Monologue: We Live Inside A Dream, But Who Is The Dreamer?

Zo Media. Hello and welcome to this week's Better Offline Monologue. I'm your host ed Zetron. It's been a weird week. I'm recording this on Thursday to thirtieth of July. So we've only had Microsoft and Meta report earning so far. So let's start with Meta, who saw it stock get hammered to day after missing on earnings for share narrowing by which I mean increasing by another word, it's cattle expenditures guidance for the year to Arrange of about one hundred and thirty five billion to one hundred and forty five billion dollars and guiding as in projecting sixty one billion dollars to sixty four billion dollars of revenue in Q three, which was below estimates. Cash Flow also deteriorated to a little under eight hundred million dollars, and I

must be clear how strange it is watching these companies do this. Meta used to just print money. They used to have ton free cash flow. But this dedication to AI is questionable and wasteful, and the market is pissed, mostly because Meta is yet to show any proof that's spending over two hundred billion dollars in Capex did anything for the company. Conversely, Microsoft's stock is ripping because it beat on analyst estimates across the board, with its as Your Cloud platform hitting one hundred billion dollars in revenue for the fiscal year that just ended, and to be clear, Microsoft's fiscal year twenty twenty six started on July first, twenty twenty five. Annoying, so annoying, I hate it, but

that's the ballgame. What's funny is that neither company actually proved that AI is paying off outside of brainless analysts and a captured business and tech media reading between the lines and saying, ooh, AI's paying off big time. Last quarter, Microsoft disclosed its AI run rate month times twelve, which was thirty seven billion dollars about three billion dollars a month, and then simply chose not to report the figure at all in this quarter. I assume because the number was lower, but that doesn't matter to anyone covering earnings. Put the AI hype in the bag. No thinking only number go up, please, no thinking at all. We cannot think here. It's not like people are gonna buy Microsoft's stock because of this.

I'll also add that nobody seems to want to discuss that Microsoft Azure's largest customer and likely the vast majority of its growth, is open Ai, an unprofitable, unsustainable company that accounted for, per my own reporting, sixty nine percent of all year over year growth of Microsoft's cloud in calendar year twenty twenty five. Microsoft's cloud revenue mysteriously seems to grow every quarter with open AI's increasing spent on AI compute, a fact mentioned in exactly zero of the stories I read about earnings, and god damn did I look.

The inflation of the AI bubble was only made possible by the continued unwillingness of the media to actually explain or even try to understand what's going on. Microsoft's growth was immediately credited to its AI bets paying off, ignoring both open AI's compute spend and the massive Microsoft three sixty five price increases that hit onto first, because it's convenient and rewarding to coddle the powerful and celebrate their supposed victories rather than actually seeking the truth. And what's funny is people are going to say, well, open ai is their bet paying off? Is it? Is it? When it's a venture capital backed company? When Microsoft has had to sink over thirteen billion dollars into the company when

there are reports in twenty twenty five that that compute was served at cost. How much is their investments to zero credits? Who knows? Nobody bothers to look, no one bothers to ask. The analysts on these calls should not have jobs. They do not exist to protect investors. They exist to perpetuate hype cycles. And what's actually happening to this company is pretty simple. As open AI's largest provider of AI compute AZ, your revenue growth will continue to spike as long as venture capital continues to funnel cash to Clammy Sam Altman. Microsoft has not found some magic AI money chie it is not unlocked incredible value for its Microsoft three sixty five copilot subscribers, and it's not got some secret saw. While three sixty five co pilot

subscriptions increase by ten million in this quarter, keep in mind that Microsoft regularly discounts l simpathly adds it for free to pump these numbers up. We're far past the point in the AI bubble when naked deception is necessary, because the media is more than willing to keep filling in the blanks at the preference of the company's Keep in mind that a mere twenty four hours before Meta's horror show earnings that The Wall Street Journal in New York Times both ran separate stories about Mark zuckerbog wanting superintelligence for all evacuous statement that exists only to get an irrelevant company attention and to paper over its meaningless and wasteful AI play. What super intelligence, Mark, You're building

fucking large language models? Who cares? Who fucking cares? None of this actually connects to what the models do. I feel like I'm going insane, And just just look at the coverage around in Nvidia's potential backstop of two hundred and fifty billion dollars in compute spend on the still theoretical ten giga. What data center in Ohio that a soft bank subsidiary want to build for open Ai? Not once in any of the stories did I read a single thing about how open ai can't afford that spend, that debt markets are becoming exhausted with AI loans, that sp Energy has never built a data center before, and that none of this makes any financial sense. No need put the AI hype in the bag. No thinking only

growth number go up, No need to think at all, Just run story. Numbers are big. We love number Again and again and again. The media foils investors in the general public through either a misplaced attachment to fictional objectivity or a desperation to appeal to the powerful. It doesn't really matter which one is true, because they both have the same effect, creating the appearance that any of this is possible in a way that only benefits the rich and powerful. And what's incredibly frustrating is it's now, for the most part, commonly held consensus we're in a bubble.

Yet the media continues to write about this stuff as if that isn't the case, glazing every single impossible deal or blatant active circular financing, salivating over every bizarre new model drop or suppose an achievement without ever really explaining why it matters, and gooning over every obtuse statement that Sam Altman makes. We're not in the singularity, a fucking asshole.

And this is because we live, on some level in an entirely imaginary and manufactured reality, at least when the media is concerned. Hyperscalas have spent over a trillion dollars in ai Capex and have across the board refuse to give us hard numbers about its return on investment. Open AI and Anthropic are unprofitable, unsustainable, and we'll need over a trillion dollars of funding in the next four years because they've made over a trillion dollars of commitments than neither of them can afford without a nearest infinite sum of venture capital. AI data centers are getting built at a snail's pace, and debt to build them is becoming more and more expensive. With core Weave hitting goat sea level.

Credit spreads trading from eight point three percent to nine point three percent above US treasuries, which is way higher than the average JUG pond, meaning that investors are valuing them like the company is a very real chance of death. And you'll notice that this isn't really something. You'll notice that the spreads are being covered, people thinking, Oh, that's strange.

Oh that doesn't look good. Ah, wonder what that's about. What it's about is that the bond market is screaming Core We've might die. Core We've might die. And if Core We've dies, every Neocloud dies, Iron dies, Nebuis dies, and Scale dies, Lambda dies, all of them die. And even if I might be wrong, which I'm not. I really am quite confident on this. The fact that this is not even a discuss point across the media is a sign that no one really gives a fuck about any investors, the public, anyone who might get tied up in this. It's a sign that no one's thinking about this too hard, either through a dramatic ignorance or just a lack of given a shit about anything. Yet, the irony of all these blaring warning signs is that it's

possible for most of the media to take them to their logical endpoint, as doing so would mean accepting that we live in an era of outright insanity. To acknowledge open AI's financial condition is to acknowledge that the largest customer of Azure might die and that a large chunk of Microsoft revenue growth is a fiction created by venture capital.

To acknowledge Corweve's condition is to acknowledge that a company pumped up by most of the media is going to explode. To acknowledge that Anthropic is basically the same company and in the same financial position as open Ai is to accept that Google Cloud and Amazon Web Services are as inflated as Microsoft, as your and to acknowledge these things would require the media to acknowledge that they ignored basically every warning sign right up until the end. I can imagine that the bubble will burst and they'll be out let's the world attempt to pretend that they were ahead of it. But those people don't realize how detailed my notes are and how unflinching I'll be in publishing them.

I will, I will be doing so. I will be publishing everything. I know everyone who pumped this up. I know what everyone did, I know how many times they ignored the warning science and I can see the articles where they helped pump this bubble up. And I'm not going to get too personal. I'm just going to publish the fucking articles and I'm going to point. I'm going to say it was obvious, then why didn't you do something?

And the answer is they didn't give a shit. Either they didn't give a shit enough to learn, or maybe they and it's much worse if they understood and they just chose to ignore it. If the answer is, well, the largest companies in the world wouldn't make such a mistake, You're just very, very gullible. I guess I'll know. I hope that someone learns after this. I don't think they will really gonna try. I'm really gonna try and explain how people got this wrong. I feel like I've been trying, and the bile you can hear, the poison in my voice comes from a place of It's funny. People say, oh, he's just a form of pr person. He doesn't know anything about finance. The only thing that it takes to become a financial expert is to become an expert in finance,

to sit down and learn. Everyone else you can fuck it. I'm using the same shit as everyone else. You just learned to read. And I don't know why more people don't do it. For the answer is it's a lot of work, and you don't really have to do it when your editors pro ai and you can just do whatever you want. I know some journalists listen, and hopefully I'm not talking about you. Hopefully you made the effort.

I really hope you did. And I must be clear on I'll probably mostly be coming after outlets rather than people directly. That would be mean. But at the same time, please God, when this explodes, journalists listening to this, please fucking try harder or I don't know, try trying harder beforehand. And if you think you are pushing back, if you truly think you are pushing back by all means, reach out and find out if you actually are, by all means, email me, signal me you have my information? Is it froet seventy six and ask me directly, because pretty much if you have to ask, you probably not. And if you think you are already, I don't know. Have you talked about core weave. Have you talked about open ai

running out of money? Or when you did so, did you talk about it saying yeah, open Ai isn't profitable. Yeah, but you know, companies take a while to get comfortable, and Uber lost a lot of money, in Aws lost a lot of money. If that's what you're thinking, you are wrong. You are wrong. You are misleading your readers, you're misleading the general public, and you should be kind of fucking ashamed of yourself. I'm I am sorry to be so merciless right now, but I am sick and tired of watching these cycles, and I know how many people are going to get washed out. For a real preview of that, go and look at the Korean stock market right now, and the many stories of people talking about fucking killing themselves. That is the real consequence of bubbles,

That is the real thing that happens, and everyone trying to downplay this is responsible for people like that suffering and eventually American and British and other investors too. It's sickening, and until something changes, we're all going to live in a paradoxical media environment that simultaneously publishes proof point after proof point after proof point that this is financially unstable, all while saying that AI is going to be the biggest, most hugest thing in history, right up until the bottom falls out. Hope a AI collapses, data centers get canceled, core we've shits its pants and everything falls apart, at which point they'll throw up their hands and say, Wow, how'd that all happen? It happened because we live in

an era where responsibility often correlates with cowardice. Those who have the most power to critique the powerful choose instead to jerk their shit from first principles, helping them create fantastical mediated realities that enrich the already rich and fuck over retail investors at scale. It darkens my heart. When I think about it, it really pisses me off because you can already see what's gonna happen. You can already see that the people invested in the markets are going to get washed out. And then there's the widespread problems caused by all of these private credit funds sinking money into data centers that will never get built, will never provide the yield, and will fuck over anyone who is

unfortunate to have insurance annuities or pension funds involved in this bullshit. Next week, i'll've ed Elson back on to talk about tech earnings and continue to fight to give you as clear a picture of reality as possible, even as we battled the lead one created by and for the powerful. Thank you for listening.

Monologue: We Live Inside A Dream, But Who Is The Dreamer?

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