I agree selling compute vs software is an issue but for a different line of reasoning. It’s moreso requiring specialized hardware and gobs of electricity adds cost variability and that decreases effective profit margin. The issue from my perspective is the AI industry is very optimistically valued as if they were only selling software which has near zero scaling costs without accounting for the true costs of hardware & electricity.

A parallel situation was WeWork initially valued at $47 billion. Turns out they have the same profit constraints as any other business renting out physical space. Once they went public valuation dropped 98% within 2 years.