1 00:00:03,200 --> 00:00:07,200 Speaker 1: Media. What's up? It's better offline and I'm your host 2 00:00:07,400 --> 00:00:22,320 Speaker 1: ed Zetron It's your better offline monologue for the week, folks. 3 00:00:22,360 --> 00:00:24,200 Speaker 1: Has been a long few months, and I've taken the 4 00:00:24,280 --> 00:00:27,560 Speaker 1: vast majority of this week after recovery, after writing about 5 00:00:27,840 --> 00:00:30,480 Speaker 1: h two hundred thousand words in the last few months, 6 00:00:30,520 --> 00:00:32,800 Speaker 1: not even including my upcoming book, The Hater's Guide to 7 00:00:32,800 --> 00:00:35,479 Speaker 1: Silicon Valley, coming out in twenty twenty seven. If you 8 00:00:35,520 --> 00:00:37,400 Speaker 1: want to support my work, I'm currently doing a week 9 00:00:37,440 --> 00:00:39,800 Speaker 1: long sale for the premium newsletter ten bucks off the 10 00:00:39,840 --> 00:00:43,199 Speaker 1: annual rate for life. That'll be in the notes. Please do. 11 00:00:43,440 --> 00:00:45,920 Speaker 1: If you feel like supporting me, do that. New's learned. 12 00:00:45,960 --> 00:00:49,200 Speaker 1: The podcast are now my by principal source of income. 13 00:00:49,280 --> 00:00:51,720 Speaker 1: It's happened. The era of smiles has begun. Join me 14 00:00:51,760 --> 00:00:54,560 Speaker 1: and receive the bounties of words every week except this one, 15 00:00:54,560 --> 00:00:57,240 Speaker 1: and I take it the week off. So let's begin, 16 00:00:57,320 --> 00:00:59,240 Speaker 1: And I wanted to start by saying how you the 17 00:00:59,280 --> 00:01:02,280 Speaker 1: listener might help me. First of all, my signal is 18 00:01:02,320 --> 00:01:05,360 Speaker 1: Ezitron dot seventy six. The things I'm looking for right 19 00:01:05,400 --> 00:01:08,160 Speaker 1: now that would help me are anthropics S one or 20 00:01:08,200 --> 00:01:11,160 Speaker 1: any and all documentation of its cloud spend and financial condition. 21 00:01:11,360 --> 00:01:13,920 Speaker 1: Especially if you can get me something from Amazon Web 22 00:01:14,000 --> 00:01:16,480 Speaker 1: Services or Google Cloud that shows me how much this 23 00:01:16,520 --> 00:01:19,200 Speaker 1: company is spending. That'd be very very helpful to me, 24 00:01:19,800 --> 00:01:22,560 Speaker 1: as would any and all information about the AI revenues 25 00:01:22,600 --> 00:01:25,800 Speaker 1: of any major tech company that aren't public knowledge, and 26 00:01:25,880 --> 00:01:28,319 Speaker 1: any and all information about the cloud spend of open Ai, 27 00:01:28,440 --> 00:01:31,840 Speaker 1: Anthropic Perplexity, or any other major AI startup, and of 28 00:01:31,880 --> 00:01:34,360 Speaker 1: course any of the financials of any AI startup. You 29 00:01:34,400 --> 00:01:36,880 Speaker 1: can get me the same ghosts with token spend at 30 00:01:36,920 --> 00:01:41,680 Speaker 1: any corporation. Please use signal, Please take photos of any documents. 31 00:01:41,720 --> 00:01:44,080 Speaker 1: Do not send me PDFs. Do not send me documents 32 00:01:44,080 --> 00:01:46,400 Speaker 1: for your safety, m for mine, and please please please 33 00:01:46,440 --> 00:01:48,520 Speaker 1: do not send me stuff that's already public. This isn't 34 00:01:48,560 --> 00:01:51,240 Speaker 1: because I'm chiding you. I'm just saying people get excited 35 00:01:51,280 --> 00:01:52,800 Speaker 1: that they want to help and they send me stuff 36 00:01:52,800 --> 00:01:56,160 Speaker 1: that's already out there. I've probably already seen it. I'm 37 00:01:56,200 --> 00:01:59,080 Speaker 1: a freak. I'm looking at this stuff all day. All right, folks, 38 00:01:59,120 --> 00:02:02,400 Speaker 1: let's roll to the actar monologue. So earlier in the week, 39 00:02:02,440 --> 00:02:04,480 Speaker 1: I put out a fifteen thousand word piece called the 40 00:02:04,480 --> 00:02:07,360 Speaker 1: Open Ai Bubble, a massive guide to how open ai 41 00:02:07,480 --> 00:02:11,200 Speaker 1: is the cause, enabler, and justification for the entire AI bubble. 42 00:02:11,200 --> 00:02:14,240 Speaker 1: Writ large and how everything kind of collapses when it dies. 43 00:02:15,160 --> 00:02:16,919 Speaker 1: I wrote it because I've heard a lot of people 44 00:02:16,960 --> 00:02:19,680 Speaker 1: say it's an open ai bubble, not an AI bubble 45 00:02:19,680 --> 00:02:21,639 Speaker 1: over the last year, as a way of waving off 46 00:02:21,680 --> 00:02:25,160 Speaker 1: potential detractors suggesting that open ai could collapse and everything 47 00:02:25,160 --> 00:02:28,000 Speaker 1: else would be left behind him. Fine, you're living at 48 00:02:28,000 --> 00:02:30,000 Speaker 1: a bubble yourself if you think this way, that's a 49 00:02:30,080 --> 00:02:32,720 Speaker 1: crazy way to live one's life. And please, please please 50 00:02:32,760 --> 00:02:34,919 Speaker 1: stop emailing me about the bailout. I already I've gone 51 00:02:34,919 --> 00:02:38,079 Speaker 1: over the summits anyway. In truth, open ai is the 52 00:02:38,160 --> 00:02:41,200 Speaker 1: largest consumer of AI compute accounts for over eight hundred 53 00:02:41,200 --> 00:02:45,080 Speaker 1: billion dollars of remaining performance obligations across hyperscalars and neo clouds. 54 00:02:45,200 --> 00:02:48,000 Speaker 1: The people that rent how ai GPUs and basically just 55 00:02:48,040 --> 00:02:51,320 Speaker 1: exist a funnel Nvidia money, and likely over one hundred 56 00:02:51,360 --> 00:02:55,120 Speaker 1: billion dollars the future revenues of Broadcom and Nvidia themselves. 57 00:02:55,720 --> 00:02:57,520 Speaker 1: I go into detail about it in the piece, but 58 00:02:57,560 --> 00:02:59,720 Speaker 1: I kind of wanted to go over it a little 59 00:02:59,720 --> 00:03:03,280 Speaker 1: today in today's monologue two. Open ai is also a 60 00:03:03,320 --> 00:03:06,440 Speaker 1: material risk to both soft Bank and Oracle. If open 61 00:03:06,480 --> 00:03:08,760 Speaker 1: Ai can't go public, soft Bank is going to face 62 00:03:08,760 --> 00:03:12,400 Speaker 1: a massive liquidity crisis. It has forty five point nine 63 00:03:12,480 --> 00:03:15,280 Speaker 1: billion dollars in debt and matures within the next twelve months, 64 00:03:15,360 --> 00:03:17,720 Speaker 1: and they'll either have to refinance it or pay it. 65 00:03:18,440 --> 00:03:20,560 Speaker 1: Except that's going to be much more difficult because they've 66 00:03:20,600 --> 00:03:24,079 Speaker 1: jettisoned most of its valuable stocks in t mobile and 67 00:03:24,120 --> 00:03:26,400 Speaker 1: in video, all while pushing up against the limits of 68 00:03:26,400 --> 00:03:28,360 Speaker 1: what it can borrow against its holdings in the chip 69 00:03:28,360 --> 00:03:31,760 Speaker 1: maker arm which it bought I think think twenty twenty 70 00:03:31,800 --> 00:03:34,000 Speaker 1: three for thirty two billion dollars. It went public at 71 00:03:34,040 --> 00:03:36,280 Speaker 1: fifty billion dollars, but the holdings are worth one hundreds 72 00:03:36,320 --> 00:03:40,800 Speaker 1: of billions of dollars. Except that's kind of a problem, 73 00:03:40,920 --> 00:03:43,000 Speaker 1: which I'll get to in a minute. But soft Bank 74 00:03:43,040 --> 00:03:46,120 Speaker 1: will never truly go bankrupt. That doesn't mean it's not 75 00:03:46,200 --> 00:03:48,720 Speaker 1: a problem if open ai fails, because it will be 76 00:03:48,760 --> 00:03:51,400 Speaker 1: put in a historic crisis, one worse than the dot 77 00:03:51,440 --> 00:03:55,680 Speaker 1: com bubble, if where Masayoshi's done to bet everything like GeoCities, 78 00:03:55,960 --> 00:03:57,880 Speaker 1: and even the horrors of twenty twenty two and twenty 79 00:03:57,960 --> 00:04:00,400 Speaker 1: twenty three when the Vision Funds had lost is of 80 00:04:00,400 --> 00:04:03,760 Speaker 1: what thirty two billion dollars. Back then, soft Bank had 81 00:04:03,760 --> 00:04:06,160 Speaker 1: plenty of other valuable stock and ways to raise debt. 82 00:04:06,720 --> 00:04:09,080 Speaker 1: They had the Ala Barber stock, They had their holdings 83 00:04:09,120 --> 00:04:12,200 Speaker 1: in Betfair and other things like that, except most of 84 00:04:12,200 --> 00:04:14,520 Speaker 1: that is gone now. And now S and P Global 85 00:04:14,600 --> 00:04:18,000 Speaker 1: is downgraded its outlook to negative, which means they think 86 00:04:18,040 --> 00:04:20,719 Speaker 1: they might actually downgrade its credit in the future. And 87 00:04:20,800 --> 00:04:23,719 Speaker 1: just to be clear, they specify that the reason that 88 00:04:23,839 --> 00:04:27,120 Speaker 1: S and P did that was open ai. They said 89 00:04:27,120 --> 00:04:31,160 Speaker 1: the words, they literally said it was the case. Except now, 90 00:04:31,279 --> 00:04:33,000 Speaker 1: what the hell is soft Bank meant to do? It 91 00:04:33,000 --> 00:04:35,240 Speaker 1: doesn't have anything else to flog really, other than it's 92 00:04:35,360 --> 00:04:38,080 Speaker 1: arm stock. And the problem there is that soft Bank 93 00:04:38,160 --> 00:04:41,360 Speaker 1: is the largest holder of armstock in the world, which 94 00:04:41,400 --> 00:04:44,120 Speaker 1: makes it difficult for it to liquidate too much without 95 00:04:44,120 --> 00:04:46,240 Speaker 1: spooking the market. Think of it like this. If the 96 00:04:46,320 --> 00:04:48,200 Speaker 1: largest holder of a stock says, oh, I'm just going 97 00:04:48,279 --> 00:04:51,440 Speaker 1: to start selling it off for liquidity, it officially stops 98 00:04:51,440 --> 00:04:54,040 Speaker 1: being about the stock in question, but the company's selling it. 99 00:04:54,279 --> 00:04:56,320 Speaker 1: The value of arm will turn into a bet on 100 00:04:56,320 --> 00:04:58,760 Speaker 1: whether soft Bank can afford to pay its own bills. 101 00:04:59,520 --> 00:05:01,719 Speaker 1: It's already taking out a bunch of margin loans on 102 00:05:01,760 --> 00:05:04,120 Speaker 1: the stock and further lands will be difficult to raise 103 00:05:04,160 --> 00:05:07,359 Speaker 1: for the very same reason. While it would be likely 104 00:05:07,440 --> 00:05:10,800 Speaker 1: rescued by the Bank of Japan and other local financial institutions, 105 00:05:10,839 --> 00:05:14,039 Speaker 1: there has never been a more dangerous time for Masayoshi's son. 106 00:05:14,520 --> 00:05:16,800 Speaker 1: Check out my hater's guide to SoftBank. I know it's 107 00:05:16,839 --> 00:05:18,840 Speaker 1: a premium thing, but there's a deal going on. It's 108 00:05:18,839 --> 00:05:21,600 Speaker 1: a beautiful deal. I stopped doing the Trump impression now 109 00:05:21,720 --> 00:05:25,279 Speaker 1: and get onto one of his friends, Oracle Now. In 110 00:05:25,320 --> 00:05:28,880 Speaker 1: Oracles case, its entire future rides and open AI's ability 111 00:05:28,880 --> 00:05:30,880 Speaker 1: to pay it about seventy billion dollars a year in 112 00:05:30,960 --> 00:05:34,159 Speaker 1: annual revenue, and that rides on Oracle's ability to build 113 00:05:34,160 --> 00:05:36,880 Speaker 1: about seven point one gigawats or so of data sene 114 00:05:36,920 --> 00:05:41,960 Speaker 1: capacity in the next two or three years. I'm not kidding, 115 00:05:42,000 --> 00:05:45,719 Speaker 1: it's genuinely that's that's what they need to do. Oracle 116 00:05:45,720 --> 00:05:48,200 Speaker 1: and open Ai have a three hundred billion dollar contract 117 00:05:48,240 --> 00:05:50,920 Speaker 1: that's meant to have started on June first, twenty twenty six, 118 00:05:51,120 --> 00:05:53,640 Speaker 1: which said revenue coming from the Stargate data sentence, the 119 00:05:53,640 --> 00:05:57,600 Speaker 1: Oracle is building for Clammy Sammy. That's right, mister Ortmand Clamuel. 120 00:05:57,960 --> 00:06:01,479 Speaker 1: We don't like him. The problem, of course, is the 121 00:06:01,520 --> 00:06:04,520 Speaker 1: seven point one gigawats of capacity needs to be built, 122 00:06:04,520 --> 00:06:07,560 Speaker 1: and barely four hundred megawats of it actually exist. And 123 00:06:07,920 --> 00:06:10,240 Speaker 1: that's in stockg Abilene, a project that broke ground in 124 00:06:10,240 --> 00:06:12,159 Speaker 1: the middle of twenty twenty four and was meant to 125 00:06:12,160 --> 00:06:14,040 Speaker 1: be done either the end of last year or a 126 00:06:14,160 --> 00:06:17,839 Speaker 1: couple of weeks ago. And everything I hear from the 127 00:06:17,880 --> 00:06:20,640 Speaker 1: people inside Oracle is that they keep firing all the 128 00:06:20,680 --> 00:06:23,920 Speaker 1: people who know other fucking business works. It's a terrible 129 00:06:23,960 --> 00:06:29,080 Speaker 1: thing for them. Oh and another thing is that Oracle 130 00:06:29,120 --> 00:06:31,359 Speaker 1: literally warned in its anal report that it may or 131 00:06:31,480 --> 00:06:33,719 Speaker 1: may not get paid by open AI, and that said 132 00:06:33,800 --> 00:06:36,279 Speaker 1: nonpayment would potentially also mean that it couldn't leasse the 133 00:06:36,320 --> 00:06:39,279 Speaker 1: GPU capacity to anyone else, as in no one else 134 00:06:39,320 --> 00:06:41,360 Speaker 1: really exists. They could buy it, and if they did 135 00:06:41,400 --> 00:06:43,760 Speaker 1: manage to sell it to them be a massive loss. 136 00:06:44,600 --> 00:06:47,599 Speaker 1: Is that good? Also? Tell me is it good that 137 00:06:47,720 --> 00:06:52,440 Speaker 1: S and P Global also downgraded Oracle just one step 138 00:06:52,880 --> 00:06:56,279 Speaker 1: above junk grade? They're barely investment grade credit wise for 139 00:06:56,360 --> 00:07:00,240 Speaker 1: now for all, an angel status aren't incoming. Maybe on 140 00:07:00,240 --> 00:07:02,760 Speaker 1: that means another monologue you don't really care. Let's get 141 00:07:02,800 --> 00:07:07,320 Speaker 1: to the funny stuff though. Larry Ellison, CEO of sorry 142 00:07:07,440 --> 00:07:10,200 Speaker 1: Chairman of Oracle CEO is currently two different mister Bean 143 00:07:10,200 --> 00:07:13,240 Speaker 1: type characters. He's also used three hundred and forty six 144 00:07:13,280 --> 00:07:15,920 Speaker 1: million of his one point one six billion Oracle shares 145 00:07:15,960 --> 00:07:18,760 Speaker 1: for an estimated twenty one billion dollars of margin loans 146 00:07:18,800 --> 00:07:21,360 Speaker 1: personal ones, just to be clear. Otherwise, he has about 147 00:07:21,400 --> 00:07:23,800 Speaker 1: ten billion dollars in cash and fifteen billion dollars in 148 00:07:23,840 --> 00:07:26,680 Speaker 1: Tesla shares. Why do you care about that? Well, this 149 00:07:26,720 --> 00:07:29,320 Speaker 1: is material because he also has to contra up about 150 00:07:29,320 --> 00:07:32,760 Speaker 1: twenty billion dollars in cash actual cash to push through 151 00:07:32,760 --> 00:07:35,920 Speaker 1: the paramount Warner Brothers deal by September thirtieth. Otherwise, he 152 00:07:35,960 --> 00:07:38,440 Speaker 1: gets find about five hundred and six hundred million dollars 153 00:07:38,480 --> 00:07:41,520 Speaker 1: a quarter, and to do so, regardless of whether it happens, 154 00:07:42,040 --> 00:07:44,360 Speaker 1: whether it's stopped by then, or whether it's meant to 155 00:07:44,400 --> 00:07:46,720 Speaker 1: go through, he's likely going to have to take out 156 00:07:46,800 --> 00:07:49,920 Speaker 1: further margin loans on his Oracle stock, And depending on 157 00:07:49,920 --> 00:07:52,040 Speaker 1: how said stock is doing, getting that loan might be 158 00:07:52,080 --> 00:07:55,160 Speaker 1: quite problematic. I think had just said problematic, but I'm 159 00:07:55,160 --> 00:08:12,280 Speaker 1: just going to keep on going. So to explain A 160 00:08:12,360 --> 00:08:14,680 Speaker 1: margin loan works by offering up a certain amount of 161 00:08:14,680 --> 00:08:17,080 Speaker 1: shares is collateral a little like a mortgage. So if 162 00:08:17,120 --> 00:08:19,520 Speaker 1: you are taken out a twenty five percent loan to 163 00:08:19,600 --> 00:08:22,600 Speaker 1: value loan for one billion dollars, you'd offer up about 164 00:08:22,640 --> 00:08:24,840 Speaker 1: two hundred and fifty million dollars in stock, maybe a 165 00:08:24,840 --> 00:08:27,640 Speaker 1: little more depending on how volatile it is. When the 166 00:08:27,680 --> 00:08:30,120 Speaker 1: value of said stock drops below a certain amount, you 167 00:08:30,200 --> 00:08:32,839 Speaker 1: get forced to do something called a margin core, while 168 00:08:32,840 --> 00:08:35,120 Speaker 1: a margin call happens to our main, where you're forced 169 00:08:35,120 --> 00:08:37,640 Speaker 1: to either proffer up more cash to cover the shortfall, or, 170 00:08:37,679 --> 00:08:40,880 Speaker 1: far more likely, in Ellison's case, give up more Oracle stock. 171 00:08:41,960 --> 00:08:44,840 Speaker 1: The problem that Ellison faces is the very same one 172 00:08:44,880 --> 00:08:48,000 Speaker 1: that SoftBank has with Arm. He owns forty percent of 173 00:08:48,040 --> 00:08:51,439 Speaker 1: Oracle shares, which means that liquidating them would be very difficult. 174 00:08:51,559 --> 00:08:55,120 Speaker 1: If he started selling them off, the market would say, oh, Christ, 175 00:08:55,160 --> 00:08:58,240 Speaker 1: is he going to sell his forty percent holdings in Oracle? Sell? 176 00:08:58,400 --> 00:09:01,320 Speaker 1: Sell it all? The Piss index is crashing. And to 177 00:09:01,360 --> 00:09:04,200 Speaker 1: make that as worse, he's collateralized over fifty billion dollars 178 00:09:04,240 --> 00:09:06,720 Speaker 1: worth of Oracle shares the ones I mentioned earlier, which 179 00:09:06,720 --> 00:09:09,439 Speaker 1: means that if Oracle stock drops below, say I don't 180 00:09:09,480 --> 00:09:13,160 Speaker 1: know sixty dollars a share, He'll be put in a 181 00:09:13,200 --> 00:09:15,839 Speaker 1: vicious cycle where he'll either have to hand over more 182 00:09:15,880 --> 00:09:18,720 Speaker 1: and more shares to cover the shortfall, or worse, still 183 00:09:19,360 --> 00:09:22,120 Speaker 1: have to sell them to keep up. Hey, hey, stop laughing, 184 00:09:22,400 --> 00:09:25,560 Speaker 1: stop it, stop laughing. Mister Ellison is in real trouble. 185 00:09:25,640 --> 00:09:28,600 Speaker 1: Larry Ellison could be in a real pickle. Stop it. 186 00:09:29,200 --> 00:09:33,240 Speaker 1: I just kid and fuck Larry Ellison anyway. The worst 187 00:09:33,320 --> 00:09:36,200 Speaker 1: part is that open ai doesn't even have to collapse 188 00:09:36,240 --> 00:09:39,400 Speaker 1: for this to happen. The AI bubble isn't based on 189 00:09:39,400 --> 00:09:44,520 Speaker 1: anyone's actual revenues, productivity or ROI. No Hyperscala actually reports 190 00:09:44,520 --> 00:09:48,400 Speaker 1: their AI revenues, Oracle kind of bundles them within OCI 191 00:09:48,520 --> 00:09:52,800 Speaker 1: their infrastructure bucket, and outside of open Ai and Anthropic 192 00:09:52,880 --> 00:09:56,040 Speaker 1: the industry is actually incredibly small revenue wise, very loud 193 00:09:56,080 --> 00:09:59,640 Speaker 1: and annoying, though the markets have conflated akapex bubble as 194 00:09:59,679 --> 00:10:02,480 Speaker 1: in GPUs and the surrounding gear for data centers with 195 00:10:02,559 --> 00:10:05,040 Speaker 1: a thriving AI industry, which is a nice way of 196 00:10:05,080 --> 00:10:08,600 Speaker 1: saying that the current slate of prices for Microsoft, Google, Amazon, 197 00:10:08,640 --> 00:10:12,000 Speaker 1: Meta and Oracle and their current AI focused bumps are 198 00:10:12,000 --> 00:10:16,439 Speaker 1: based on vibes, and mania vibes can break mania subsides. 199 00:10:17,160 --> 00:10:19,520 Speaker 1: All it takes for things to go pair shaped is 200 00:10:19,520 --> 00:10:23,240 Speaker 1: for the market to believe, to become convinced that Oracle 201 00:10:23,280 --> 00:10:26,079 Speaker 1: won't get paid by open Ai for them to start 202 00:10:26,160 --> 00:10:29,000 Speaker 1: dumping the stock. All they have to believe is that 203 00:10:29,120 --> 00:10:32,880 Speaker 1: all of that capex, all of that negative cash flow 204 00:10:34,040 --> 00:10:37,160 Speaker 1: is just for nothing, is for a company that either 205 00:10:37,200 --> 00:10:40,520 Speaker 1: won't exist or won't be able to actually afford all 206 00:10:40,520 --> 00:10:42,280 Speaker 1: of that data center capacity. Every time I say this 207 00:10:42,320 --> 00:10:46,320 Speaker 1: out loud, I feel crazy. The biggest myth though about 208 00:10:46,360 --> 00:10:49,640 Speaker 1: Oracle is that it's this healthy, profitable business and that 209 00:10:49,720 --> 00:10:52,880 Speaker 1: this AI thing is just yet more good stuff that 210 00:10:52,880 --> 00:10:56,480 Speaker 1: they've added on top, when in fact, every other business 211 00:10:56,520 --> 00:11:00,280 Speaker 1: segment other than renting out aigpus is either plat code 212 00:11:00,440 --> 00:11:04,440 Speaker 1: or in active decline, meaning that Oracle's entire future rides 213 00:11:04,480 --> 00:11:07,200 Speaker 1: and whether it can monetize its fin doom relationship with 214 00:11:07,280 --> 00:11:13,400 Speaker 1: Nvidia and Jensen Wong and really Oracle's story is fundamentally insane. 215 00:11:13,480 --> 00:11:17,079 Speaker 1: Right now, It's spending three hundred and forty billion dollars 216 00:11:17,160 --> 00:11:20,280 Speaker 1: or more on AI data center capacity for one client 217 00:11:20,559 --> 00:11:23,160 Speaker 1: Open AI in the hopes that open Ai can bring 218 00:11:23,200 --> 00:11:25,840 Speaker 1: it seventy billion dollars a year in revenue for a 219 00:11:25,840 --> 00:11:28,440 Speaker 1: contract that began a month ago, except most of the 220 00:11:28,480 --> 00:11:31,719 Speaker 1: capacity is barely under construction, and because data centers take 221 00:11:31,760 --> 00:11:34,440 Speaker 1: eighteen to thirty six months to build, it's unlikely that 222 00:11:34,480 --> 00:11:36,880 Speaker 1: more than a single gigawatt will be ready before the 223 00:11:36,880 --> 00:11:40,440 Speaker 1: beginning of twenty twenty eight, if at all, building this 224 00:11:40,480 --> 00:11:43,600 Speaker 1: capacity is costly. An Oracle's cash flow has been negative 225 00:11:43,640 --> 00:11:46,360 Speaker 1: twenty billion dollars or worse for the last two quarters, 226 00:11:46,400 --> 00:11:49,480 Speaker 1: with plans to spend another ninety billion dollars in the 227 00:11:49,520 --> 00:11:53,800 Speaker 1: next fiscal year, which just begun in June. The twenty 228 00:11:53,800 --> 00:11:55,920 Speaker 1: two thousand people that it laid off in the past 229 00:11:55,960 --> 00:11:59,320 Speaker 1: six months were based on discussions with many sources load 230 00:11:59,320 --> 00:12:02,160 Speaker 1: bearing parts of it's infrastructure, throwing parts of the business 231 00:12:02,160 --> 00:12:05,920 Speaker 1: into active chaos and genuinely causing problems with renewals for 232 00:12:05,960 --> 00:12:10,280 Speaker 1: its Oracle database products that are the cornerstone of how 233 00:12:10,920 --> 00:12:14,720 Speaker 1: Larry Ellison's heart beats. I don't know what to say. 234 00:12:14,960 --> 00:12:17,439 Speaker 1: I don't know. I am just a guy. Why am 235 00:12:17,520 --> 00:12:20,360 Speaker 1: I the one that found this? It's sitting in broad daylight. 236 00:12:20,440 --> 00:12:23,880 Speaker 1: Maybe people just don't do mathematics. I don't know, but 237 00:12:23,960 --> 00:12:28,200 Speaker 1: this is this is quite bad. And the point I'm making, though, 238 00:12:28,280 --> 00:12:30,720 Speaker 1: just to simplify, is that for me to be wrong, 239 00:12:31,240 --> 00:12:33,720 Speaker 1: open ai will have to bring in hundreds of billions 240 00:12:33,720 --> 00:12:37,120 Speaker 1: of dollars a year in revenue for themselves by twenty three, 241 00:12:37,600 --> 00:12:41,720 Speaker 1: which will require it to become either profitable massively profitable 242 00:12:41,720 --> 00:12:43,760 Speaker 1: too like not just like a little bit of a 243 00:12:43,800 --> 00:12:47,640 Speaker 1: bit the profitability I mean twenty thirty forty billion dollars 244 00:12:47,679 --> 00:12:51,760 Speaker 1: a year plus or just continually raise money. I'm talking 245 00:12:51,880 --> 00:12:54,840 Speaker 1: hundreds of billions of dollars a year, and no, no 246 00:12:54,960 --> 00:12:57,960 Speaker 1: government bailout will cover the shortfall. The government's talking about 247 00:12:58,000 --> 00:13:00,720 Speaker 1: five percent share be forty two billion dollars. That won't 248 00:13:00,760 --> 00:13:03,400 Speaker 1: even cover their fucking influence costs if they lasted twenty 249 00:13:03,440 --> 00:13:08,880 Speaker 1: twenty seven. It's a joke. Oh and by the way, 250 00:13:09,480 --> 00:13:12,160 Speaker 1: even if open ai does that, Oracle will have to 251 00:13:12,280 --> 00:13:15,959 Speaker 1: complete the single most ambitious construction project of all time, 252 00:13:16,280 --> 00:13:20,120 Speaker 1: building enough power to power multiple cities, erecting giant data 253 00:13:20,160 --> 00:13:23,600 Speaker 1: centers in multiple states, make them fully operational with far 254 00:13:23,679 --> 00:13:26,000 Speaker 1: less people than the shortage of both talent and the 255 00:13:26,000 --> 00:13:29,559 Speaker 1: core materials like electrical grade steel and also do so 256 00:13:29,679 --> 00:13:31,520 Speaker 1: on a timeline that doesn't put it in breach of 257 00:13:31,559 --> 00:13:36,079 Speaker 1: contract with open AI. Would it shock you if I 258 00:13:36,200 --> 00:13:39,680 Speaker 1: told you that this is considered radical thinking? Would you 259 00:13:39,760 --> 00:13:42,880 Speaker 1: be surprised if I told you that many journalists simply 260 00:13:42,920 --> 00:13:45,120 Speaker 1: shrug when you tell them this, and they go, they'll 261 00:13:45,120 --> 00:13:48,080 Speaker 1: work it out, they'll work it out, It'll all work out, 262 00:13:48,360 --> 00:13:51,040 Speaker 1: it'll work out. Don't worry about it. Ed, you're crazy 263 00:13:51,080 --> 00:13:53,600 Speaker 1: head Ed. Why are you outside my office? Why are 264 00:13:53,600 --> 00:13:55,439 Speaker 1: you dressed as a dug? Why do you keep saying 265 00:13:55,720 --> 00:13:59,600 Speaker 1: I'm the deterioration dug. Quack quack quack, the market's going 266 00:13:59,640 --> 00:14:01,719 Speaker 1: to hell? And the answer is that's a bit I'm 267 00:14:01,760 --> 00:14:04,760 Speaker 1: working on that I'll go to later. In any case, 268 00:14:04,800 --> 00:14:07,160 Speaker 1: I am kidding, and I do need to say. The 269 00:14:07,200 --> 00:14:10,240 Speaker 1: future really is one strewn with chaos and carcasses, and 270 00:14:10,240 --> 00:14:12,760 Speaker 1: I'm not sure the world is actually ready for it, 271 00:14:12,800 --> 00:14:15,400 Speaker 1: thanks to a captured media industry that refuses to do 272 00:14:15,480 --> 00:14:18,959 Speaker 1: the messy work of reconciling with the projections that range 273 00:14:19,000 --> 00:14:23,600 Speaker 1: from unrealistic to fantastical. When the time comes, people are 274 00:14:23,640 --> 00:14:25,760 Speaker 1: going to be asking why we didn't see this coming? 275 00:14:25,880 --> 00:14:28,520 Speaker 1: And as I've said before, it's because nobody wanted to 276 00:14:28,640 --> 00:14:33,080 Speaker 1: fucking look anyway, Thanks as ever for listening. Things are 277 00:14:33,080 --> 00:14:35,360 Speaker 1: going to get real interesting over the next few months. 278 00:14:35,440 --> 00:14:37,960 Speaker 1: I just got me a Bloomberg terminal, and it's a 279 00:14:38,000 --> 00:14:40,640 Speaker 1: source of unfathomable power that I believe will take my 280 00:14:40,720 --> 00:14:42,920 Speaker 1: coverage to the next level. If you're on there, shoot 281 00:14:42,960 --> 00:14:45,560 Speaker 1: me a message, shoot me a goot on Ploop. That's 282 00:14:45,560 --> 00:14:49,280 Speaker 1: another social network I'm on. And I really do, genuinely, 283 00:14:49,360 --> 00:14:52,760 Speaker 1: deeply and meaningfully appreciate the many wonderful messages and emails 284 00:14:52,800 --> 00:14:55,040 Speaker 1: I receive every day, and I'm so grateful to have 285 00:14:55,080 --> 00:14:58,200 Speaker 1: such incredible fans and followers. You're all amazing, like I 286 00:14:58,240 --> 00:15:00,360 Speaker 1: hear from so many of you, and you're very thoughtful 287 00:15:00,360 --> 00:15:02,320 Speaker 1: and smart, and you pick this stuff up very quickly. 288 00:15:02,920 --> 00:15:05,640 Speaker 1: I love you all, and I assume your bellow we 289 00:15:05,680 --> 00:15:08,640 Speaker 1: love you chef in response, See you next week.