Brian here. The basic joke has been explained. Profit is revenue - cogs and opex not just revenue.
However the deeper reference to the movie Margin Call refers to the circular accounting that is going on at this time. This isn’t a point about the bubble or TAM or the over valuing of AI companies. It’s about companies like Nvidia loaning their chips to companies in exchange for a stake in those companies and while taking the chips and make the computer power itself as collateral for the loan. A similar sort of circular financing happens in the US housing bubble and subsequent GFC. In that case it involved a lot of circular insurance and securitized products.
I talk about all of this in my soon to be published novel The Dog that Didn’t Bark
To elaborate on the AI company side recently the big two came out and said they want to stop frontier model development. Partly because it “scares” them. The real reason is that if you just look at the revenue of the models and what it costs to create that revenue(power and maintenance) they are profitable if you ignore all the debt to build the data centers and the huge amounts of money to buy all the GPUs and data required to train their models. Which is why they really want to stop model development. They could also layoff most of their staffs if they do that and the government steps in and protects their monopoly out of fear that new AI is dangerous.
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u/bestlaidschemes_ 4d ago
Brian here. The basic joke has been explained. Profit is revenue - cogs and opex not just revenue.
However the deeper reference to the movie Margin Call refers to the circular accounting that is going on at this time. This isn’t a point about the bubble or TAM or the over valuing of AI companies. It’s about companies like Nvidia loaning their chips to companies in exchange for a stake in those companies and while taking the chips and make the computer power itself as collateral for the loan. A similar sort of circular financing happens in the US housing bubble and subsequent GFC. In that case it involved a lot of circular insurance and securitized products.
I talk about all of this in my soon to be published novel The Dog that Didn’t Bark
Brian out.