The global artificial intelligence sector is currently locked in an intense, high-stakes dynamic described by industry observers as the "AI Chicken Race". This competition is characterized by unprecedented capital expenditure and escalating financial risk across the ecosystem, leading to the crucial question: who will "draw the short straw" when the bubble potentially bursts?
This race involves various players taking differing levels of risk, but its central feature is the aggressive infrastructure buildout that threatens to financially strain even the wealthiest tech giants, a phenomenon explicitly anticipated by CEOs as leading to mass failures and subsequent acquisitions.
The Unstoppable Infrastructure Arms Race
The primary drivers of the AI Chicken Race are the "Magnificent Seven" (Hyper-scalers), including Microsoft, Google, and Amazon, who are generating massive cash reserves but simultaneously spending them at an alarming rate to secure AI supremacy.
These hyper-scalers are reporting enormous quarterly net profits, typically ranging from 3 to 5 trillion yen ($21–35 billion).
However, in the last year or two, the majority of this generated cash has been immediately channeled into securing GPUs and building data centers. This spending has led to a significant depletion of their available cash.
This cash burn has been so intense that these companies have begun aggressively issuing debt in 2024. Combined annual bond issuance among the top five firms has surged from an average of 2–3 trillion yen to 15 trillion yen this year.
This signals that even the wealthiest firms, despite their massive profits, cannot fund their AI ambitions through internal cash flow alone.
The sheer scale of investment is staggering: the top five hyper-scalers are projected to spend $400 billion (60 trillion yen) this year on infrastructure.
Furthermore, reports suggest this annual spending will accelerate, potentially reaching 450 trillion yen over four years by 2027 across the United States.
The Tiered Spectrum of Risk
The participants in the AI Chicken Race fall into distinct tiers based on their financial stability and exposure:
1. The Absolute Victors (The Guaranteed Winners)
At the very top of the supply chain sits NVIDIA, which is seen as the "Ceiling Person" and the "guaranteed winner". As the supplier of chips—the "shovels and pickaxes"—NVIDIA is positioned "upstream" and profits regardless of who ultimately wins the AI service war.
NVIDIA's CEO, Jensen Huang, stated that the computation demand is expanding exponentially and the industry has entered an "AI virtuous cycle". This dominance means NVIDIA is the one participant that is "not affected" by the financial risks of the race.
Below NVIDIA are the Hyper-scalers (Microsoft, Google, Amazon). They occupy the Next Tier in the Supply Chain, possessing enormous profits and high "defense power" due to their vast cash reserves (described as "gold bars in the vault"). They are currently engaged in intense, dominant competition competing against each other to maintain their market position.
2. The Vulnerable Frontline (Massive Operating Losses)
The highest financial risk is concentrated among AI startups like OpenAI and Anthropic. While these companies are experiencing significant revenue growth, they are simultaneously incurring massive operating losses.
Unlike the established hyper-scalers, these startups must constantly raise new capital, relying purely on their "vision" of the future to secure funding.
Their financial position is considerably more vulnerable, especially from the perspective of the "Ceiling People".
This vulnerability is sometimes masked by "circular transactions".
For example, Microsoft and NVIDIA invested up to 15 billion in Anthropic, which then pledged to spend around "30 billion" on the Azure cloud platform, creating a self-reinforcing loop that inflates both valuation and transaction volume.
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3. The Emerging, High-Risk Infrastructure Builders
Further complicating the race are emerging players categorized as "Neo-Cloud" companies, such as Oracle. While sometimes grouped with hyper-scalers, these firms are taking on immense risk by accelerating infrastructure expansion, further intensifying the competitive environment.
The Inevitable Restructuring
Warnings about the nature of this chicken race have been issued by those actively participating and those who successfully predicted past crises.
Meta CEO Mark Zuckerberg publicly acknowledged the enormous risks in the infrastructure binge, stating that he is prepared to potentially lose tens of trillions of yen because the pursuit is the "greatest business chance for humanity".
Crucially, Zuckerberg views the current situation as analogous to historical bubbles, specifically the Railway Bubble and the IT Bubble.
He predicted that highly indebted companies that overproduce infrastructure will inevitably "go bankrupt and be acquired".
He explicitly questioned the ability of highly indebted startups like OpenAI and Anthropic to survive the financial pace set by cash-rich giants like Meta and Google.
Even established investors renowned for accurately predicting past crises, such as the US housing loan crisis, have signaled caution.
Michael Burry, famously known as the "Seller of the Century", raised concerns about the depreciation of GPUs. Burry argued that while older chips may be functional (NVIDIA countered this, noting that A100 GPUs shipped six years ago still run), their usable shelf life for competitive AI model creation is shorter than anticipated (closer to two or three years, rather than five or six).
The AI Chicken Race is thus defined not by innovation alone, but by capital deployment and risk management.
While the profitability of the hardware supplier (NVIDIA) confirms the immediate strength of the market, it simultaneously acts as the engine forcing the infrastructure builders to spend at an unsustainable pace, ensuring that a massive restructuring—where some players "draw the short straw"—is a likely outcome of this high-stakes game.
The AI Chicken Race operates much like an extreme marathon where the participants are required to spend vast amounts of cash on equipment while running.
The equipment suppliers (like NVIDIA) are thriving on record sales, but the runners (the hyper-scalers and startups) are draining their financial reserves and taking on excessive credit just to keep pace, knowing full well that many of them will collapse before they reach the finish line.
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