Gurley says cloud credit investments are definitively low quality revenue despite auditor approval.
“From the big company players' side, I would just say definitively, this could get me in trouble, but This is flat out low quality revenue.”
Gurley argues cloud providers may inflate AI valuations by overbidding to win investment deals and gain market share.
“And so all of a sudden, like, you know, you've got definitive proof that the way you would win the war and and and you get another benefit, you get revenue, you get market share.”
Gurley warns AI companies with cloud credits may price services at negative gross margins without realizing it.
“So I believe that once you have these credits inside your company, somebody is certainly gonna make the argument, right?”
Gurley argues cloud GPU hosting is a commodity service, making credit-based investments questionable.
“Here's another here's a way to really drill in on that, you know, going back to Ultra Hosting Company. Let's assume for the sake of this discussion that the service being provided is a commodity.”