Take the margin apart

Investors do not want to hear that AI improved your margins. They want the margin taken apart.

A clean decomposition separates three things: gross margin before any AI cost, the inference and tooling spend the AI carries, and the net effect once that spend is in the denominator. Plenty of AI-driven margin stories quietly leave the model's own cost out of the maths.

The follow-up that catches people off guard: does the AI cost scale with usage, with revenue, or with neither? A model whose cost rises faster than the revenue it serves is a margin headwind wearing a tailwind's clothes.

Decompose it yourself first. The number that survives your own decomposition is the number you can defend in the room.

Noel Lam, Founder and Managing Director, VeriQ Standards. Personal capacity, public information only. See the method or a sample read.