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The Logic of the AI Stack

Financing Jensen's Cake Nvidia's Jensen Huang has offered a clean, orderly way to think about the AI economy. At a recent conference, he described the industry as a "five-layer cake." At the bottom, you have Energy. Then comes Chips, Infrastructure, AI Models, and finally,
The Logic of the AI Stack

When AI Revenue Eats Your Margins

The Price of AI There is a simple model for how tech companies are supposed to work: you build a new product, demand spikes, and as you scale up, your margins expand. Operating leverage kicks in, and each new dollar of revenue boosts profits more than the last. The past

AI's Unit Math Problem

$800 Billion Interest Payment The unit math of AI is usually presented in terms of compute: teraflops, parameters, and tokens. But occasionally, someone does the math in terms of dollars, and the result is enough to make a CFO faint. Last week, IBM CEO Arvind Krishna provided one of the
AI's Unit Math Problem

The Business Model of God

Programming note: ARPU will be off  Monday, back on Wednesday. OpenAI's Reality Check The story of OpenAI's original business plan is already the stuff of Silicon Valley legend. Back in 2019, Sam Altman proposed a simple three-step process: build a God-like intelligence, ask it for a
The Business Model of God

The Friendly Fire Trade War

TSMC Enforces a Non-Compete The basic premise of United States industrial policy right now is that semiconductor manufacturing is a matter of national security. The government has poured billions into subsidies—and, under recent administration moves, even taken an equity stake—to ensure that Intel can build leading-edge chips on

Enterprise SaaS and AI Narrative

Programming note: We've just released our thematic report: Google's TPU and the New Economics of AI Deployment. It's an 18-page analysis deconstructing how Google is breaking Nvidia's monopoly on AI compute by exploiting the market's shift to inference. Access a
Enterprise SaaS and AI Narrative

Google's TPU Yard Sale

Google's Chips vs. Nvidia's Margin Google and Meta have long been fierce rivals in the world of digital advertising. They fight for every second of user attention and every cent of marketing budget. But in the basement of the internet—the data center—they are fast
Google's TPU Yard Sale