New pod/newsletter: THE AI QUESTION THAT THE VALLEY FEARS AND WALL STREET CAN'T ANSWER: How much external revenue is the AI ecosystem actually generating? “All I care about is are the revenues coming into the system greater than the costs of building the whole value chain,” tech analyst Craig Moffett recently told @benthompson. “The market is panicking right now, because [it's] saying, ‘We don’t know.’" I talked to Ramp economist @arakharazian about what his firm, which oversees billions in AI corporate spending, is seeing. He's worried, too. Kharazian sees several "cracks" in the AI thesis: 1. AI spending is highly concentrated among VC-backed tech companies The top 1 percent of AI spenders accounts for 80 percent of all AI spending. They are highly likely to be backed by venture capital. Why that's awfully interesting: AI demand is supposed to account for revenue generated outside of the AI capital cycle. But if most AI spending comes from companies that rely on venture capital firms that also rely on AI valuations, this seems like another example of the AI capital cycle paying itself. 2. Spending among the top 1% of companies is stagnating Per-employee spending among Ramp’s top 1 percent has fallen in the last few months. Token spending—that is, the money businesses pay to run models through their software—recorded “two straight months of virtually no growth,” Kharazian wrote. 3. Falling token prices Intelligence getting cheaper is good for many parts of the AI ecosystem. But it's a challenge for external revenue, as firms get better at avoiding the most advance models to find cheaper tools to do most of their work. youtube.com/watch?v=e7F1AvDs…