Claim on capacity
AI investment is becoming a material claimant on capital, electricity, infrastructure and productive capacity.
CAPITAL ALLOCATIONTHESIS I · SEPTEMBER 2026
The Three-Dimensional Economics of AI
Rethinking returns when capital, revenue and technological velocity are endogenous
The return on the next dollar depends on a moving system.
AI capital is committed across long physical and accounting lives while model and hardware frontiers can reset within months. This thesis examines what happens when capital, revenue and technological velocity become interdependent—and when the rate of technological change alters the economic life and prospective return of the investment itself.
Two clocks
The physical life of AI infrastructure can substantially exceed its competitive economic life.
Endogenous variables
Capital, revenue and technological velocity can evolve together rather than follow independent forecast paths.
TERAXYS TRACER™
Technological Rate-Adjusted Capital Expected Return evaluates the prospective return on marginal AI capital within that coupled system.
RIGHTS
This publication contains the proprietary TERAXYS TRACER™ framework and associated analytical expressions and diagrams. See the final PDF for the complete proprietary-frameworks and rights notice governing citation, reproduction, adaptation, implementation and commercial use.
NEXT FIELD