Global AI Revenue Tops Depreciation Costs for First Time but Faces Profit Test

The generative AI boom has prompted hyperscalers and neocloud providers to spend heavily on GPUs and data centers, raising questions about whether revenue can cover the capital outlay. Research firm Exponential View said depreciation represents only the break-even threshold and excludes electricity, labor and financing costs. Meanwhile, low-cost, open-weight models such as DeepSeek continue to push prices down, leaving profitability as the industry’s real test.

In a report published on June 25, 2026, Exponential View said global AI revenue excluding China reached $25 billion in the first quarter of 2026, exceeding roughly $21 billion in data-center and chip depreciation for a second consecutive quarter. Depreciation still accounted for about 81% of revenue, however, and the estimate assumes a six-year depreciation schedule for IT equipment. Profit margins would narrow further if GPUs are replaced more quickly.