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It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating marg
by danielmarkbruce 4mo ago
It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating margins, that's slightly over 200B of operating income, and it all makes a lot of sense.
You can debate the assumptions, but it isn't witchcraft. The math is simple.
- anshumankmr 4mo agoI think what PEOPLE are saying IT is very difficult to sustain that level of growth.
- moi2388 4mo agoOf course it is. But stocks aren’t a measure of current profitability. It’s a bet on future profits. How many serious, large AI players are there? Google, OpenAI, Anthropic, and who else exactly? At least one of them will probably win. And winning here means billing almost all companies for AI and automation, consumers, perhaps robotics and research.. and that potential earning is massive. So yes, I will pay 10 times the worth for the stock now, but paying 1000 per stock for a chance of owning all that future profit is not that outrageous.
- necovek 4mo agoI believe a more likely outcome is that neither one of them outright "wins", and they get joined by other players like xAI, DeepSeek, Qwen, Mystral, Llama even... That should make it hard to bank in on future growth with any single AI company: what I believe is happening is investors jumping in on the short term gains train.
- niemandhier 4mo agoI think the reasoning should be the other way around: If you limit yourself to simple math, than you get this result. Assuming linear growth into a market with competition and an unclear ability to absorb that growth is a gamble.