AI Datacentres
A note to John Gowings · Gowings Bros · Compute, from the customer's side

Demand

What the customer is buying when they buy compute. The middle of the data flow is the only thing billed. What goes in and what comes back is the customer's own.

IWhat gets billed
Input
a prompt
a query
a document
a question
raw data
Process · Compute
GPU-hours
of work done
the only thing billed to the customer
Output
a token
an answer
an image
a prediction
a model
USD 2–4per million output tokens at frontier; USD 1.50–3per H100 GPU-hour at retail.
IIThe shape of the customer's demand
One customer three days, hour by hour
DAY 1 DAY 2 DAY 3 PEAK IDLE
A typical customer's compute demand: morning ramp, midday peak, evening peak, overnight floor. Bursty.
If the customer owned the fleet capacity sized to peak
OWNED CAPACITY idle most of the time DAY 1 DAY 2 DAY 3
~30%average utilisation. The other 70 per cent is paid for, and idle.
Pooled across many peaks and troughs cancel
POOLED AGGREGATE six customers, each with their own peaks DAY 1 DAY 2 DAY 3
~70%operator utilisation. Your peak is everyone else's trough.
IIIWhen ownership pays, when renting does
$0 $2 $6 $9 $12 USD / GPU-HOUR DELIVERED 0% 25% 50% 75% 100% SUSTAINED UTILISATION OF THE FLEET WHERE MOST CUSTOMERS LIVE BUILD IT YOURSELF cost per useful GPU-hour RENT IT flat ~$3 per GPU-hour, you only pay for what you use crossover at ~67% SUSTAINED ~67%
Below ~67% utilisation

The chip is idle too often to amortise. The all-in cost of build divided by hours actually used exceeds the rental rate. Renting wins. Almost every customer lives here.

Above ~67% utilisation

You can amortise the chip; build undercuts rent. Constant workload (Meta serving global ad inference) or a strategic mandate (sovereign defence) is required. A handful of customers live here.

The investor read

Your peak is everyone else's trough. That arbitrage is what the data centre operator sells. The chips age in three years; the pooled demand had better not. Whether it does is the investor's question — the only real one once the connection is secured.