O'Driscoll: 20x-revenue AI valuations demand Microsoft-level 40% margins
Rory O'Driscoll · Should the US Ban Chinese Open-Source Models | OpenRouter's Chance To Sell | Stripe Buying PayPal · Jul 23, 2026 · at 48:33
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Save the cut (mp4) →“But as you're pointing out here, there are real, even at the margin, even after you've fully paid for your training costs, there are real physical costs to serve these models, and you've got to cover your nut. You got to cover the marginal cost of the model of the inference, which gets the entire two, three bucks kind of blended average token. Then you got to recover the cost of the training, and you got to recover pretty damn quick because it only lasts, you know, 12, 24 months before it's obsolete. And then on top of that, you want to make extraordinary profits because you're being valued at 20 times revenues, and if you're valued at 20 times revenues, you better be like Microsoft with 40% operating margins.”
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