companies, and then expand the TAM to all white collar work worldwide, you can make everyone successful beyond their wildest dreams with a "20% of work for 20% of the cost" model. Again, how you distribute that 20% remains to be seen (20% new unemployment, or new 0% unemployment with "tools".
I formalized my thoughts here: https://jodavaho.io/posts/ai-jobpocolypse.html
The replace-work TAM is overstated because it fails to address transaction costs, which are astronomical when refactoring work and dislodging stakeholders with sunk costs. Coding is now the leading app for AI now because it had already been factored to support division of labor, outsourcing, and remote work.
It's also understated, because the real value of AI is not in replacing work, but making new products possible either because it's finally cheap enough to make them, or because -- AI.
Your math is missing the fact that Apple products are differentiated from their competitors. If AI becomes a ubiquitous commodity, it's not worth 300B/y.
Potable water is far more important than AI or iPads ever will be, but the world's most valuable water company only does about 5B/year in revenue: https://en.wikipedia.org/wiki/American_Water_Works
very apt analogy - same as your other one LLMs are similar to CNC machines.
Given the state of AI (LLMs) - they still need a very human (skilled driver) to operate
The bosses already hate their workers and are mad that they have to pay them a cent. Would they really accept paying another 10% on their wages to make their workers 10% more productive? When there is significant active competition between the providers of core models and huge pressure to reduce prices?
In the US, since the 1970s virtually all technologically-driven productivity gains have been captured by the top 10% (who own 90% of all public equity). (See, e.g., https://www.epi.org/productivity-pay-gap/ .)
So no, little or none of the AI productivity gains will go to workers, barring significant changes in public policy like universal basic income and the massive tax increases necessary to implement it.
"TAM" = ?
Total addressable market.
Frequently seen as a big fun number in pitch decks. "The TAM for our new Coca-Cola killer is $1.6T: all humans who imbibe liquids on a regular basis. You simply MUST invest."
Total addressable market
Total addressable market