Aswath Damodaran said big tech's AI spending is not his concern; the lack of a stated business model is. He argued the Mag 7, except Apple, have become capital-intensive manufacturing companies, and investors must now judge them on returns on invested capital versus cost of capital. He said the companies likely don't know their AI business model and should be transparent, as markets fill vacuums with skepticism. He flagged that most AI revenue is intracompany, not from end users, and that architecture should be 10-20% of revenue, not 80%. He called the AI buildout overinvestment driven by fear of being left behind, and said he is uneasy. He noted China's LLM token share rose from 8% in January 2025 to over 50%, and that China is targeting the low-margin, high-scale AI market. He said he can live with current valuations, and that debt is manageable at 1.5 times EBITDA.
| Figure | What it refers to | Type | At |
|---|---|---|---|
| 70, 80, 90% | Returns on invested capital for big tech five years ago | metric | 8:07 |
| 8% | China's share of LLM tokens in January 2025 | metric | 37:30 |
| 50% | China's current share of LLM tokens | metric | 37:30 |
| 20% | Acceptable write-down in his big tech investments | other | 49:51 |
| $6,000 an hour | Price Anthropic charges for its products and services | price | 39:20 |
| 10, 15, 20% | Healthy share of revenue from architecture in a business | metric | 18:48 |
| 80% | Share of SpaceX's value tied to xAI story | metric | 54:54 |
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Sign in to read the full transcriptElson, E. (2026, August 7). Aswath Damodaran: Big Tech Has No Idea How AI Pays Off [Interview transcript]. Prof G Markets. CEOInterviews.AI. https://ceointerviews.ai/interview/3003254/
Ed Elson. "Aswath Damodaran: Big Tech Has No Idea How AI Pays Off." Prof G Markets, 7 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3003254/.
@misc{elson2026_3003254,
author = {Ed Elson},
title = {Aswath Damodaran: Big Tech Has No Idea How AI Pays Off},
howpublished = {Interview transcript, Prof G Markets. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/3003254/},
note = {Speaker-attributed transcript with timestamps}
}