diegodl

Friedberg’s Bull Case: Everyone is Making Money in AI “I took a look at the AI value stack to try and identify who's making money where, and it turns out everyone's making money. So for every dollar of COGS, every dollar that Nvidia spends, that turns into $4 of revenue for Nvidia, 75% margin. And then that gets sold to SpaceX, and then SpaceX turns around and they're making an 83% margin on that chip spend because they're looking at a five-year depreciation, but then they're making $1.25B a month on Colossus. And then Anthropic is showing in this S1 that they're making about 85% incremental gross margin on every incremental dollar coming in. So at the end of the day, $1 that Nvidia spends turns into $18 that Anthropic is making selling to customers. And the question is, are customers making money? So if the customers are making, call it on the order of 2-10x the money they're spending, because otherwise there would probably be a retention issue and a decline in spend. Generally speaking, if AI is delivering value to the customers, I think this shows that there really is true productivity arising from AI. That across the whole value chain there is such margin to be had, there's so much value being created, that this really is what I think Eric Schmidt a long time ago in the early days of Google used to say, ‘Google's total addressable market is global commerce.’ And I think for the first time ever, we're seeing a business actually potentially starting to realize that theory that if you can create enough productivity gain for your customers, that your TAM is commerce. We're almost growing the equivalent of the human working population by 100x or 1000x or 1,000,000x with this technology stack.”