The Journal Entry
Posts
Profit, Signal, Noise

Profit, Signal, Noise

Why the same returns chart now holds AI labs and slot apps, and what financial reporting can't tell you about the difference.

Xavier Prospero
May 01, 2026

Profit, Signal, Noise

2 Min Read

Pull up a 2025 returns leaderboard. Sitting near the top: AI labs raising at numbers that would have been embarrassing to say out loud three years ago, GLP-1 drugmakers, and a handful of names selling shovels in the AI gold rush.

Sitting right next to them: DraftKings, Polymarket, and a long tail of crypto casinos.

Same scoreboard but two extremely different things going on underneath.

🧠 Fun fact: The global online gambling market is now worth roughly $90 billion a year. That's around three times bigger than the entire global recorded music industry.

The orthodox view

There's a pretty clean argument doing the rounds. The framing goes something like this: profit is a signal. It tells you that scarce resources have been allocated to something people valued enough to pay for. The bigger the profit, the louder the signal.

Capital flows to the loudest signals, the best allocators end up with more to allocate, and the playground sorts itself out faster than any central planner could.

The wrinkle

That argument works on one assumption: that the person handing over the money knows what they're buying. Software, medicine, energy, transport, those are reasonably easy to evaluate. You use it, it does the thing, you keep paying.

Online sportsbooks, prediction markets, slot apps and the meme-coin layer aren't really that. They're engineered around variable rewards, push notifications, deposits that clear in seconds, and a UX designed to keep you in the loop. What got priced in that exchange though, was attention being captured, oftentimes from people who couldn't afford to give it.

Capital, looking only at the income statement, can't tell the difference, and so capital is allocated. This creates a dangerous loop, whereby capital invested drives company-level returns, which attracts more capital, and so the cycle goes on and on.

Question is, does the consumer get real value or is this manipulation?

The Accounting Lens

This is where it gets interesting from our side of the desk. The Conceptual Framework, our fundamental education and knowledge tell us financial reporting exists to help capital providers make decisions about resource allocation.

What it doesn’t tell us is whether capital was allocated to something genuinely useful and impactful.

At the end of the day, revenue is revenue, and there’s no IFRS column for “the world is better off”.

The closest we’ve come is integrated reporting which looks at 6 capitals. The thing is, this looks more so at whether these capitals are created or eroded, and with these majorly successful (on a pure returns basis) companies it’s relatively easy to show a net positive in the increase of these capitals, even if the consumer is receiving no real utility.

It's also a long way from a full answer, because the measurement problem here goes well beyond the current measures.

The Bottom Line

The market is allocating capital exactly the way the textbooks describe, and the accounting is faithfully recording the result. Both are working off a scoreboard built to count what's countable. The thing worth sitting with for a moment is whether what we've been counting was ever quite the same thing as value, or just the closest proxy we had. For most of the last century, those two things were close enough that nobody had to think about it.

Until next week,
The Journal Entry

Find The Right Articles Program For You

The journey to those four letters CA(SA), is a long one, let’s not kid ourselves. We all know the high volume of coffee and library hours required to get there.

The last thing you want, is to spend your first working years at a firm that you don’t enjoy. You want to work somewhere that aligns with your specific skillset, because working in an environment you actually enjoy is important.

Aptihire helps students discover, apply for, and land their dream SAICA, SAIT & CIMA articles.

It is a free tool for students. It considers your unique personality and skills to provide tailored recommendations. This platform ensures you find a workplace where you can successfully turn your academic theory into practice.

Explore Aptihire here