They're Lying To You About AI Profits
Let's get one thing straight. When Amazon boasts about a $9.5 billion windfall from its AI investment, you should feel your wallet for two reasons. First, to make sure it’s still there. Second, because you’re witnessing one of the greatest corporate magic tricks of our time. This isn’t profit. It's not cash. It’s a phantom number on a spreadsheet, a ghost in the financial machine designed to make you think the AI gold rush is paying off.
It ain’t.
Here’s the deal. Amazon’s Q3 profits supposedly jumped 38%. But peel back one layer of that onion and you’ll start crying. The headline you might have seen is that Amazon’s Anthropic investment boosts its quarterly profits by $9.5B. This gain, however, came from their stake in the AI darling Anthropic. Did Anthropic pay Amazon a dividend? Did Amazon sell its shares for a massive payday? Nope. Anthropic just raised more money at a ridiculous new valuation—$183 billion, apparently—and thanks to some fun little accounting rules, Amazon gets to "mark-to-market." This means they just re-value their own investment on paper and call it income.
It’s just creative accounting. No, that’s too generous—it’s a financial sleight of hand. It’s like your neighbor telling you he’s a millionaire because his collection of Beanie Babies was appraised for a million bucks on some sketchy website. He can’t pay his mortgage with them, but damn if it doesn’t look good on paper. Meanwhile, Amazon’s actual profit engine, AWS, pulled in $11.4 billion in operating profit. That’s real money from a real business. This $9.5 billion? It's a fantasy, designed to distract from the terrifying amount of cash they’re setting on fire. And boy, are they setting it on fire.
The Grunts on the Ground Tell the Real Story
While the suits in Seattle are playing with Monopoly money, the real story of AI is happening in the trenches. And it looks a lot less like a revolution and a lot more like a desperate, high-stakes sales pitch. In fact, The new hot job in AI: forward-deployed engineers is a role that sounds vaguely military, because it is.
These aren't just coders. They're corporate shock troops. OpenAI, Anthropic, Cohere—they're all hiring these people by the dozen. Their job is to embed themselves inside client companies, hold their hands, and basically force the AI models to do something useful. It’s a tacit admission that this "world-changing" technology is, off the shelf, a brilliant but hopelessly complicated mess. It’s a race car with no steering wheel. You need a specialist just to get it out of the garage.
Palantir, a company that knows a thing or two about military-style corporate jargon, pioneered this. They send in teams of two, an "Echo" and a "Delta," to figure out what the customer wants and then build it on-site. Give me a break. If your product is so revolutionary, why does it need a translator and a babysitter? The whole thing reminds me of those impossible-to-assemble IKEA desks, except this one costs millions of dollars and comes with a Swedish engineer who lives in your conference room for six months.
This FDE hiring spree, which is up over 800% this year, tells us everything we need to know. It tells us the AI isn't a simple tool but a complex project. It tells us that for every dollar a company spends on an AI license, they’re going to spend a hell of a lot more on the people needed to make it work. They're selling a dream of automation that requires more and more specialized humans to even function...
And what does this have to do with Amazon's funny money? Everything. Amazon is burning through actual cash at an alarming rate to build the infrastructure for this stuff. We're talking an $11 billion data center complex called "Project Rainier." We're talking a 55% jump in spending on property and equipment, to the tune of $35.1 billion in a single quarter. Their free cash flow has cratered, dropping 69% in a year.
So you see the game now? They distract you with the shiny, imaginary $9.5 billion paper gain over here, while they hemorrhage real dollars over there. All to build the plumbing for a technology so raw it needs an army of "forward-deployed" handlers to convince Fortune 500 companies it's not just a very expensive toy. How long can that charade possibly last? When does the paper value have to finally translate into, you know, actual value?
It's All Monopoly Money
Look, I'm not saying AI is nothing. But right now, the business of AI is not about creating value; it’s about creating valuation. It's a circular hype machine where massive investments justify insane valuations, which then appear as paper profits on an investor's balance sheet, which then justifies even more massive investment. Amazon didn't earn $9.5 billion. They just got a new, higher estimate on their lottery ticket. The problem is, they're spending all their real cash building a stadium for the lottery drawing, and nobody's offcourse sure if their number will ever be called.
