Investors Likely Underestimating AI Profitability

0302 GMT - Investors are likely underestimating artificial-intelligence profitability across the supply chain, Nomura analysts say in a research note. Losses at select AI labs and neoclouds have contributed to a broader perception that AI investment is unprofitable, they say. Rapid growth requires investment in computing capacity before the associated revenue streams fully mature, creating a cashflow mismatch, they say. This timing gap and losses at selected companies are distorting perceptions of the broader AI profit pool, the analysts note. Sustained utilization and pricing remain important to returns on incremental capital, they say. Meanwhile, established cloud platforms such as AWS and Microsoft remain highly profitable, they add.