Speaker 1: Media.
Speaker 2: Hi, I'm Edzetron, and this is the second part of
Speaker 2: this week's better offline. As ever, go to the episode
Speaker 2: notes by some merch get the challenge coin, subscribe to
Speaker 2: my newsletter if you like it, go premium. Either way,
Speaker 2: you've got this episode for free if you can stand
Speaker 2: the ads, which many of you can.
Speaker 3: Anyway.
Speaker 2: The thrust of this two part is that the AI
Speaker 2: trade is going to, as you've probably guessed by now,
Speaker 2: end badly, and as I'll also explain, I believe we're
Speaker 2: now set up for potentially economic and market wrecking consequences
Speaker 2: of this hysterical investment bubble. Today we're going to go
Speaker 2: beyond just startups and into how the poison of the
Speaker 2: bubble is crept into our economy and how dangerous things
Speaker 2: are getting as a result. In the first installment, we
Speaker 2: talked about Cursor, the AI coding startup that, despite having
Speaker 2: no mote and zero sustainability, has somehow earned a valuation
Speaker 2: of ten billion dollars, and then asked why none of
Speaker 2: these generative AI companies are being acquired, at least not
Speaker 2: in the traditional sense. And no, I'm not including the
Speaker 2: acquisitions where a big company snags the talent and leaves
Speaker 2: barely breathing bodies of startups in their wake. This matters
Speaker 2: because if these AI companies can't get an exit, go public,
Speaker 2: or get bought, it raises serious questions about how any
Speaker 2: of this ends. Cursor is the best example, and the
Speaker 2: fact that Anthropic is hopelessly dependent on Cursor for revenue
Speaker 2: despite doing everything they can to kill it, makes the
Speaker 2: entire situation feel a little bit weird. Cursor's paths to
Speaker 2: viability seem frankly to be non existent, and the collapse
Speaker 2: of Cursor will inevitably result in a vast chunk of
Speaker 2: anthropics revenue is going up in smoke, which again will
Speaker 2: also make its collapse seem inevitable, as how can it
Speaker 2: fundraise that evaluation over its previous one when its biggest
Speaker 2: customer just died? So much of what I'm describing as
Speaker 2: structural and few companies have bigger structural obstacles to survive
Speaker 2: all than open AI. As a reminder, open aia I
Speaker 2: appears to have burned at least ten billion dollars in
Speaker 2: the last two months. It has just raised another eight
Speaker 2: point three billion dollars after raising ten billion dollars in
Speaker 2: June according to The New York Times, and intends to
Speaker 2: receive around twenty two point five billion dollars by the
Speaker 2: end of the year from SoftBank, and that is assuming
Speaker 2: it becomes a for profit entity by the end of
Speaker 2: the year, and if that doesn't happen, the route gets
Speaker 2: cut to twenty billion dollars total, meaning that SoftBank would
Speaker 2: only be on the hook for a further one point
Speaker 2: seven billion dollars. I am repeating myself, and I need
Speaker 2: you to really get this. Open Ai just got ten
Speaker 2: billion dollars in June, just in June, and had to
Speaker 2: raise another eight point three billion dollars in August. And
Speaker 2: that is an unbelievable cash burn, one dwarfing any startup
Speaker 2: in history, raveled only by Xai, makers of Grok the
Speaker 2: races dollar m which loses over a billion dollars a month.
Speaker 2: I should also be clear that if open ai does
Speaker 2: not convert to a for profit there is no path
Speaker 2: forward to continue raising capital. Open Ai must have the
Speaker 2: promise of an IPO. It must go public because a
Speaker 2: valuation of three hundred billion dollars or more. Open Ai
Speaker 2: can no longer be acquired because nobody has that much money.
Speaker 2: And if Let's be real, nobody actually believes open ai
Speaker 2: is worth that much. The only way to prove that
Speaker 2: anybody does is to take open ai public, and that
Speaker 2: will be impossible if it cannot convert. And ironically, SoftBank's
Speaker 2: large and late stage participation makes exits actually harder, as
Speaker 2: early investors will see their holdings diluted as a percentage
Speaker 2: of total equity or whatever the hell we're calling it.
Speaker 2: Because these aren't real equity shares, their profit participation units.
Speaker 3: They're a nonprofit. You can't do stock in them.
Speaker 2: While a normal company could just issue equity and deal
Speaker 2: with the dilution that way, open AI's structure necess states
Speaker 2: the negotiation, where companies can obstruct the entire process if
Speaker 2: they see fit. Speaking of companies doing that, let's talk
Speaker 2: about Microsoft. As I asked in my premium newsletter a
Speaker 2: few weeks ago, what if Microsoft does not want open
Speaker 2: ai to convert. They own all the IP, they own
Speaker 2: all the access to open AI's research, and already run
Speaker 2: most of their infrastructure, while assuming the best case scenario
Speaker 2: that it would end up owning a massive junk of
Speaker 2: the biggest tech stile up of all time. And I'm
Speaker 2: talking about equity not open AI's current profit sharing units.
Speaker 2: Microsoft might also believe that it stands to gain more
Speaker 2: by letting open ai die and assuming its role in
Speaker 2: the AI ecosystem. But let's assume that open ai converts
Speaker 2: and now has to continue raising money at a rate
Speaker 2: that will require it allegedly to only need to raise
Speaker 2: seventeen billion dollars in twenty twenty seven. That number doesn't
Speaker 2: make any sense considering the open ai already had to
Speaker 2: bring forward its eight point three billion dollar fund raised
Speaker 2: by at least three months. But let's stick with that idea.
Speaker 2: Open ai believes it will be profitable somehow by twenty thirty,
Speaker 2: and even if we assume that that means it intends
Speaker 2: to burn over one hundred billion dollars total to get there,
Speaker 2: is the plan to take open ai public and then
Speaker 2: dumper toxic acx onto the public markets. Then it will
Speaker 2: just flounder and convulse and die for everybody to seek.
Speaker 2: Kind of sucks. Can you imagine open aiss one? How
Speaker 2: old do you think this company would do when they
Speaker 2: had a true financial audit from a major accounting firm,
Speaker 2: and you can claim they already have one. I simply
Speaker 2: don't belie leave you, this burn does not seem like
Speaker 2: an accountancy firm would be good with them. And if
Speaker 2: you want to know what all that looks like Google
Speaker 2: we Work, which went from tech industry darling to joke
Speaker 2: in a matter of days in part because it was
Speaker 2: forced to disclose how bad things actually were when they
Speaker 2: filed to go public. No really are linked to an
Speaker 2: article I've linked in the spreadsheet called the Strangest and
Speaker 2: most Alarming things in we Work's IPO filing. It's a
Speaker 2: bad sign if your IPO filing is described as strange
Speaker 2: and alarming. Those are not even terms of art, they're
Speaker 2: just worrisome. With that in mind, I feel the same
Speaker 2: way about Anthropic. Nobody is buying this company a one
Speaker 2: hundred and seventy billion dollars, which is how much it's
Speaker 2: raising it right now, and thus the only way to
Speaker 2: access liquidity would be to take Anthropic public and show
Speaker 2: the world how a company that made seventy two million
Speaker 2: dollars in January and more than four hundred million dollars
Speaker 2: in July twenty twenty five and also plans to lose
Speaker 2: three billion dollars or more, and then you show them
Speaker 2: that and let the market sign a fair price, especially
Speaker 2: if the S one includes a bunch of strange and
Speaker 2: alarming stuff that raises questions about whether anthropics value is
Speaker 2: actually justified. I'm I'm stuttering here because everyone's acting like
Speaker 2: these irrational things like yeah, our open ai, which burns
Speaker 2: five billion dollars in twenty twenty four, probably ten or
Speaker 2: more in twenty twenty five. If if not fifteen or twenty,
Speaker 2: like that's fine, Like this is all good.
Speaker 3: They'll just go public one day, will they really?
Speaker 2: Really?
Speaker 3: Will they? No?
Speaker 2: Really, what's the plan? What's the plan here? Because the
Speaker 2: arguments against my work always come down to costs will
Speaker 2: go down and these products will become essential. Outside of
Speaker 2: chat GPT, there's no real proof that these products are
Speaker 2: anything remotely essential, And I'd argue there's very little about
Speaker 2: chat GPT that Microsoft can't provide with rate limits via
Speaker 2: co pilot. I'd also argue that essential is a very
Speaker 2: subjective term, essentially in the sense that some people use
Speaker 2: it as search doesn't mean it's useful for enterprises or
Speaker 2: the majority of people, or could not be replaced by
Speaker 2: anything else. And I guess chat GPT somehow makes one
Speaker 2: billion dollars a month in revenue selling access to premium
Speaker 2: versions of chat GPT, though I'm not one hundred percent
Speaker 2: sure how Assuming it has twenty million customers paying twenty
Speaker 2: bucks a month, that's four hundred million dollars a month.
Speaker 2: Then five million business customers paying an average of one
Speaker 2: hundred dollars a month each, that's nine hundred million dollars.
Speaker 2: And is that is that really indicative? Is the average
Speaker 2: really that good? Are there that many people paying thirty
Speaker 2: five or fifty or two hundred bucks a month? How
Speaker 2: many of those versus one hundred bucks? I mean, most
Speaker 2: don't pay one hundred bucks. It's either thirty five, fifty
Speaker 2: or two hundred. Open ai doesn't break out the actual
Speaker 2: revenues behind these numbers for a reason. I believe that
Speaker 2: reason is they don't look as good. I also, by
Speaker 2: the way, when I was fucking around trying to play
Speaker 2: with GPT five, I got offered a team subscription for
Speaker 2: a dollar for one month. How how's how many people?
Speaker 2: How many of those business customers got a month for
Speaker 2: a dollar? How long does open ai counter customer? What
Speaker 2: is open AI's churn like? And does it really as
Speaker 2: I wrote in my news there, how much money do
Speaker 2: open AI and Anthropic make in the year making more
Speaker 2: than Spotify at one point five billion dollars a month.
Speaker 2: We don't know an open AI, much like Anthropic, has
Speaker 2: never shared actual revenues other than in June when they
Speaker 2: said ten billion annualized revenue, choosing instead to leak to
Speaker 2: the media and hope to wfiscape the actual amounts of
Speaker 2: money being spent on its services. Anyway, long story short,
Speaker 2: these companies are unprofitable with no end in sight, don't
Speaker 2: even make that much money in most cases, and have
Speaker 2: valued more than anybody would ever buy them for. And
Speaker 2: they don't even have that much in the way of
Speaker 2: valuable IP. And on top of that, the two biggest
Speaker 2: players burn billions of dollars more than they make serving
Speaker 2: these companies that also burn billions of dollars. I wish
Speaker 2: someone would make this make sense because it doesn't. But
Speaker 2: ed the government will give them more money forever, They'll
Speaker 2: bail them out. I'm tired of this fucking point. I'm
Speaker 2: so tired of hearing about bailouce. I'm so tired of
Speaker 2: people saying they'll bail them out. I get that you're scared,
Speaker 2: I get that things are grim, things are absolutely fucking grim,
Speaker 2: But engage with reality here. You can't bail this out.
Speaker 2: You can't bail it out even if this were going
Speaker 2: to happen, will not. Who would they give the money
Speaker 2: to and.
Speaker 3: For how long would they give it to? All AI startups?
Speaker 2: Is every startup going to get a paycheck protection program
Speaker 2: for generative AI? How would that play out in rural,
Speaker 2: red districts where big tech has never been popular, which
Speaker 2: are being hit with both massive cuts to welfare as
Speaker 2: well as the shock waves of betrayed war that has
Speaker 2: made American agricultural exports like feedstocks, which previously went to
Speaker 2: China by shiploads, less appealing worldwide. So they just, in
Speaker 2: this scenario, by the way, bail out open AI then
Speaker 2: stuff it full of government contracts to the tune of
Speaker 2: what fifteen billion dollars a year? Right just in this example,
Speaker 2: just to be clear, that's the low end of what
Speaker 2: this would take to do. And they'll have to keep
Speaker 2: doing it forever until Sam Wultman can build enough data
Speaker 2: centers to what keep burning billions of dollars. There's no
Speaker 2: plan to make this profitable. Say this happens, it won't
Speaker 2: be Sam, Now what America has a bullshit generative AI
Speaker 2: company attached to it, attached to the state that doesn't
Speaker 2: really innovate. It doesn't really matter in any meaningful way
Speaker 2: except that it owns a bunch of data centers, which
Speaker 2: it doesn't yet. By the way, Microsoft owns all their infrastructure,
Speaker 2: the core stuff is barely happening. Fucking hell, I just
Speaker 2: don't think this happens. I think it's a silly idea,
Speaker 2: and the most likely situation would be that Microsoft would
Speaker 2: unhinge its daw and swallow open AI in its customer's whole. Hey, hey, hey,
Speaker 2: did you know, by the way, the Microsoft's data center
Speaker 2: construction is down year every year, and it's basically signed
Speaker 2: no new data center leases.
Speaker 3: I wonder why it isn't building these new.
Speaker 2: Data centers or open AI could be anything. By the way,
Speaker 2: Stargate isn't saving them either. As I've written recently, Stargate
Speaker 2: doesn't actually exist beyond the media hype it generated, and
Speaker 2: every single person who wrote big articles about Stargate being
Speaker 2: real and Stargate being connected to Abilene Texas should be
Speaker 2: fucking ashamed of themselves. It's deeply unprofessional anyway. That also
Speaker 2: counts the hint of the involvement. There are several articles
Speaker 2: that hint without directly saying that Abilene Texas was part
Speaker 2: of the soft bank stargate thing. You can't wriggle out
Speaker 2: of this one when the time comes or will be
Speaker 2: ad by which I mean, I'm going to be pointing
Speaker 2: at the articles aggressively. We have other stuff to do anyway.
Speaker 2: By the way, does the government do this for everybody?
Speaker 2: This very important question is everyone getting bailed out? Is
Speaker 2: it just anthropical out and open AI? What about Google
Speaker 2: and Microsoft? They're going to be burning and come on
Speaker 2: a bunch of money. Why do they get the money
Speaker 2: no one else? While their industries are going to turn
Speaker 2: around and go wait wait, wait, wait, wait wait. Why
Speaker 2: do I have to fucking make money when what's the
Speaker 2: point is? Because AI is important, You're going to get
Speaker 2: a bunch of fraud if this happens, it's not going
Speaker 2: to Just to be clear, and what is the limit?
Speaker 2: By the way, do they subsidize or compute for companies
Speaker 2: like Cursor to what end? Where's the limit? How does
Speaker 2: it end? What is the bailout? What are you bailing out?
Speaker 2: Where does the bailout go? These are all questions that
Speaker 2: would get answered. You can. You can sit there and say, oh,
Speaker 2: the government's corrupt. Oh I feel this way and that way.
Speaker 2: Here's the thing top, which is the thing that was
Speaker 2: used to bail out banks and such and hedge ones,
Speaker 2: and during that whole situation at least made more sense
Speaker 2: because if a bank fails, people lose actual money. This
Speaker 2: stuff fails, what do people lose? What is the service
Speaker 2: that people lose access to? Chat GPT?
Speaker 3: That's it.
Speaker 2: I don't even think that Donald Trump could explain what
Speaker 2: chat GPT is. And even then, he al really has
Speaker 2: people to give him money, like these people don't have
Speaker 2: anything to offer other than just this vague sense of
Speaker 2: AI is important. I just don't buy it. And I
Speaker 2: think that people if you're worried to get hopeful.
Speaker 3: I don't know.
Speaker 2: I'm hopeful that something's going to explode within this terrible
Speaker 2: fucking industry. And I'm kind of hopeful because I think
Speaker 2: it's time to ask a basic question, which is what
Speaker 2: if generative AI just is not profitable? And I think
Speaker 2: this is a question that we have to seriously consider
Speaker 2: at this point because it's ramifications are significant. If I'm honest,
Speaker 2: I think the future of large language models will be
Speaker 2: largely client side on egregiously expensive personal setups or enthusiasts,
Speaker 2: and in a handful of niche enterprise roles. Large language
Speaker 2: models do not scale profitably, and their functionality is not
Speaker 2: significant enough to justify the costs of running them. By
Speaker 2: immediately applying old economics the idea that you would pay
Speaker 2: a monthly fee to have relatively unlimited access, companies like
Speaker 2: open ai and Anthropic immediately trained users to use their
Speaker 2: products in a way that was antithetical to their costs.
Speaker 2: Then again, had these models been served in that way,
Speaker 2: had they been mindful of the cost and charged what
Speaker 2: they actually were, there would likely have been no way
Speaker 2: to get this far. If open ai is making billions
Speaker 2: of dollars a month, or a billion dollars a month,
Speaker 2: or whatever the fuck it is, it's possibly losing that
Speaker 2: much or more after revenue, and that's the money it
Speaker 2: can get selling the product in a form that can
Speaker 2: never turn profitable itself. If open ai charged in line
Speaker 2: with its actual costs, would even be able to justify
Speaker 2: a free version of chat GPT outside of a few
Speaker 2: requests a month. The revenue you see today is what
Speaker 2: people are willing to pay for a product that loses money,
Speaker 2: and I cannot imagine they would pay as much as
Speaker 2: companies in question charge their costs. If I'm wrong, Curse
Speaker 2: will be just fine. And that's assuming that Cursor's current
Speaker 2: hobbled form is even profitable, which it has not said
Speaker 2: it is. So you've got an entire industry of companies
Speaker 2: that struggle to do anything other than lose a lot
Speaker 2: of money. Great, and now we have a massive expansion
Speaker 2: of data centers the likes of which we've never seen
Speaker 2: or to capture demand for a product that nobody makes
Speaker 2: much money selling. This naturally leads to an important question,
Speaker 2: how do these people building data centers actually make money.
Speaker 2: At the start of August, the Wall Street Journal published
Speaker 2: one of the most worrying facts I've seen in the
Speaker 2: last two years. The Journal quoted investor Paul Kodrowski is
Speaker 2: saying that, and I quote as a percentage of gross
Speaker 2: domestic products, spending on AI infrastructure has already exceeded spending
Speaker 2: on telecom and internet infrastructure from the dot com boom,
Speaker 2: and it's still growing. Kudrowski described this insane capex spending
Speaker 2: as a sort of private sector stimulus program. The Journal
Speaker 2: also quotes analyst Neil Dhuta as saying that CAPEX spending
Speaker 2: for AI contributed more to growth in the US economy
Speaker 2: in the past two quarters than all consumers spending. The
Speaker 2: massive build out of data centers and the associate sheated
Speaker 2: physical gear like chips, service some raw materials to building
Speaker 2: them has become a massive dominant economic force, building capacity
Speaker 2: for an industry that is yet.
Speaker 3: To prove it can make real money.
Speaker 2: And no Microsoft talking about it's a zero revenue it's
Speaker 2: last quarterly earnings for the first time is not the
Speaker 2: same thing as it stopped explicitly stating its AI revenue
Speaker 2: in January when it was thirteen billion dollars annualized, so
Speaker 2: about a billion a month. And by the way, that's revenue,
Speaker 2: not profit. Just to remind you, I need to every
Speaker 2: time remind anyone who ever mentions AI revenue that that's
Speaker 2: not profit anyway. Aikapex allegedly, though I've heard some questions
Speaker 2: about this figure, accounts to one point two percent of
Speaker 2: the US GDP in the first half of the year,
Speaker 2: and it accounted for more than half of the to
Speaker 2: quote the Wall Street Journal, already sluggish one point two
Speaker 2: percent growth of the US economy in the first half
Speaker 2: of the year. Another Wall Street Journal piece published a
Speaker 2: few days later discussed how data center development is souring
Speaker 2: the free cash flow for big tech, turning them from
Speaker 2: the kind of asset light businesses that the markets love
Speaker 2: into entities burdened by physics, real estate and their associated
Speaker 2: costs and I quote. For years, investors loved those companies
Speaker 2: because they were asset lighting. They earned their profits or
Speaker 2: on intangible assets such as intellectual property, software, and digital
Speaker 2: platforms with network effects. This can be seen as a
Speaker 2: metric called free cash flow, roughly defined as cash flow
Speaker 2: from operations minus capital expenditures. This is arguably the purest
Speaker 2: measure of business's underlying cash generating potential. From twenty sixteen
Speaker 2: through twenty twenty three, free cash flow and net earnings
Speaker 2: of Alphabet, Amazon, Meta, and Microsoft grew roughly in tandem,
Speaker 2: but since twenty twenty three the two have diverged. The
Speaker 2: four companies can by net income is up seventy three
Speaker 2: percent to ninety one billion in the second quarter from
Speaker 2: two years earlier, while free cash flow is down thirty
Speaker 2: percent to forty billion. According to fact Sheet Data, Apple
Speaker 2: a relative pika on capital spending has also seen free
Speaker 2: cash flow lag behind. These numbers are all very scary,
Speaker 2: and I mean that sincerely, but they also failed to
Speaker 2: explain why how much was actually spent on AI capex
Speaker 2: in the US. One would think two different articles on
Speaker 2: the subject would include that number versus a single quarter's worth.
Speaker 2: But from my estimates, I expect capital expenditures from the
Speaker 2: Magnificent seven alone to crest two hundred billion dollars in
Speaker 2: the first half of twenty twenty five, with Axios estimating
Speaker 2: they'd spend around four hundred billion total this year. Most
Speaker 2: articles are drafting off of a blog from Paul Kodrowski,
Speaker 2: who estimates that total AI capex would be somewhere in
Speaker 2: the region of five hundred and twenty billion dollars for
Speaker 2: the total in the year, which felt conservative for me,
Speaker 2: so I did the smart thing and asked him. Kudrowski
Speaker 2: noted that these numbers focus entirely on the four big
Speaker 2: spenders Microsoft, Google, Meta, and Amazon, and his own estimated
Speaker 2: three hundred and twelve billion dollar capex and one point
Speaker 2: two percent number came from the assumption that the US
Speaker 2: GDP in twenty twenty five will be around twenty eight
Speaker 2: trillion dollars, which is lower than other forecasts which put
Speaker 2: it around thirty trillion. Even Kujoski, in his own words,
Speaker 2: was trying to be conservative using public data and then
Speaker 2: building his analysis from there. I personally believe his estimate
Speaker 2: is too conservative because it does in factor in the
Speaker 2: capital expenditures Maracle, which along with Crusoe is building the
Speaker 2: vast abilenei Exis data center for Open AI or any
Speaker 2: other private data center developers thinking cash into ar capex.
Speaker 2: When I asked him to elaborate, he estimated that AI
Speaker 2: spending all in was around half of three percent Q
Speaker 2: two real GDP growth. He added that it could be
Speaker 2: half of US GDP four year GDP growth if.
Speaker 3: Certain conditions are out. That's so cool.
Speaker 2: Half of the US economy's growth came from building data
Speaker 2: centers for generative AI, which is the combined revenue of
Speaker 2: a little more than the fucking smartwatch industry did in
Speaker 2: twenty twenty four. Another troubling point is that big tech
Speaker 2: doesn't just buy data centers and uses them, but in
Speaker 2: many cases, pace for a construction company to build them,
Speaker 2: fills them full of GPUs, then leases them from a
Speaker 2: company that runs them, meaning that they themselves don't have
Speaker 2: to personally staff up and maintain them. This creates an
Speaker 2: economic boom for construction companies in the short term, as
Speaker 2: well as lucrative contracts for ongoing support as long as
Speaker 2: the company in question still wants them. While Microsoft or
Speaker 2: Amazon might use a data center and indeed act as
Speaker 2: if they own it, ultimately somebody else is holding the
Speaker 2: bag and the ultimate responsibility for said data center. One
Speaker 2: such company is QTS, the data center developer that leases
Speaker 2: both to both Amazon and Meta according to The New
Speaker 2: York Times, which was acquired by Blackstone in twenty twenty
Speaker 2: one for ten billion dollars. Since then, Blackstone has used
Speaker 2: commercially mortgage backed securities I know it's so great to
Speaker 2: raise over eight point seven billion dollars since since then
Speaker 2: to sink into qts's expansion, and as of mid July
Speaker 2: said it'd be investing twenty five billion dollars in AI
Speaker 2: data centers and energy. Blackstone, according to The New York Times,
Speaker 2: see strong demand from tech companies who apparently are willing
Speaker 2: to sign what they describe as airtight leases for fifteen
Speaker 2: to twenty years to rent out data center space. As
Speaker 2: a reminder that Microsoft has over one thousand lawyers in
Speaker 2: the company anyway. Yet the Times also names another problem,
Speaker 2: the unanswered question of how these private equity firms actually
Speaker 2: exit these situations. Blackstone, KKR and other asset management firms
Speaker 2: do not buy companies with the intention of siphoning off revenue,
Speaker 2: but to pump them and sell them to another company
Speaker 2: or dump them onto the public markets. Of course, much
Speaker 2: like AI startups, it isn't obvious who would buy qts,
Speaker 2: and what I imagine would be a twenty five or
Speaker 2: thirty billion dollar valuation mean that black Stone would, as
Speaker 2: I've mentioned, have to take them public. Similarly, KKR is
Speaker 2: supposed fifteen billion dollar partnership with investment firm Energy Capital
Speaker 2: Partners to build data centers and their associated utilities does
Speaker 2: not appear to have much of an exit plan either.
Speaker 2: And let's not forget Oracle Open AI and Cruso's abominable
Speaker 2: mess in Abilene, Texas, where Oracle is paying for forty
Speaker 2: billion dollars worth of GPUs and Crusoe is spending fifteen
Speaker 2: dollars billion dollars raised from Blue Man, Owl Capital and
Speaker 2: primary digital infrastructure. Though I think JP Morgan is involved
Speaker 2: too to build data centers for open Ai, a company
Speaker 2: that loses billion dollars.
Speaker 3: If yeah, why would they do that?
Speaker 2: Right? Why why would they do that? Well, it's simple,
Speaker 2: you roube, you moron, you buffoon. It's so that open
Speaker 2: Ai can allegedly, starting in twenty twenty eight, pay Oracle
Speaker 2: thirty billion dollars a year for compute. And I am
Speaker 2: being fully serious to be clear, open Ai, by my estimates,
Speaker 2: has made only five point twenty six billion dollars this year,
Speaker 2: and we'll have trouble meeting their twelve point seven billion
Speaker 2: dollar revenue projection for twenty twenty five and will likely
Speaker 2: lose more than ten billion dollars doing so. Oracle will,
Speaker 2: according to the information, oh Crusoe one billion dollars in
Speaker 2: payments across a fifteen year span of release. How does
Speaker 2: Crusoe afford to pay back it's fifteen billion dollars in lungs?
Speaker 3: Beats me.
Speaker 2: The information says that Crusoe is raising a billion dollars
Speaker 2: to take on the cloud giants by earning construction management
Speaker 2: fees and rent and you can sell it's stake in
Speaker 2: the project upon reaching certain completion milestones, while also building
Speaker 2: its own Ai Compute, making the assumption that the demand
Speaker 2: is there outside of hyperscalers. Then there's corp Eve, my
Speaker 2: least favor company in the world. As I discussed a
Speaker 2: few months ago, core Wave is burned by obscene debt
Speaker 2: and a horrifying cash burn and has seen its stock spikee
Speaker 2: to a high of one hundred and eighty three on
Speaker 2: June twentieth, twenty twenty five, which has led to an
Speaker 2: all stock attempt to acquire develop a core scientific for
Speaker 2: nine billion dollars. And they're doing that with all stock,
Speaker 2: and now that's falling apart because core Wave, as my
Speaker 2: last check, and who knows where it will be by
Speaker 2: the time this episode runs, is below one hundred bucks.
Speaker 2: Because the IPO lockiles has gone.
Speaker 3: All the people that.
Speaker 2: Invested seem to be getting out. We'll see where they
Speaker 2: go from here. Cor we've by the way, has since
Speaker 2: gone public and had to borrow billions of dollars to
Speaker 2: fund their obscene capital expenditures. And they are also by
Speaker 2: the way, going to have to handle in October at
Speaker 2: the beginning of their DDTL two point zero, their biggest loan,
Speaker 2: and that's also when open Ai is allegedly going to
Speaker 2: start paying them for their compute and by the way,
Speaker 2: they lose hundreds of millions. They lose so much money
Speaker 2: every quarter. They have no part to profitability. Ah, every
Speaker 2: time I think about core Weave feel crazy and to
Speaker 2: be honest, I'm gonna be honest when to put out
Speaker 2: that blog, and people sent me some very unfair emails
Speaker 2: about that. They said, there's no way that corl We've
Speaker 2: can run out of money. If Corwe've runs out of money,
Speaker 2: by the way, and they collapse, which I think is
Speaker 2: very possible. I'm taking some fucking names on this one.
Speaker 2: A lot of people very unfair to miss. The ztrum
Speaker 2: corwave I had is also pretty much reliant on Microsoft
Speaker 2: as one of its primary customers. While this relationship has
Speaker 2: been fairly smooth so far as far as we know,
Speaker 2: this dependence also presents the next eistential threat to core
Speaker 2: we even is part of the reason why I'm so
Speaker 2: pessimistic about their survival. Microsoft has its own infrastructure and
Speaker 2: has every incentive to cut out middlemen when it's able
Speaker 2: to meet supply with the demand itsself owns or lease
Speaker 2: it's rather than subcontracts out simply because middlemen add costs
Speaker 2: and shrink margins.
Speaker 3: If Microsoft walks, what's left?
Speaker 2: How does it service its its ongoing obligations and the debt.
Speaker 2: In all of these cases, data center developers seem to
Speaker 2: have very few options as to making actual money. We
Speaker 2: have companies spending billions of dollars to vastly expend their
Speaker 2: data center footprint, but very little evidence that doing so
Speaker 2: results in revenue, let alone some sort of payoff event.
Speaker 2: And similarly, the actual capital expenditures they're making are much
Speaker 2: smaller than those of big tech. Digital Realty Trust, one
Speaker 2: of the largest developers with over three hundred data centers
Speaker 2: worldwide and five point five billion dollars in revenue in
Speaker 2: twenty twenty four, only spend three point five billion dollars
Speaker 2: in Capex last quarter, and Equinix eight point seven billion
Speaker 2: dollars of revenue in twenty twenty four total, which has
Speaker 2: two hundred and seventy data centers, but Capex at three
Speaker 2: point five billion dollars for a quarter. Two NTT Global
Speaker 2: Data Centers, which has over one hundred and sixty of
Speaker 2: the fuckers, has dedicated ten billion dollars in Capex through
Speaker 2: twenty twenty seven to build out more of them.
Speaker 3: Yeah, in many of.
Speaker 2: These cases, it's because these companies are, to quote a
Speaker 2: source of mind, functionally obsolete for this cycle because legacy
Speaker 2: data centers are not plug and play ready for GPUs
Speaker 2: to slot into. And remember GPUs and the way they
Speaker 2: work with GENERATIVEAI is just atypical. They burn them, they
Speaker 2: run them hot constantly, They're running full fucking till the
Speaker 2: whole fucking time. It's absolutely ridiculous, leading to a bunch
Speaker 2: of replacements. But it just to be specific, requires a
Speaker 2: bunch of specialized cooling, much more energy. And yeah, there's
Speaker 2: just it's not a thing where you just take out
Speaker 2: one computer and you put in another. And also any
Speaker 2: investment in CAPEX by these companies would have to be
Speaker 2: for both GPUs and said retrofitting. By the way, massive
Speaker 2: amounts of money. And this means that the money flowing
Speaker 2: into a ID data centers, it's predominantly going to neo
Speaker 2: clouds like Corweven Crusoe, and all seems to flow back
Speaker 2: to private equity firms that never thought about where the
Speaker 2: cash out might be. Blackstone led corby seven point five
Speaker 2: billion dollar a line with Magnetal Capital, who, by the way,
Speaker 2: was involved with a bunch of subprime mortgages, and Crusoe
Speaker 2: signed a deal a week ago with infrastructure firm and
Speaker 2: they're also owned by Blackstone called tall Grass, and they're
Speaker 2: building a data center in Wyoming, all of which seems
Speaker 2: very good for Blackstone, unless you think, how does it
Speaker 2: actually make money here? As private equity firms generally not
Speaker 2: like to hold assets longer than five years, and the
Speaker 2: timer is running. Even if it did, it's capital expenditures
Speaker 2: that are dropping the bucket in the grand scheme of things.
Speaker 2: Assuming Crusoe burns as the information suggests, it will as
Speaker 2: much as four billion dollars in twenty twenty five. Corweave
Speaker 2: spends as much as twenty billion dollars. Digital Realty Crust
Speaker 2: spends as much as fourteen billion dollars. Global data centers
Speaker 2: three point three three billion, that's ten billion over three years.
Speaker 2: Equiniz spends fourteen billion. That's about fifty five point three
Speaker 2: three billion dollars in AI CAPEK spent in twenty twenty
Speaker 2: five from the largest developer of data centers in the world.
Speaker 2: For some context, one hundred and two billion dollars were
Speaker 2: spent by Meta Alphabet, Microsoft and Amazon in the last quarter.
Speaker 2: Private equity may face the same problem as AI startups.
Speaker 2: In the end, though, there is no real exit strategy
Speaker 2: for any of these investments. Furthermore, the supposed AI capex
Speaker 2: boom that's driving the US economy is not, as reported,
Speaker 2: driven by the massive interest in driving AI infrastructure up
Speaker 2: for a variety of customers.
Speaker 3: The reality is simple. The majority of AI capex.
Speaker 2: Is from big tech, which is a massive systemic weakness
Speaker 2: for our economy. Now, while some might say that AI
Speaker 2: capex has swallowed the US economy, I think it's more
Speaker 2: appropriate to say that big tech capex has swallowed the
Speaker 2: US economy. I also want to be clear that the economy,
Speaker 2: which is the overall state of the country's production and
Speaker 2: can asumption of stuff and the flow of money between
Speaker 2: participants in said economy, and the markets as in the
Speaker 2: stock market, well, those are two very different things. But
Speaker 2: the calculations from Paul Kodrowski and others have now allowed
Speaker 2: us to see where one might hit the other. You see,
Speaker 2: the markets do not actually represent reality. While Microsoft, Amazon,
Speaker 2: Google and Meta might want you to think there's a
Speaker 2: ton of money in AI, their growth is mostly from
Speaker 2: selling further iterations and contracts of their existing stuff, or
Speaker 2: in the case of Meta further increasing its ad revenue.
Speaker 2: The economy is where things are actually bought and sold,
Speaker 2: representing the economic effects of both the things that happen
Speaker 2: to build out the AI boom or whatever you call it,
Speaker 2: and selling access to the services and the models themselves.
Speaker 2: I recognize this is simplistic, but I'm laying it out
Speaker 2: for a reason. As I discussed in the three part
Speaker 2: Hater's Guide to the AI Bubble in video, is the
Speaker 2: weak point in the US stock market, representing ninety percent
Speaker 2: of the value of the Magnificent Seven, which in turn
Speaker 2: makes up about thirty five percent of the value of
Speaker 2: the U S stock market. The associated Magnificent Seven stocks
Speaker 2: have seen a huge boom through their own growth, which
Speaker 2: has been mistakenly in incorrectly attributed to revenue from AI,
Speaker 2: which I've laid out previously is about forty billion dollars
Speaker 2: of revenue in what in the last year or two,
Speaker 2: maybe a little bit more. Nevertheless, the markets can continue
Speaker 2: to be irrational because all they care about is number
Speaker 2: going up. As the value of a stock is often
Speaker 2: times disconnected from the value of the company itself, instead
Speaker 2: associated with its kind of propensity for growth. It's fishy,
Speaker 2: it sucks, and it's going to end badly. GDP and
Speaker 2: other measurements of the economy aren't really something you can
Speaker 2: fudge quite as easily, nor can you say a bunch
Speaker 2: of fancy words to make people feel better in the
Speaker 2: event that growth stores are the clients.
Speaker 3: This leads me to my principal worry that AI.
Speaker 2: Capex is actually a term for the expenditures of four companies,
Speaker 2: namely Microsoft, Amazon, Google, and Meta, with Nvidia's GPU sales
Speaker 2: being part of that capex too. What we include you
Speaker 2: can if you want, include others like Oracle, XAI and
Speaker 2: various neoclouds like Corweven, Crusoe, or who. According to DA
Speaker 2: Davidson's gil Luria will account for about ten percent of
Speaker 2: GPU sales from Nvideo in twenty twenty five. The reality
Speaker 2: is that whatever our economic forces being driven by AI investment,
Speaker 2: it's really just four companies building and leasing data centers
Speaker 2: to burn on generatorvai a product that makes it relatively
Speaker 2: small amount of money before losing a great deal more. Also,
Speaker 2: want to be clear, Anthropic runs on Amazon and Google,
Speaker 2: Open AI runs on Microsoft. These companies don't really own
Speaker 2: their own infrastructure. That's what Open AI is allegedly building
Speaker 2: with Oracle. Now forty two percent of Nvidia's revenue comes
Speaker 2: from Magnificent seven per Laura Brand at Yahoo Finance, Big
Speaker 2: up to Laura one of the best out there, which
Speaker 2: naturally means that big tech is the lynchpin of investment
Speaker 2: in data centers. I'll put it far more simply. If
Speaker 2: AI capex represents such a large part of our GDP
Speaker 2: and economic growth, our economy does on some level rest
Speaker 2: on the back of Microsoft, Google, Meta, and Amazon and
Speaker 2: their continued investment in AI. What should worry everybody is
Speaker 2: that Microsoft, which makes up eighteen point nine percent of
Speaker 2: Nvidia's revenue, assigned basically no leases in the last twelve months,
Speaker 2: and it's committed data center construction and lamp purchases are
Speaker 2: down year over year. Also, their data center capex is
Speaker 2: not all to be AI, and all of these data
Speaker 2: centers won't necessarily be used for that. In fact, nothing
Speaker 2: they're doing suggests that they're super into it.
Speaker 3: It's not good.
Speaker 2: And while its CAPEX may not have dipped yet, in
Speaker 2: part because the chip heavy nature of generative AI means
Speaker 2: that CAPEX isn't exclusively dominated by property or construction. It's
Speaker 2: now obvious that if it does, there will be direct
Speaker 2: effects on both the US economy and the stock market,
Speaker 2: as Microsoft is part of what amounts to a stimulus
Speaker 2: packaged propping up America's economic growth. And not to repeat
Speaker 2: the point too much, but Big Tech is yet to
Speaker 2: actually turn anything resembling a profit on these data centers
Speaker 2: and isn't making much revenue at all out of generative AI.
Speaker 2: How exactly does this end?
Speaker 3: What is the plan?
Speaker 2: Here's Big Tech going to spend hundreds of billions of
Speaker 2: dollars a year in CAPEX on generative AI in perpetuity?
Speaker 2: Will they continue to buy more and more in video
Speaker 2: chips as they do so, because it's always got to
Speaker 2: be more. It can't be the same. They must get
Speaker 2: more otherwise Nvidia doesn't grow At some point. Surely these
Speaker 2: companies are built in enough data centers. Surely at some
Speaker 2: point they will run out of space to put these
Speaker 2: GPUs in. Is the plan to by then make so
Speaker 2: much money from MAI that it won't matter? What does
Speaker 2: Nvidia do at that point? How does the US economy
Speaker 2: rebound from the loss of activity that follows?
Speaker 3: I don't fucking know. And it's worrying me.
Speaker 2: As I've said again and again, the genera IFAI bubble
Speaker 2: is and always has been fundamentally irrational and inherently gothic,
Speaker 2: playing in the ruins, patterns, and pathways of previous tech booms,
Speaker 2: despite this one having little or no resemblance to them.
Speaker 2: Though the tech industry loves to talk about building a
Speaker 2: glorious future, its presence is one steeped in rituals of
Speaker 2: death and decay, with the virtues of value creation and
Speaker 2: productivity take a back seat to burning billions of dollars
Speaker 2: and lying to the public again and again and again.
Speaker 2: The way in which the media has participated in these
Speaker 2: lives is disgusting. Venture capital, still drunk off the fumes
Speaker 2: of twenty twenty one, keeps running the same old planebook,
Speaker 2: shove as much money into a company as possible in
Speaker 2: the hopes you can dump it onto an acquirer of
Speaker 2: the public markets, only to get high on their own supply,
Speaker 2: pushing valuations to the point that there's no possible liquidity
Speaker 2: event for the majority of big private AI companies as
Speaker 2: a result of their overstuffed valuations, burdens and business models,
Speaker 2: and a lack of any real intellectual property, and like
Speaker 2: the rest of the AI and bubble, Silicon Valley's only
Speaker 2: liquidity path out of the bubble is big tech itself.
Speaker 2: Without Google, character Dot AI, and WINDSORFS founders would likely
Speaker 2: have been left for dead, and the same ghosts for Inflection,
Speaker 2: And I'd even argue Scale AI, who's fourteen point three
Speaker 2: billion dollar investment doing air quotes there for Meta effectively
Speaker 2: decapitated the company, removing its CEO, Alexander Wang, leaving the
Speaker 2: rest of the company to die playing are fourteen percent
Speaker 2: of its staff on five hundred contractors mere weeks after
Speaker 2: its CEO and investors cashed in. In fact, Generative AI
Speaker 2: is turning out to be a fever dream entirely made up.
Speaker 3: Big tech.
Speaker 2: OpenAI would be dead if it wasn't for the massive
Speaker 2: infrastructure provided by Microsoft at cost in returns for its
Speaker 2: rights to its IP research and the ability to sell
Speaker 2: its models, on top of tens of billions of dollars
Speaker 2: of venture capital thrown into its billion dollar cache. Incinerator
Speaker 2: Anthropic would be dead if both Google and Amazon, the
Speaker 2: latter of which provides most of its infrastructure, hadn't invested
Speaker 2: billions in keeping it alive. So that it can burn
Speaker 2: three billion dollars or more in twenty twenty five while
Speaker 2: fucking over its enterprise customers and rate limiting the rest.
Speaker 2: The generative AI industry is, at its core unnatural. It
Speaker 2: does not make significant revenue compared to its unbelievable costs,
Speaker 2: nor does it have much revenue potential itself. It requires,
Speaker 2: unlike just about every other software revolution, an unbelievable amount
Speaker 2: of physical infrastructure to run because nobody but big tech
Speaker 2: can afford to build the infrastructure necessary, creates very little
Speaker 2: opportunity for competition or efficiency. As the markets are in
Speaker 2: the throes of the growth of or costs rot economy,
Speaker 2: they failed to keep big tech in line, conflating Big
Speaker 2: text ability to grow with growth driven as a result
Speaker 2: of the capital expenditures. Sensible reasonable markets would notice the
Speaker 2: decay of free cash flow or ridiculousness of big text
Speaker 2: capex bonanza, but instead they clap and squeal on oink
Speaker 2: whenever Satching the Della jingles his keys. And I got
Speaker 2: told the other day by someone that Satch in a
Speaker 2: Della is not a is the citiot, that he's secretly
Speaker 2: this big tech guy. And here's here's what I'd like
Speaker 2: to say to them, it's fucking stupid. It's fucking dumb.
Speaker 2: If this guy's actually technical, he's just a craven liar.
Speaker 2: I actually think he's a bozo. Anyway, put in that side,
Speaker 2: what's missing is any real value generation. Again, I tell you,
Speaker 2: put aside any feelings you may have about generative AI
Speaker 2: itself and focus on the actual economic results of this bubble.
Speaker 2: How much revenue is there? Why is there no profit?
Speaker 2: Why are there no exits? Why is big tech, which
Speaker 2: has sunk hundreds of billions of dollars into generative AI,
Speaker 2: not talk about the money they're making from it? Why
Speaker 2: for three straight years have we been asked just wait
Speaker 2: and see and for how long are we going to
Speaker 2: have to wait? And when are we going to see it?
Speaker 2: What's incredible is that the inherently compute intensive nature of
Speaker 2: generative AI basically requires the construction of these facilities without
Speaker 2: actually representing whether they are contributing to the revenues of
Speaker 2: the companies that operate the models, like Anthropic or Open AI,
Speaker 2: or any other business that builds on top of them.
Speaker 2: As the models get more complet and hungary, more data
Speaker 2: centers get built, which Hyperscaler's book as long term revenue,
Speaker 2: even though it's subsidized by Hyperscalers or funded by VC money.
Speaker 2: This in turn stimulates even more CAPEX spending, and without
Speaker 2: having to answer any basic questions about longevity or market
Speaker 2: fit longevity longevity.
Speaker 3: I don't know yet.
Speaker 2: The worst part of this financial farce is that we've
Speaker 2: now got a built in economic breaking point in the
Speaker 2: form of capex from AI. At some point, Kapex has
Speaker 2: the slow if not because the lack of revenues are
Speaker 2: massive costs associated, but because we live in a world
Speaker 2: with finite space. And when said CAPEX slow happens, so
Speaker 2: will the purchase of Nvidio GPUs, which in turn has
Speaker 2: proven by Kadrowski and others slow America's economic growth. And
Speaker 2: that growth is pretty much based on the whims of
Speaker 2: four companies, which is an incredibly risky and scary proposition.
Speaker 2: I haven't even dug into the wealth of private credit
Speaker 2: deals that underpin build outs from private AI neo clouds
Speaker 2: like core Wave, Cruise, So, Nebuis, and Lambda, in part
Speaker 2: because their economic significance is so much smaller than the
Speaker 2: big text ugly meanland the sprawl, and because I don't
Speaker 2: like saying their names very much. To quote Paul Kodrowski,
Speaker 2: we live in a historically anomalous moment. Regardless of what
Speaker 2: one thinks about the merits of AI or explosive data
Speaker 2: center expansion, the scale and pace of capital deployment into
Speaker 2: a rapidly depreciating technology is remarkable. These are not railroads.
Speaker 2: We aren't building century long infrastructure. AI data centers are
Speaker 2: short lived, asset intensive facilities, writing declining cost technology curves,
Speaker 2: requiring frequent hardware replacement to preserve margins, to which I say,
Speaker 2: what margin's for? But nevertheless, you can't bail this out
Speaker 2: because there is nothing to bail out. Microsoft, Meta, Amazon,
Speaker 2: and Google have plenty of money and have proven they
Speaker 2: can spend it in video is already doing everything it
Speaker 2: can to justify people spending more on their GPUs. There's
Speaker 2: little more it can do here other than soak up
Speaker 2: the growth before the party ends. That CAPEX reduction will
Speaker 2: bring with it a reduction in expenditures on those GPUs,
Speaker 2: which will take a chunk out of the US stock market.
Speaker 2: Although the stock market isn't the economy, the two are
Speaker 2: inherently linked, and the popping of the AI bubble will
Speaker 2: have down downstream ramifications, just that the dot com bubble did.
Speaker 2: With the wider economy, expect to see an acceleration in
Speaker 2: layoffs and offshoring in pop driven by a need for
Speaker 2: tech companies to show for the first time in living memory,
Speaker 2: fiscal restraint. For cities where tech is a major sector
Speaker 2: of the economy thinks Seattle and San Francisco, there will
Speaker 2: be knock on effects to those companies and the individuals
Speaker 2: that support the tech sector, like restaurants, construction companies, building apartments,
Speaker 2: uber drivers, and so on. We'll see a drying up
Speaker 2: of VC funding, which is kind of already starting. Pension
Speaker 2: funds will take a hit, which will affect how much
Speaker 2: people have to spend in retirement.
Speaker 3: It'll be grim.
Speaker 2: Worse than that is the fact that these companies will
Speaker 2: be by definition, non performing assets and ones that inflicted
Speaker 2: an opportunity cost that will be impossible to calculate. While
Speaker 2: a house, once built and sold, technically falls into that category,
Speaker 2: doesn't add to any economic productivity. Obviously, people at least
Speaker 2: need somewhere to live. Shelter is an essential component of life.
Speaker 2: You can live without a data center the size of
Speaker 2: Manhattan what would happen if companies like Microsoft and Meta
Speaker 2: instead spent the money on things that actually drug productivity
Speaker 2: or created a valuable competitive business that drove economic activity.
Speaker 2: For example, Hell, even if they just gave everyone a
Speaker 2: ten percent raise, it would likely be better for the
Speaker 2: economy than this if we're factoring in things like consumer
Speaker 2: spending instead. It's just waste, ugly, pointless waste. In summary,
Speaker 2: we're already facing the prospect of a recession, and though
Speaker 2: I'm not an economist, I can imagine being a particularly
Speaker 2: nasty one. Given that the Magnificent seven account for forty
Speaker 2: seven point eight seven percent of the Rustle one thousand
Speaker 2: indexes returns in twenty twenty four. Even if big Tech
Speaker 2: somehow makes this crap profitable, they won't. It's hard to
Speaker 2: imagine that they'll be able to counterbalance any CAPEX reduction
Speaker 2: with revenue, because there doesn't seem to be that much
Speaker 2: revenue in generative AI to begin with. This is what
Speaker 2: happens when you allow the rot economy to run wild,
Speaker 2: building the stock market and tech industry on growth over
Speaker 2: everything else. This is what happens when the tech media
Speaker 2: repeatedly fails to hold the powerful to account catering to
Speaker 2: their narratives and making excuses from are abominable billion dollar
Speaker 2: losses and mediocre, questionably useful products. Well, for all you
Speaker 2: want about the so called agentic era or anyonized revenues
Speaker 2: that make you hot under the collar, I see no
Speaker 2: reason for celebration about an industry with no exit plans
Speaker 2: and needless capital expenditures that appeared to be one of
Speaker 2: the few things keeping the American economy growing for effectively
Speaker 2: no reason. I've been writing about the tech industry's obsession
Speaker 2: with General IVAI for two years, and I've really never
Speaker 2: felt more grim before. This was an economic uncertainty, a
Speaker 2: way that our markets might contract, the big tech might
Speaker 2: take a big haircunt, that a big a bunch of
Speaker 2: money might have been wasted. But otherwise the world could
Speaker 2: keep turning, right, it felt before Kutrowski said that thing,
Speaker 2: and this was all sitting in public as well. I
Speaker 2: don't know how I missed it. It felt until then
Speaker 2: that it was like, Oh, this will really fuck up
Speaker 2: big tech. It will hit their stocks. It'll be bad
Speaker 2: for them now because the economy has slowed so much. Otherwise,
Speaker 2: this data center, Capex and these four companies is holding
Speaker 2: everything up and it won't lost. There's just no way
Speaker 2: it can last forever, and there's not really anything to
Speaker 2: bulk it up or and Microsoft's already pulling back.
Speaker 3: How does this end?
Speaker 2: I keep asking that the original title of this was
Speaker 2: called how does this end? And I really don't know
Speaker 2: how this ends. It feels as if everything is the
Speaker 2: learning for disaster, and I really feel there's nothing that
Speaker 2: can be done to avert in.
Speaker 3: I will be here to tell you what's happening. Is
Speaker 3: it happens?
Speaker 2: And your third part for this week is going to
Speaker 2: be about GPT five, which I'm going to be honest
Speaker 2: doesn't really feel me full of hope or promise either.
Speaker 2: Thank you for listening to Better Offline.
Speaker 1: The editor and composer of the Better Offline theme song
Speaker 1: is Matasowski. You can check out more of his music
Speaker 1: and audio projects at Mattasowski dot com, m A T
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