[JCM9]

Good article although especially in tech it’s not so simple. Thanks to games with depreciation and other financial engineering a company may look “profitable” but still be quite unhealthy or at risk. One generally needs to look at “profit” in the context of cash flow.

I.e. a company could be “profitable” but also basically broke at the same time with no cash to pay people or suppliers.

[mbesto]

Also, "tech" and "AI" are not markets. A software provider that provides let's say CRM software may have very different operating margins than Tesla (automobiles), a hardware manufacturer (TSMC), a chip designer (NVIDIA), or a media company (Facebook). Yet these are all "tech" and "ai".

[jbs789]

Many lenses. I do like the authors focus on one. But you’re right it doesn’t tell the whole story.

Op margins are a great way to think about where one might see mean reversion, which then flows to net.

Ie are there structural reasons for the op income or is it a maturing sector which will attract new entrants.

[jddj]

It skews the other way just as often in my experience. That large clump at 10% has some wildly profitable businesses in it.

[PopAlongKid]

The comment you are responding to was "profitable but no cash flow" (due to non-cash deductions). I'm not clear what you mean by "the other way".