In AI, the 41% Depends on the -59%

Apollo's chief economist Torsten Slok published a chart-packed note breaking down AI profit margins by value-chain layer. The headline: profit margins are inverted in AI — the closer you get to the end user, the more money you lose.

The numbers

• Silicon & Equipment (Nvidia, AMD, Broadcom, TSMC, SK Hynix, Micron, etc.): +41% average margin
• Energy & Grid (Constellation Energy, Vistra, NextEra, Vertiv, Eaton): +17%
• Compute & Cloud (AWS, Azure, Google Cloud, CoreWeave, Super Micro, Dell): +10%
• Models & Applications (OpenAI, Anthropic): -59%

Those are equal-weighted averages from Bloomberg, PitchBook and the Financial Times (2Q 2026 estimates for OpenAI and Anthropic).

The dependency

The key insight: the 41% margins at the top are not being paid for by end-customer revenue. OpenAI and Anthropic are burning capital at a staggering rate, and that capital — not customer demand — is what funds the GPU purchases, data-center leases, and energy contracts that flow upstream.

In a normal business, profit flows from the entity that owns the customer relationship. In AI, the pricing power sits at the semiconductor and infrastructure layer, but those profits are ultimately subsidized by investors betting on future returns from the model layer.

Slok's conclusion: "The most profitable part of the AI value chain depends on the least profitable part continuing to grow revenue or raise capital."

Capital can bridge the gap "for a while, but not indefinitely." The risk, he says, is whether ROI shows up for AI's end customers fast enough to sustain the spending that's generating those upstream margins.

For AI engineers, this is a useful macro lens on the industry's fragility. The tooling you build on top of frontier models is only as stable as the venture capital funding that keeps those model providers alive. If OpenAI or Anthropic can't find ROI on their customer-facing products, the entire upstream supply chain resets.

Worth reading the original note for the full chart and data sources.