$Microsoft(MSFT.US)OpenAI’s widening losses have once again raised questions about the sustainability of the AI ecosystem. The interesting part is that cloud providers like Microsoft can capture part of the economics, but they still can’t completely escape the pressure from rising hardware costs and massive infrastructure spending.

This creates a strange dynamic: AI revenue is growing, but so are the costs required to support that growth. If hardware prices continue rising faster than monetization, the industry may struggle to expand margins even as demand remains strong.

The market is therefore starting to focus less on AI revenue growth itself and more on where the profits ultimately accumulate—and whether the entire ecosystem can generate sustainable free cash flow.

@Captain's Treasure