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The True Cost of AI Hidden in Big Tech's Financials
Investor summaryBearish
Big Tech's reported FCF is inflated because cash is wasted on buybacks to offset Share-Based Compensation (SBC) costs tied to AI.
Bear points
- Reported FCF is artificially inflated as cash is used for buybacks to offset Share-Based Compensation (SBC).
- The true financial cost of AI talent is hidden in SBC, making current company valuations misleading.
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Post body
I watched this video couple of times and i think i finally got it.
https://www.youtube.com/watch?v=YrJzjC4kKCY
The FCF reported often gets wasted into Share Based Comp costs, because they use the Cash to buy backs shares that they are giving out as part of the pay package. Something to watch out for when Valuing a company.
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