Mark Moss breaks down why AI companies face a financing crisis even without technological failure. Epoch AI's capital spending will soon exceed its operating cash flow, forcing reliance on external funding. The real danger isn't that AI stops working, but that growth slowing from 60% to 15% breaks the financial model built on much higher expectations.
On Epoch AI's current trend, CapEx overtakes operating cash flow somewhere in the second half of this year. Now, that doesn't mean that big tech is going broke. It just means that internal cash won't be enough to fund all of this. So that means that more of the next dollar has to come from outside capital. And that's where the risk that they see, the bears, they, they see that risk starting to change because AI doesn't actually have to stop growing. All it takes for the financing underneath it to to get stressed is for growth to slow down, right? So if growth goes at like 60% to then 40% to 25% to 15%, the business is still growing and it's growing really fast. But if you financed a project and you were expecting 50% or 60% growth and you get 15%, that creates a problem. Not because AI failed, not because AI stopped growing, because the financial assumptions were built for something faster than what you're getting.
