What a model owes the people it predicts
If a system can guess what I will do before I do it, does it owe me a reason? A sample essay on prediction, explanation, and what we are entitled to ask of machines that decide things about us.
Writing · 06 notes
Writing
Notes on one company at a time: what the price implies, what the consensus may be missing, and what would change my mind. Now and then, an essay on a question that does not have a price.
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NVIDIA: pricing power in a capacity-constrained market
The debate is not about demand. It is about how long NVIDIA can keep gross margin above 70% while customers build alternatives. I walk through the three things that would have to break.
Costco: the membership fee is the business
Merchandise margin is close to zero by design. The fee is where the profit lives, and the renewal rate is the number that matters. A look at how much of the multiple that one line item supports.
JPMorgan: what scale buys you in banking
A fortress balance sheet is a slogan until you look at the technology budget. I try to separate the cyclical earnings from the structural ones and ask what a normal return on tangible equity looks like.
ASML: a monopoly with a backlog
The only supplier of EUV lithography is priced like one. The interesting question is how export controls and customer capex cycles interact with a multi-year order book.
Lockheed Martin: backlog as balance sheet
A $160B backlog is a form of visibility most companies would pay for. The question is what margin it converts at, and whether fixed-price development contracts keep taking bites out of it.
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