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[ARTICLE · art-101053] src=afr.com ↗ pub= topic=artificial-intelligence verified=true sentiment=· neutral

What if the AI capex bubble may not be a bubble after all?

Microsoft CEO Satya Nadella recounted Sam Altman's pitch for the OpenAI-Microsoft partnership, which framed human knowledge as a logarithmic function of compute, suggesting that the AI capital expenditure boom may be justified despite bubble concerns.

read1 min views1 publishedAug 18, 2026
What if the AI capex bubble may not be a bubble after all?
Image: source

The way Satya Nadella tells it, Sam Altman had a killer pitch when first discussing an OpenAI-Microsoft partnership: “knowledge is the log of compute.”

In other words, human knowledge – about anything – is an increasing function of the amount of computing power thrown at it. And knowledge increases more and more slowly as more compute is applied.

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