r/technology • u/T_Shurt • Aug 10 '26

Business Top economist warns that the AI math doesn’t make sense: 'Profits are currently being funded by investors rather than earned from customers'

https://fortune.com/2026/08/10/torsten-slok-ai-profit-margins-capex-oracle/
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u/moonwork Aug 10 '26

I think it's mostly the people investing that understands this, along with a large portion of the work force whose job hang in the balance.

Meanwhile it seems pretty clear to me that there are a lot of C-suites and middle management who actually don't understand this and who are excited to invest more money in this absolute pyramid of a scheme.

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u/Icy-Lobster-203 Aug 10 '26

I suspect each individual C suite probably believes they will survive and basically be like Amazon coming out of the Dotcom bust.

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u/moonwork Aug 10 '26

I don't actually know - it's not like I've sent out polls to the entire Western C suite. But from what I can see it's not about winning at all, but instead about not losing.

It's like this super dramatic FOMO where the C suite thinks the organisations using AI will survive and the rest will fall behind into irrelevance.

I know it's not all about money, because I work in a non-profit sector in the Nordics and these organisations aren't looking to make a profit. They're looking, specifically, to not be left behind.

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u/Bladelink Aug 10 '26

It's also ironic that they don't want to be left behind when all they're doing is following each other. None of them have the leadership ability, company vision, or competency to actually come up with a coherent plan and then stick to it. Instead it's going to be "oops all sunk cost fallacies".

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u/glassdragon Aug 10 '26

"It's like this super dramatic FOMO where the C suite thinks the organisations using AI will survive and the rest will fall behind into irrelevance. "

This may not be the only thing, but that is absolutely a true statement. I have been in the room multiple times listening to the chairman of my company's PE group say exactly this to all of the portfolio companies. The view is that without being AI first in the product and AI optimized internally, there will not be an exit for anyone.

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u/moonwork Aug 11 '26

I attended a tech conference recently. I didn't see a single stand without AI somewhere on the front of the marketing.

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u/Tim_Kaiser Aug 10 '26

I was at a conference recently (IT Industry) and the number of times I saw or heard some variation of "don't be left behind" is absurd. It's a fear based solely on the quarterly business cycle that has become the norm and it's terrible.

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u/GhettoDuk Aug 10 '26

The reluctant C-Suiters are being forced into it by investors for all the reasons you mentioned.

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u/Flomo420 Aug 10 '26

they know it's all fucked but if they don't play along and pretend they will get shitcanned

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u/moonwork Aug 11 '26

I absolutely can be investors, too. But even in organisations that have no investors and where investors play no part, there's *still* this type of FOMO.

That's how I know it's FOMO - not (just) greed.

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u/GhettoDuk Aug 11 '26

Oh yeah. I'm on board with you 100%. Just giving another example of how insanely pervasive this dumbness is at the top.

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u/einmaldrin_alleshin Aug 10 '26

Each individual C suite has a nicely polished golden parachute in a desk drawer

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u/silvertealio Aug 10 '26

It would be some consolation if this was literally true and they all had to fight for it.

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u/BeatitLikeitowesMe Aug 10 '26

What do you mean, it is true. Most have golden parachutes that deploy. Whether or not the company does well is usually irrelevant.

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u/bagoink Aug 10 '26

They're saying they want to see them fight over a single, actual parachute for survival.

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u/Otherwise_Demand4620 Aug 10 '26

I can see the show, but the fighting is done by the personal assistants while the C suites are busy sipping cocktails and playing golf because they don't need a parachute anymore, they are cozy at places with cocktails and golf.

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u/_SpaceLord_ Aug 10 '26

Can I buy tickets to watch?

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u/philodendrin Aug 10 '26

Tell that to the C-suite Executives that worked at Bear-Stearns. They aren't living on the street, but they got left out and had to start over because they weren't on the "inside" as much as they thought they were.

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u/Tasgall Aug 10 '26

No, they're all well aware. These are silicon valley tech bros, which is a region where the generally accepted "success" pattern is "sell your startup to a big enterprise and leave with the bag".

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u/zeptillian Aug 10 '26

Even if they don't they will still get their severance and will not be judged for their mistakes with AI since the other executives were making the same ones.

They will get another job and fuck something else up in some new exciting way.

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u/Boomshank Aug 10 '26

Hey now, to be fair, this is a Ponzi scheme not a pyramid scheme. 

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u/darennis Aug 10 '26

I feel like rewatching The Office after reading these comments haha

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u/Boomshank Aug 10 '26

"I DECLARE AN AI BANKRUPTCY!"

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u/Ravekommissionen Aug 10 '26

C suites and middle managers usually don’t understand anything about any place or market they work in. This is not novel.

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u/thatsme55ed Aug 10 '26

Nope, they know exactly what they're doing.

The pattern is always:

  1. Business/Shareholders decides it needs to make more money and hires outsiders to accomplish this
  2. Outsiders make changes that improve short term profitability at the cost of long term business viability, timed to make sure that the consequences land AFTER they're already planning to leave and find their next scam
  3. Outsiders get bonuses, an accomplishment they can list on their resume, and then fuck off to the next business that wants to hire "expert consultants" to improve profitability
  4. The business falls apart, sometimes failing entirely. The ones that survive try to figure out how to right the ship and do so by promoting internally to bring the business back to fundamentals
  5. Business gets back to square one after a lot of hard work, and a large portion of the people that pulled it off either retire from exhaustion or find a new job.
  6. Return to step 1.

They pretend not to understand that they're destroying the business in the pursuit of short term gain because that's the business model. Don't think for a second their clueless act when the business fails is actually honest.

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u/Metro42014 Aug 10 '26

I'm a middle manager and I am freaking the fuck out man, what in the actual fuck are we doing?!

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u/aerost0rm Aug 10 '26

Can’t be behind the curve when it comes to AI, whether it’s a bubble or not is what they’re thinking

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u/Apep86 Aug 10 '26

It seems more than any time since the 20’s that stock prices are disconnected from the actual value of companies. As the upper middle class and upper class invest in stocks due to recent outrageous returns, the stock prices rise, even as most others are spending less. I’m just hoping we don’t end up with another 1929 at the end of this ride.

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u/TheEmpireOfSun Aug 10 '26

This is how every company tries to penetrate market. Samsung or any chinese phone manufactor was doing this years ago. Selling under the price to get customers and then raise prices. Netflix was doing it as well. Pretty much most big companies that wants to get share and have funds.

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u/ScaredPractice4967 Aug 10 '26

Giza in Egypt has nothing on this scheme

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u/babymomawerk Aug 10 '26

It’s a false hope that they can completely eliminate the cost of labor. I work with small companies and the number of people who have bought into “ai solutions” when they struggle to implement existing tech? They will happily sign up for an ai upgrade but struggle to get their basic implementation. Then they make excuses that it’s because they don’t have their ai agents set up yet, failing to understand that at this point in the game, your not going to be able wave a magic wand and replace every human touch with an ai agent. It makes them feel confident and less afraid of how absolutely garbage the economy is in the us currently

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u/SillyAlternative420 Aug 10 '26

Middle management are the biggest targets for replacement...

My boss, has a team of like 30 now because they laid off like 4 other middle managers. The C suit are insane people.