🦔Apollo's chief economist Torsten Slok put hard numbers on something a lot of people have been circling for a while. AI's money runs backward, chipmakers booking huge profits while the model makers bleed, and the profits come from investors rather than customers. Chipmakers earn a 41% profit margin. The model makers like OpenAI and Anthropic run a negative 59% operating margin. His conclusion is that the 41% depends on the negative 59% staying financeable. My Take Slok pulled these figures from Pitchbook and Bloomberg, and they match what plenty of people have argued for months. Nvidia's cash is solid, but it comes from OpenAI and Anthropic spending money they raised, not money customers paid them. Take the fundraising away and the chip profits have nothing underneath them. The most profitable layer of this industry depends on the least profitable one raising money it does not earn. That leaves one question. Can AI start paying off for the companies using it before the money funding all of this runs out? I don't know, and I don't think anyone does yet. For now the margins at the top hold, and the demand under them is borrowed. I wouldn't let the chip profits convince me the boom has proved itself. Hedgie🤗