Operating Margin as AI Revenue

In the past 18 months we have seen fortune 500 companies pour unprecedented amounts of capital into AI initiatives. Investors rallied behind this capex expansion, but sooner or later will start to ask where the revenue is.

There are a few select companies that are taking this spending battle to an extreme… namely Google, Meta, OpenAI, Oracle, and few others. They are in their own league. A few steps below this league, there are still companies spending significant capital on AI and AI-led initiatives.

Investing in “AI” at a company can mean different things. It can mean building AI-led support, better marketing, or new features that increase the sales or retention of a product. All that to say, I don’t think “AI-driven revenue” will show up as a line item or metric in most companies 10-k’s.

For most companies, AI revenue will show up as an increase in Operating Margin. It will lead to better, and more profitable businesses.

This is showing up for companies who were ahead of the curve, like Robinhood. In Q4 of 23, Robinhood’s operating margin was** ~30%**. As of Q3 2025, Robinhood’s operating margin was 49.8%. During this same time, Vlad Tenev has said that investing in AI early has given them the ability to grow revenue 3x while reducing headcount by 27%. A masterclass in efficiency.

Robinhood is just a start. Google said that 25% of all code is now generated by AI, while Gemini has handled 40 million customer support sessions. JP Morgan has cited a $2b AI-related upside driven by their in-house “AI-Driven LLM Suite” that yields 4 hours of productivity per employee per week. Meta has stated that their AI tools for advertisers reached a $60b run rate.

AI is helping expand both sides of operating margin for these companies, and likely many more through the S&P 500.