A very well-known evaluation metric in the technology and software industry—the "40 Rule"

In the software/tech industry, it is usually used that revenue growth rate + profit margin ≥ 40% to determine if a company is healthy.
And in this chart, because the companies are too strong, the ordinary "40 Rule" can no longer contain them, so the chart creator drew higher dashed boundary lines:
RULE OF 120 FRONTIER: The boundary where the sum of growth rate + profit margin reaches 120%.
RULE OF 160 FRONTIER: The top boundary where the sum of growth rate + profit margin reaches 160%.
Let's see which companies can maintain high profitability while achieving terrifying explosive growth?
First, understand the meaning of the axes:
Horizontal axis: Adjusted Operating Margin
Represents profitability.
The further to the right, the higher the company's earning efficiency, with net profit or operating profit margins being more substantial (for example, Nvidia, Visa are at extremely high levels around 70%).
Vertical axis: Year-over-Year Revenue Growth
Represents growth speed.
The higher up, the faster the company's business expansion in the most recent quarter.
1. Red circle area: $MU (Micron) and $SKhynix (SK Hynix), these two memory chip giants, have their vertical growth rates directly exceeding 200%.
These two companies' performance shows cyclical explosive growth combined with AI dividends, soaring to the top of the chart.
2. Green circle area: $PLTR (Palantir) is marked green alone, with the sum of its two data points reaching 145%, far surpassing the "Rule of 120" dashed line.
3. Other impressive giants: $NVDA (Nvidia) at 141%, located in the top right (approaching 70% profit margin and over 70% growth rate), with the sum reaching 141%.
Following are Samsung, Broadcom, TSMC, and others, which are also very strong, but compared to the previous companies, they are still slightly behind.