Source: Financial Times (paywall)
Major tech companies are increasingly reliant on investment gains and financial engineering rather than core business performance to justify AI spending. Q2 "other income"—largely unrealized gains from venture bets—is now a material contributor to earnings. This accounting opacity obscures whether AI is generating actual returns or whether tech giants are simply buying stakes in AI startups, marking them up on balance sheets, and declaring victory to shareholders while their actual AI products remain unprofitable and undefined. If these venture valuations compress (as they historically do in downturns), tech earnings will face sudden headwinds, exposing the real productivity gap between hype and commercial deployment.