Emily Flippen

a little bit more of a premium for taking on that additional risk.

This is such an interesting question because this calculation has been centered upon what's the return on investment for artificial intelligence in particular.

This equation has always been, we make all these investment dollars, what am I getting out of it?

The equation is actually, what is the return on investment

for the artificial intelligence investments, really data centers, that's what the debt's being used to pay for, versus what is the cost of the financing.

The focus has been on the former part of that equation, not so much the latter.

But maybe we should all be thinking a little bit more about the latter part of that equation as we look at the bond markets here.

Because even if the former gets a decent return, even if we're getting

eight to 10%, let's say, of a return on our AI investments, is that actually more than the cost of our debt financing?

And even if we're not funding with debt, if we're funding with cash, and there's been some question marks about how much of this is being covered with cash,

I would challenge the perception that cash is actually free.

As an equity investor myself, I actually think that there's a massive opportunity cost that exists with these big, large organizations, tech companies that are using all of their cash and reinvesting into artificial intelligence.

I, as an investor, like to see more than 10%.

Mark Zuckerberg is probably the worst example because Meta has, in my opinion, performed well despite his capital allocation skills.

Zuckerberg has spent tens of billions of dollars investing into the Metaverse that has effectively gone nowhere.

But the Microsofts of the world

the Amazons, these businesses that actually get a really good return on investment by reinvesting either into their core business, but also potentially returning shareholder dollars through dividends, share buybacks, other CapEx expenses that are a bit more known versus data centers.

There's a million and one ways that businesses could be spending capital.

that have a more clear return on investment probability versus artificial intelligence.

Now, I will say, more clear does not necessarily mean more profitable.