2 months ago
"Is there an AI bubble?" is such a tired thought. Here's something altogether more wired: The AI boom is paying off, but not in a way that the current equities market has accounted for. The success of the technology in one area of the economy could make the bubble real in another, more precisely.
In a blog post published on Friday, Apollo Chief Economist Torsten Slok highlighted that the parts of the AI value chain with the highest profit margins—companies making AI models and applications—actually have the lowest levels of profitability, a departure from the standard business model of, well business, in which profit margins are higher for companies selling an end product to consumers.
Slok broke down AI companies into four categories: models and applications, cloud and compute, energy and grid, and silicon and equipment. Using data from Pitchbook and Bloomberg for companies including OpenAI, Anthropic, Microsoft, Amazon, Constellation Energy, Nvidia, AMD, and Micron, Slok calculated that silicon and equipment—such as chipmakers—has the highest profit margin, 41%, in the AI value chain. Meanwhile, models and applications—like Anthropic—have a -59% operating margin.
Slok warns that this sharp disparity is because money from the AI boom is not coming from natural demand for AI applications, but rather shareholders hoping to cash in on what they hope is the next technological revolution.
"AI boom's profits are currently being funded by investors rather than earned from customers," Slok said. "The upstream margins are real, but they are paid for out of capital raised by the layer losing money, not out of cash generated by end demand."
#profit #boom
In a blog post published on Friday, Apollo Chief Economist Torsten Slok highlighted that the parts of the AI value chain with the highest profit margins—companies making AI models and applications—actually have the lowest levels of profitability, a departure from the standard business model of, well business, in which profit margins are higher for companies selling an end product to consumers.
Slok broke down AI companies into four categories: models and applications, cloud and compute, energy and grid, and silicon and equipment. Using data from Pitchbook and Bloomberg for companies including OpenAI, Anthropic, Microsoft, Amazon, Constellation Energy, Nvidia, AMD, and Micron, Slok calculated that silicon and equipment—such as chipmakers—has the highest profit margin, 41%, in the AI value chain. Meanwhile, models and applications—like Anthropic—have a -59% operating margin.
Slok warns that this sharp disparity is because money from the AI boom is not coming from natural demand for AI applications, but rather shareholders hoping to cash in on what they hope is the next technological revolution.
"AI boom's profits are currently being funded by investors rather than earned from customers," Slok said. "The upstream margins are real, but they are paid for out of capital raised by the layer losing money, not out of cash generated by end demand."
#profit #boom
2 months ago
He's eating barbecue. He's winning over Joe Rogan. He's challenging his opponent to mano-a-mano televised faceoffs.
James Talarico is determined not to let his GOP challenger Ken Paxton's and Republicans' attacks on his masculinity define him in what has emerged as one of the party's loudest tactics in the crucial Senate race.
The Texas Democrat is working to position himself as a candidate focused on issues he says men actually care about instead of speculation about his diet, **** uality and religious beliefs.
"They've even called me a vegan, and those are fighting words in the state of Texas," Talarico said at a San Antonio rally this summer.
"Nowadays our culture tells young men that greatness is tearing other people down, is trolling and owning and dominating. But my dad showed me what real greatness looks like. He inspired me to serve," Talarico said at another rally in Houston, referencing how his dad often mowed the lawn of his elderly widowed neighbor without asking.
#texas #mano #greatness #james
James Talarico is determined not to let his GOP challenger Ken Paxton's and Republicans' attacks on his masculinity define him in what has emerged as one of the party's loudest tactics in the crucial Senate race.
The Texas Democrat is working to position himself as a candidate focused on issues he says men actually care about instead of speculation about his diet, **** uality and religious beliefs.
"They've even called me a vegan, and those are fighting words in the state of Texas," Talarico said at a San Antonio rally this summer.
"Nowadays our culture tells young men that greatness is tearing other people down, is trolling and owning and dominating. But my dad showed me what real greatness looks like. He inspired me to serve," Talarico said at another rally in Houston, referencing how his dad often mowed the lawn of his elderly widowed neighbor without asking.
#texas #mano #greatness #james
