Can Investors Trust AI Sales Figures? Asks Wall Street Journal Opinion Piece (wsj.com) 39
A Wall Street Journal opinion piece warns of "a troubling trend" in AI's growth. "Rather than selling software, some AI companies are paying their partners to use it."
It cites OpenAI's $1.5 billion joint venture with private-equity firms, Anthropic's $200 million contribution to a private-equity firm joint venture, and Google's $750 million subsidization of Gemini's adoption by consulting firms. "These agreements muddy the distinction between a company's sound growth trajectory and artificial financial engineering." [T]he scale and structure of the recent AI deals go beyond standard incentive mechanisms... When a seller pays customers to buy its products, it is unclear if its revenue growth reflects vibrant demand or a willingness to accept subsidies.
Slashdot reader destinyland writes: This warning comes from a prominent figure in the investing community. For six years Robert Pozen was chairman of America's oldest mutual fund company, after five years at Fidelity. An advocate for corporate governance, he's currently a lecturer at MIT's business school (and the author of the book Remote Inc.: How to Thrive at Work...Wherever You Are). "As AI companies prepare initial public offerings, investors should scrutinize their numbers closely," Pozner writes, warning about "time-limited financial support".
"In evaluating AI sales figures, analysts should consider the distorted incentives that the recent financing deals create," writes Pozner: Private-equity firms, enticed by promised returns, might demand rapid rollouts of AI products, rather than ensuring their orderly and safe development. Portfolio companies of private-equity firms may embrace AI tools not because they are needed but because adoption is mandated by their owners. Consultants may favor one set of AI models based on the subsidy instead of the merits.
If guarantees and subsidies are major factors in the rapid adoption of AI tools, investors should be skeptical of AI companies' revenue projections. Many of their customers enticed by consultants will stop paying full price when the financial incentives are gone. Many of the portfolio companies of private-equity firms could back away from selected AI tools once these joint ventures expire. The challenge with evaluating these AI financing deals is the lack of transparency. At present, AI vendors don't separate revenue driven by subsidies or joint ventures from standard sales.
The lesson from the telecom debacle is that financial engineering can obscure, for years, the difference between real customer demand and demand driven by incentives. When AI companies begin to finance their own product distribution, guaranteeing returns to investors and subsidizing sales, it's a signal for investors to dig deeper. Investing in an AI company? Ask what percentage of enterprise revenue is coming from subsidized channels or joint ventures, Pozner suggests. And the renewal/retention rate for customers not supported by subsidies or joint ventures...
It cites OpenAI's $1.5 billion joint venture with private-equity firms, Anthropic's $200 million contribution to a private-equity firm joint venture, and Google's $750 million subsidization of Gemini's adoption by consulting firms. "These agreements muddy the distinction between a company's sound growth trajectory and artificial financial engineering." [T]he scale and structure of the recent AI deals go beyond standard incentive mechanisms... When a seller pays customers to buy its products, it is unclear if its revenue growth reflects vibrant demand or a willingness to accept subsidies.
Slashdot reader destinyland writes: This warning comes from a prominent figure in the investing community. For six years Robert Pozen was chairman of America's oldest mutual fund company, after five years at Fidelity. An advocate for corporate governance, he's currently a lecturer at MIT's business school (and the author of the book Remote Inc.: How to Thrive at Work...Wherever You Are). "As AI companies prepare initial public offerings, investors should scrutinize their numbers closely," Pozner writes, warning about "time-limited financial support".
"In evaluating AI sales figures, analysts should consider the distorted incentives that the recent financing deals create," writes Pozner: Private-equity firms, enticed by promised returns, might demand rapid rollouts of AI products, rather than ensuring their orderly and safe development. Portfolio companies of private-equity firms may embrace AI tools not because they are needed but because adoption is mandated by their owners. Consultants may favor one set of AI models based on the subsidy instead of the merits.
If guarantees and subsidies are major factors in the rapid adoption of AI tools, investors should be skeptical of AI companies' revenue projections. Many of their customers enticed by consultants will stop paying full price when the financial incentives are gone. Many of the portfolio companies of private-equity firms could back away from selected AI tools once these joint ventures expire. The challenge with evaluating these AI financing deals is the lack of transparency. At present, AI vendors don't separate revenue driven by subsidies or joint ventures from standard sales.
The lesson from the telecom debacle is that financial engineering can obscure, for years, the difference between real customer demand and demand driven by incentives. When AI companies begin to finance their own product distribution, guaranteeing returns to investors and subsidizing sales, it's a signal for investors to dig deeper. Investing in an AI company? Ask what percentage of enterprise revenue is coming from subsidized channels or joint ventures, Pozner suggests. And the renewal/retention rate for customers not supported by subsidies or joint ventures...
Re:AI will create a ton of jobs (Score:4, Interesting)
All the vibe-coded slop .. instead of buying enterprise software .. it will just get vibe coded by the IT department. Think about that .. instead of buying a license for Photoshop a design company can just vibe code a photo editor that has what they need. "create a full featured photo editor with some custom features like ..."
AI will create new jobs and opportunities.
You're assuming that cart will still need a horse.
Why the hell would I bother with asking AI to build a photo editor and then hire a photo expert to edit photos (a.k.a. that “new jobs and opportunities” part), when I can just ask AI to edit the photo?
Yes. It will get that good. Because we’re demanding it to.
Yes. That means unemployment. Not opportunity.
Re: AI will create a ton of jobs (Score:2)
If the photo is for an advertisement or a web page, my AI browser will be instructed not to display it if it adds nothing to my query. For instance, if I want to know if Tescoburies are offering marmite flavoured crisps for sale, I will not have to click through pointless pages showing me cheerful AI generated customers and staff or attractively-lit crisp packets. If I want to know if a hotel has a room available, I need not wade through dozens of intentionally misleading AI generated photos of rooms.
Re: AI will create a ton of jobs (Score:2)
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"... when I can just ask AI to edit the photo?"
And that assumes you would have use for a photo that you could afford to pay for. When everyone is unemployed there is no demand for photos.
That unemployment you rightfully identify will have magnifying effects. AI is targeted at replacing people with property. That does not create new jobs, it at best creates a zero sum transfer of a few workers while eliminating many others.
Free markets work when there are consumers and competition. 100 billionaire consume
Yet another empire, falls. (Score:1)
I fully agree with your summary. And while you might have jumped a shark in front of the horseless carriage, you are not wrong.
We humans have been infected with the Disease of Greed for thousands of years. Carved up an entire planet into Yours and Mine, drawing lines in the sand with blood. Filled with the ironic rage of endless warmongering, killing each other arguing over what happens when you die.
This is FAR from the end of Capitalism or Greed. We are merely yet another empire to fall to the Disease.
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Well, maybe. But the state of the art of photo manipulation by AI is still pretty awful.
Last week I took a simple flow chart (about 5 boxes) I made using Draw.io and converted it to an image. Then I asked both Claude and Copilot to add a few more boxes. Both completely fell on their faces. Copilot drew some more boxes, but they pointed to each other in haphazard ways, making no flow sense at all. Claude did a little better, mostly getting the flow right, but the results was in no way presentable.
Both took a
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I smell entitlement. You can demand all you want; try violating the 2nd Law and get kicked in the nutz. Yes it's true; only an overpaid human can edit a photo to your satisfaction.
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While you're correct that IT departments and random people in organizations will try this, they'll soon find out that "vibe coding" isn't as easy as it seems. Once you get past the initial mockup stage, and you have to add features that require attention to detail, they'll quickly run into a wall.
Somebody in my company right now, demonstrated a vibe-coded receipt-management tool. The company doesn't want to pay for a system like Concur, so he's creating one in house. He's going to quickly find out that, whi
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While you're correct that IT departments and random people in organizations will try this, they'll soon find out that "vibe coding" isn't as easy as it seems. Once you get past the initial mockup stage, and you have to add features that require attention to detail, they'll quickly run into a wall.
Somebody in my company right now, demonstrated a vibe-coded receipt-management tool. The company doesn't want to pay for a system like Concur, so he's creating one in house. He's going to quickly find out that, while the initial demo was impressive, security will be a problem, and the million edge cases he's not thinking about until somebody actually goes on a trip and needs to report expenses, and won't be able to use the software.
From what I've heard, you also can pay the big bucks for Concur and still find out that the taskflow and documentation is not nearly as smooth as the consultant demo, and you still have a huge process tangle requiring a haggard team of people to manually fix all the things that go wrong and enter correct information.
Who cares? (Score:1)
Those absurd sums are just booking entries from the war-chests of megacorps. If there is an AI bubble and it bursts tomorrow, normal people most likely will barely notice. The corps themselves will likely barely notice, since it's money (bits and bytes on HDDs) that has been lying around already and that they had to spare.
Re:Who cares? (Score:4, Interesting)
Then who will it impact, and if no one, how is it a bubble?
Re:Who cares? (Score:4)
Then who will it impact, and if no one, how is it a bubble?
It will directly impact investors. This will have the usual indirect effects on/due to the people who had no business investing.
Re:Who cares? (Score:4, Interesting)
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Those absurd sums are just booking entries from the war-chests of megacorps. If there is an AI bubble and it bursts tomorrow, normal people most likely will barely notice. The corps themselves will likely barely notice, since it's money (bits and bytes on HDDs) that has been lying around already and that they had to spare.
When a stock market filled with nothing but predictive bits and bytes crashes, the impact is a hell of a lot more than ones and zeros.
Stop pretending social security nets, don’t rely on 21st Century investments. The main corrupt reason WFH was shit on by Capitalism, was because of commercial real estate investments that FED pensions.
The other day I subscribed to Cllaude. (Score:3)
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First, you need to use an AI that's integrated into your IDE. I'm not sure from your description whether you're doing this. Claude Code, Visual Studio Code, etc. have very good AI integration.
In these tools, you _can_ quickly describe what you want, in general terms, and most of the time it will get it right. Certainly, they sometimes fail to resolve ambiguities. For example, I told GitHub Copilot to add "console logging" for my download status updates in my web app. It assumed I wanted the logging on the s
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Actually, Visual Studio Community *does* have Claude integration, assuming you are using GitHub Copilot. You can choose from 16 different LLMs, including Claude Haiku 4.3, Claude Sonnet 4, 4.5, and 4.6. In the box where you type your prompts, the dropdown is at the bottom, or you can set the default in Visual Studio Settings.
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Of course not. (Score:2)
What kind of a question even is that?
Everyone knows that most of AI "sales" numbers come from bundled, unwanted and inseparable installations.
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You should never ever trust an AI. All output needs peer reviewed by real humans.
Talk to 100 high school graduates first.
Then you might understand the reason society is going to be leaning on AI.
Idiocracy wasn’t meant to be a documentary any more than Orwell should have been made a prophet, but here we are. Using both as a guide.
if I was an investor (Score:3)
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"I would not trust anything wal street has to say because their only interest is getting your money..."
And what does an investor want? That's the game, taking money without producing anything, right? And you mean Wall Street JOURNAL?
Betteridge's Law of Headlines (Score:5, Informative)
Can Investors Trust AI Sales Figures?
Betteridge's Law states that if the headline is a question, the answer is probably "No."
Bubbles (Score:2)
But this BS that is going on at the moment is world class bubble bullshit.
I don't think the sales matter (Score:1, Troll)
The Epstein class wants to fundamentally break capitalism. No more markets no more competition no more regulation no more paying wages no more arguing with unions or employees none of that. Just them in charge of everything deciding who gets what. Techno feudalism.
So AI companies can lose as much money as they want. Because billionaire
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Billionaires want AI because they are tired of being dependent on consumers and employees. They don't care how much it costs and they don't care about profits anymore.
The accurate term for billionaire, is money junkie. So let’s stop pretending history is full of billionaires losing their ass in an economic crash, and shrugging their shoulders to passively walk off into retirement as a mere mortal millionaire. They’re addicted to Greed. Horrifically. If they were merely addicted to power, you would be forced to bow and address them as King or Queen.
Billionaires are “tired” of being dependent on consumers? The pathetic part about billionaires b
It's not about money it's about power (Score:2)
If Elon musk wants you to do something, I mean he really wants you to do it, you are going to do it or he is going to destroy you.
The only reason that isn't an issue in your daily life is he hasn't noticed you
Reminds me the old days of Windows (Score:5, Informative)
Some of you may not be aware of this story, but through the 80s–00s, Microsoft famously didn't enforce anti-piracy laws in poorer countries.
The reason is that it was better for them to lose some money, but to have Windows widely distributed and become the de facto standard for operating systems worldwide. After that, they could finally enforce it and profit.
I would bet that the big AI companies are basically following the same model.
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This is a good way to grow. The old "the first hit is free" model. However, in this scenario, the AI companies should give their product away for free and recognize no revenue. They can report active users per month or something similar. Subsiding the sales and then recognizing the revenue feels like fraud.
Never fear! (Score:3)
short answer: no (Score:2)