Charlie Munger said investing in a new textile loom was a terrible idea because the benefits would accrue to the customers rather than the investor. I wonder if the same is happening with AI CAPEX.

I've been reading Poor Charlie's Almanack while watching Reddit freak out (and then rejoice) about markets. Meanwhile my holdings (ADBE, FDS, CMCSA, THC, BRK-B, CB) have been doing well. Of course we know that Berkshire Hathaway is named for a textile company Buffett bought and came to regret. When someone asked whether to invest in a new loom to drive down costs, Munger said that it was a terrible idea. The benefits wouldn't go to the investor, but rather to the consumers. Buffett made the same point about airlines. What could be more wonderful than flying through the air on a whim? But add up all airline profits over their entire history and you get bupkis. Transformative technology and good investments are different things. The data that makes this concrete for AI: Microsoft fiscal 2024: true FCF fell 8.5% from $59.6B to $54.6B while revenue grew 18%. CapEx grew 79.6%. Operating cash flow grew 34.4%. Infrastructure spend is outrunning cash generation and there isn't enough AI monetization catching up. The revenue gap: covering current CapEx plans through AI-specific revenue would require roughly $2.5T per year in AI income. More than all of tech's combined revenue today. Actual current AI services revenue triangulated across multiple independent methodologies: roughly $150-220B annualized. About 6-9% of what's needed. The depth-of-use problem: only 10% of euro-area firms using AI report doing so intensively per the ECB. Average US executive uses AI 1.7 hours per week. 50% of UK businesses using AI pay nothing for it. Median firm AI spend per worker: $10.66 per month. The sharpest data point: token consumption is growing faster than revenue, meaning a meaningful share of usage is free-tier switching not monetized growth. A BIS economist estimates roughly a third of current AI CapEx may represent zero-sum competitive spending, companies poaching each other's users rather than expanding the market. True FCF yield by layer tells the whole story visually: compute leasers at -2.8% to -19.4%, hyperscalers at -0.5% to 1.9%, beaten-down SaaS at 5.8% to 8.0%. The companies the market thinks are being killed by AI are generating more cash per dollar than the companies building it. Full piece with the flow chart, the Google advertising exception, and the Munger conclusion here: [https://cavemanscreener.substack.com/p/bridges-to-nowhere-part-iv-a-lesson](https://cavemanscreener.substack.com/p/bridges-to-nowhere-part-iv-a-lesson) Disclosure: I own ADBE, FDS, CMCSA, THC, BRK-B, CB and a small starter position in ASML. The ASML position is a price-aware hedge against being wrong about who wins, not a reversal of the thesis. Microsoft and Amazon interrupted the rotation trade that had been gaining steam, but the growth that they're seeing in on the cloud/infrastructure side.