Answering the AI Gross Margin Debate: Terminal EBITDA Margin as the Real Measure of Long-Term Monopoly Power

The article examines the debate over low/negative gross margins in AI companies, arguing that gross margin alone is a poor predictor of long-term business viability. The author contends that terminal EBITDA margin—and whether companies build defensible competitive advantages—matters far more than current gross margins, with sustainable free cash flow generation ultimately determining long-term value creation.