OpenAI's Week From Hell — And Why Anthropic Is Winning

Scott Galloway and Ed Elson break down OpenAI's worst week yet — missed targets, the Musk trial, and a safety lawsuit — and what it all means for Anthropic. They also dig into earnings from Meta, Microsoft, Amazon, Apple and Google. Finally, they discuss why the government had no business trying to bail out Spirit Airlines. Get your tickets to the Prof G Markets tour Subscribe to the Prof G Markets Youtube Channel Subscribe to the Prof G Markets newsletter Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:29Scott Galloway?

  Today's number 30. That's the percentage of Gen Z people who believe they are psychic. Ed, does Forrest Gump belong to Gen X, Gen Y, or Gen Z? I'm not sure. Nope. He belongs to Gen A.

• 1:45Scott Galloway?

  Wow, that really moved Claire.

• 1:47Speaker 09

  My favorite part was the nope.

• 1:51Speaker 09

  Not a transition from what he said.

• 1:53Scott Galloway?

  Is that I'm not sure you said? Nope. No. Nope, Gen A.

• 1:56Speaker 09

  Gen A.

• 1:57Scott Galloway?

  Gen A. Gen A, yeah.

• 2:09Scott Galloway?

  How was your interview with Ray Dalio?

• 2:11Ed Elson?

  It was great. He's got the same perspective he usually has, but I mean, he's been right about a lot of things. But yeah, we had an excellent discussion, had a great discussion with Gil Luria as well, talked about the tech earnings, which was interesting, which we'll get into as well. It's been a good week, good week for, good week for the show.

• 2:31Scott Galloway?

  You know what I really enjoyed? I don't listen to your work, but I accidentally stumbled across it yesterday. I listened to the guys talking about AI and power the grid. I thought that was really interesting.

• 2:43Ed Elson?

  You should check out the podcast.

• 2:44Scott Galloway?

  I like to watch it because I find you handsome.

• 2:48Ed Elson?

  That's good. I'll take that. I'll take that. A criticism and a compliment. We're net neutral. I'm happy with it.

• 2:55Scott Galloway?

  I found myself putting rewind a lot to try and, to try and understand it. And I'm also want to announce that we are transitioning to a power inference GPU AI center company called Quince, Quince AI.

• 3:10Ed Elson?

  Quince AI. I love it. We're pulling in all birds. Right after the live tour, which is happening in 23 days, we're going to be in San Francisco, we're going to be in LA, we're going to be in Miami, we're going to be in Chicago, we're going to finish in New York. We're so excited. So please go get your tickets to profitemarkets.com if you want to come see us. It'll be a great time.

• 3:33Scott Galloway?

  I think this is your first tour, isn't it? It's the first time you've been on a live podcast tour, right?

• 3:37Ed Elson?

  It's our first together.

• 3:39Scott Galloway?

  Yeah, we're super excited and we have guests lined up for all of them. So it's going to be, it's going to be a lot of fun. All right, Ed, should we get to, should we get to the news?

• 3:48Ed Elson?

  Let's do it. Today we're discussing OpenAI's week from hell, also big tech earnings, and also a bailout of Spirit Airlines. So let's get into it.

• 4:00Scott Galloway?

  Now is the time to fly. I hope you have plenty of the well at home.

• 4:07Ed Elson?

  It was a brutal week for OpenAI with a string of setbacks putting the company under pressure. A Wall Street Journal report revealed the company missed both key revenue and user growth targets. At the same time, OpenAI's legal battle with Elon Musk kicked off, centered on claims that the company abandoned its original nonprofit mission. And adding fuel to the fire, families of victims from a mass shooting in Canada filed a lawsuit against OpenAI and Sam Altman. The families allege that ChatGPT played a role in the shooting and that its safeguards fell short. Taken together, these moments highlight three core criticisms of the company. Questions about the company's financial durability, also concerns around Sam Altman's

• 4:51Ed Elson?

  leadership, and ongoing doubts about its commitment to safety. So kind of a trifecta of bad news here for OpenAI, Scott, which we are going to unpack now. We should probably start with this Wall Street Journal report, which I have to say was a little bit vague. We didn't really learn much from this. But there are two concrete revelations that we did learn. One is that OpenAI missed its goal of a billion users in 2025. And two is that they also missed on revenue. We don't actually know what the revenue number was. We don't actually know what the revenue target was. All we know is that they missed it last year.

• 5:36Ed Elson?

  And the reaction from the stock market was pretty severe. A lot of companies that have agreements with OpenAI in some capacity fell really hard on the news. So Nvidia fell 4%. Oracle fell 6%. CoreWeave fell 7%. SoftBank, which is a major investor, fell 12%. If you add up the amount of market value that was erased because of this one report from the Wall Street Journal, it came out to nearly $400 billion, which is roughly half of the entire value of OpenAI.

• 6:09Ed Elson?

  I'm going to ask you a question Scott, but it looks like you're getting changed.

• 6:14Scott Galloway?

  So hot in here. We're not using London's struggling with a sweltering 65 degrees today. And anyways, I'm sorry, lot trillions of dollars lost market cap, OpenAI.

• 6:25Ed Elson?

  Exactly. So well, $400 billion in market value was erased of other companies. And so we don't know what the value of OpenAI actually is because it's private. We can sort of get a sense from secondary markets, which aren't as liquid and aren't as sensitive to timing. But the point being they missed on this, according to the Wall Street Journal and other tech stocks were not happy about it. Not a good look for OpenAI. Your reaction Scott?

• 6:52Scott Galloway?

  I think this is more of an indictment on OpenAI and Sam Altman's leadership than it is on the space because it just strikes me, if you look at the big tech's earnings yesterday, AI is just, I mean, it is growing into its expectations or it is meaning in maybe even surpassing its expectations. And by the way, OpenAI probably had incredibly ambitious internal goals. So my guess is the company is still, you know, doing well, just not as well. The biggest, the biggest thing that's happened is that in just, I've never seen a recalibration of the market leaders this fast. You've never seen Pepsi overtake Coke this fast. You've never seen what was a distant number two in the eyes

• 7:36Scott Galloway?

  of the market in December become squarely the number one. So just some, some data here. Anthropic's recently hit 30 billion run rate and OpenAI's run rate is 25 billion. So all of a sudden, OpenAI is now the number two. And even more importantly, 80% of Anthropic's revenue is enterprise versus 40% at OpenAI and enterprise revenue is considered the white meat of this whole space. Anthropic expects to break even by 2028, two years away versus 2030 for OpenAI. And what's really striking is OpenAI is expected to burn 14 times more cash than Anthropic. It just looks like that Dario Amodei seems to be a better operator.

• 8:20Scott Galloway?

  And then according to Kalshi, in November of 2025, again, only what, six, seven months ago, OpenAI had a 75% chance of IPOing before Anthropic. And today, that number has dropped to 31%. And the odds of Sam Altman being replaced as CEO this year are up to 37% from 14% of the beginning of the year. So we, essentially every company but one, Anthropic, is, would pray for OpenAI's problems. And that is, it's not that OpenAI isn't doing incredibly well, it's just that they've ceded the number one position to Anthropic in what feels like overnight. But my guess is those numbers, that if you looked at those numbers, while they might

• 9:05Scott Galloway?

  not have met expectations, the sense I get is the company is still like on just an unbelievable march. I would argue that the court case is actually going to end really well for Altman. One of two things is going to happen. I think either Musk withdraws the case, or it is squarely decided in favor of OpenAI. I think that this is going, this court case, I initially thought it'd make them both look bad. I think it's going to absolutely, I think it's going to make Musk look terrible, and I don't think he cares. I think he kind of is almost enjoying his villain status. And Sam is going to come out of this, I think, as the big winner here. So I wonder if the court case is going to remove a cloud of uncertainty and a decision

• 9:49Scott Galloway?

  from the court, which I believe will be in favor of OpenAI, will be good for them.

• 9:54Ed Elson?

  I have thoughts on the lawsuit. I kind of disagree half with your comments, but I'll get to that in a moment. Let's just focus on. OpenAI's financials for a moment. I think one of our team members, Chris Nodine, you said it best. She said, you know, we're not in an AI bubble right now. We're in an open AI bubble. And I think that's really what we're seeing, where AI businesses across the board are completely taking off, as reflected in the earnings that we saw. I mean, these businesses are just, the numbers are just ridiculous. The growth rates are incredible, growing off of these ridiculously large bases. These are the largest businesses in the world, and they're growing at startup-like rates. It's just kind of insane what's happening here.

• 10:39Ed Elson?

  But the attention is turning towards like, how are you managing your balance sheet? And how are you managing your spending commitments? Scaling, yeah. Exactly. And you look at the way OpenAI is handling this. I mean, we talked before about how ridiculous and insane it was that they were saying they wanted to spend one and a half trillion dollars over the next few years. How many years exactly? They didn't really say, but they came out and they made these commitments. We pointed out that they had generated thirteen billion dollars in revenue, and they wanted to spend one and a half trillion dollars. It just, it made no sense at all. Well, they have now changed the number, and they're now saying publicly that they plan to spend six hundred billion dollars

• 11:21Ed Elson?

  by 2030. That is the number that they're saying. And that is still an insane number. It's less than half of what they said before. But it's still insane. It's actually in line with the amount of money that Meta is spending right now on AI. The only difference is that Meta's generating two hundred twenty-five billion dollars in annual recurring revenue, if we look at the most recent quarter, and OpenAI is generating twenty-five billion dollars in annual recurring revenue. And so when you just think about the amount that they're planning to spend versus the amount that they're actually raking in, it just starts to get a little bit ridiculous.

• 12:04Ed Elson?

  And then you think about these valuations, I mean, OpenAI, they lost raised at a $850 billion valuation, they're currently trading around 880, that's 35 times sales. I mean, there is so many reasons to not trust the trajectory of this company, not just the fact that we saw this Wall Street Journal report, which showed that they actually missed their expectations, but also the slew of other things, the fact that they are kind of lying about how they're going to deal with spending moving forward, the fact that we saw this Ronan Farrow article in The New Yorker, where literally every single person close to Sam Altman has said that this guy is basically a serial liar, that he has a serious problem with telling the truth.

• 12:49Ed Elson?

  So clearly, OpenAI is having some trouble right now. I think the question is, do we think that $880 billion at the current secondary markets valuation, is that fair? I would say it's, I mean, it's kind of a crapshoot either way, but the most important point would be that Anthropic is now more valuable on the secondary markets. Anthropic is now trading at a $1 trillion valuation, which is something that we thought might happen at the end of last year. And then eventually you did flat out make the prediction that Anthropic would overtake OpenAI. Let's just play that clip really quickly.

• 13:30Scott Galloway?

  I think Anthropic's raising at 350, OpenAI claims are raising at 850. Within a year, and I don't know what the relative numbers will be, but in a year, Anthropic is going to be worth more than OpenAI. Boom.

• 13:44Ed Elson?

  Boom. That's why they come here, right? When did we say that? When was that? I believe you said that in, I want to say February. You said it before it happens, and that's what matters most.

• 13:54Scott Galloway?

  Yeah, it's like, I actually think this court case is really good for Altman, because I think Altman compared to Daria Amadai makes him look bad, but Altman compared to Musk, I think he comes out looking pretty good. And unfortunately, it's got to be a huge distraction for Altman in an era where his company is struggling. But I kind of buy what Kelsey says. I think there's somewhere between one and three and one and two chance that by the end of the year, especially this pissing match with Satya Nadella.

• 14:21Ed Elson?

  They made up. They had their truce last year. They arrived at a deal and a lot of people would say that Sam Altman came out on top. I would say that they both got a decent-ish deal, but they did. They did kiss and make out.

• 14:33Scott Galloway?

  But wasn't there a memo leaked where Sam is shitposting Microsoft and blaming their lack of progress in the enterprise market on Microsoft? Do I have that wrong?

• 14:41Ed Elson?

  There was before. They had serious tensions that were flaring up. I guess my point being the new plot point is that they have supposedly made up as they finally came to a deal that would, I guess, OpenAI would be more happy with as of this week.

• 14:59Scott Galloway?

  Yeah, we said this a few weeks ago. OpenAI has the most negative momentum of any important company and then topic the most. It'll be this court. This court case is going to be really illuminating in terms of what comes out. I'm just trying to think. I don't think there's ever been a one becomes two and two becomes one this fast and this radical.

• 15:19Ed Elson?

  As reflected by how much Anthropic's revenue increased in a matter of months. They literally went from nine billion to $30 billion a year. And I believe that I believe that took them like a couple of months. And now they're ahead of OpenAI. OpenAI is at 25. I mean, how much can we even trust these numbers? I'm not entirely sure. It's all self-reported and I just can't wait until these companies go public and we actually know the numbers. I think it's going to be a very big deal. But yeah, I mean, the acceleration, the speed with which Anthropic is scaled and the amount of businesses that are turning to Anthropic, it is really unbelievable. I just want to turn to the lawsuit for a moment. I just, I think I directionally agree with you, but I think there are, there are a couple

• 16:04Ed Elson?

  of sort of interesting nuances here. I mean, so the reason that this is happening is Elon says, who co-founded OpenAI, for those that don't remember, he says that This was supposed to be a nonprofit and that's why he co-founded this company. And that's why he donated forty million dollars to this company in its early beginnings. Or not company, nonprofit organization. And then they did this sort of ridiculous switch where they suddenly decided, actually, no. Now we're a for-profit company. Now we're an actual enterprise. And he's saying that's ridiculous, which by the way, all of that is true. That is exactly what happened with OpenAI. It was supposed to be a nonprofit. And now suddenly it's a trillion dollar for-profit company.

• 16:48Ed Elson?

  So Elon is suing them for this reason. But is that really the reason? No, the real reason is that he is now competing with OpenAI via his company XAI, which of course he folded into SpaceX. So he wants to figure out a way to basically kneecap OpenAI and Sam Altman. So he's launching this lawsuit. Now, there are two main claims, legal claims that he is making in this lawsuit. The first legal claim is this thing called breach of charitable trust.

• 17:24Ed Elson?

  And this is basically just the idea that this was supposed to be. There was a, there was a break of, of, of promise by Sam Altman. This was supposed to be a nonprofit. They turn it into a for-profit, which means that the entire organization is illegitimate. It, it cannot hold. And he's pursuing this and the, the remedy for that could be that they break up the company entirely. Or that there's huge, huge damages there. But the legal standing for that case is honestly pretty weak. Cause actually it's the attorney general's job to assess whether nonprofit donations were used correctly or misused. He's suing as a donor.

• 18:06Ed Elson?

  I mean, his argument is that the entire organization is completely invalid. And the legal standing there isn't very strong. The other claim, which he has stated he's not actually that interested in, is a fraud claim. And that claim is actually a lot stronger. And basically, the the claim would be Elon was lied to about where his money was going and what his money would be used for. And therefore, he should get his money back. And that's very fair because he donated forty million dollars into this thing. Now it's not really being used for what he expected on a personal basis. And so maybe he should get his money back. And that's a pretty valid claim.

• 18:48Ed Elson?

  And if he does that, and he wins that, then he'll get forty million dollars back plus interest. Problem solved. Except no, because Elon doesn't really give a shit about forty million dollars and nor does OpenAI. And so I think that distinction really gets to the heart of this case here, which is Elon is intentionally choosing the kind of ridiculous route, which could potentially gut the entire company, but probably won't work out, as opposed to taking the normal route where he says, you guys defrauded me personally. But he's not doing that because he knows that it's not going to kill the company. And that is ultimately his goal here. It's not actually about achieving justice.

• 19:30Ed Elson?

  It's about trying to hamper OpenAI as much as possible, trying to make sure that they have to pay as much money as possible, such that they are behind in the race and they ultimately lose to XAI. So my prediction here is that he'll win, but only on the fraud basis. And they'll say, OK, you can have your forty million dollars back. And then he's going to complain and say, it was a hoax, it was a conspiracy, they should be paying me billions and billions of dollars. And instead, he just gets back the money, the amount of money that he put in. So a little bit of nuance there, but I think that that's directionally where we're where we're headed here. This isn't really about justice. It's more about how do I literally destroy Sam Altman's career?

• 20:12Scott Galloway?

  So I've spent some time with someone who, if I were a journalist, I could describe as someone close to the matter. And this is, this is some major points as described to me. One, Altman tried to raise a half a billion dollars when it was a nonprofit, that he was trying to raise money for OpenAI as envisioned as a nonprofit and could not raise the money. And Musk, seeing a commercial opportunity, said this needs to be a for-profit, that he was the one actively pushing for it to become a for-profit. And I, Elon Musk, need to own eighty percent of it and control it. And when OpenAI said, no, we're not down with that.

• 20:54Scott Galloway?

  He said, I'm out and signed legally binding contracts, giving up all ownership and all governance rights. And then it goes to a little bit about state of mind or intention. Okay, Elon Musk is claiming that he thought he was giving money to something that would help create guardrails to protect the world from the downside of AI, that he's worried about the world and it's in the impact of AI and wasn't interested in for profit. One, the fact that he was advocating for it to become a for-profit company that he would control flies in the face of that. And two, the fact pattern here does not foot well to Musk's claims of concern around AI. Because he then went on to found a company, which is arguably has the fewest guardrails

• 21:37Scott Galloway?

  around AI, that is a for-profit AI company, that is consistently seen as the one where you go to get, you know, to get porn or visualizations or, you know, it is the, people think that most, I believe, most, most thoughtful people who understand the space would go that XAI is the most, quote unquote, is the one with the fewest guardrails. So one, he was the one advocating to turn this thing into a for-profit as long as he got to control it. And when they said, no, that's not going to happen, he took his ball and left and went on to start a company that is known in AI LLM for having the fewest guardrails.

• 22:19Scott Galloway?

  So maybe in some sort of Pyrrhic victory, they give him his $38 million back. But I see this as nothing more than the best example of the biggest case in history of seller's regret. I went investor in what's called Boom Technology. Do you remember Boom, supersonic plane? Mm hmm. I'm fascinated with aviation. I invested some money, right? They hit a wall. They ran out of money and they did a raise and said, okay, we've run out of money. They, they brought the valuation way down. The CEO did the right thing, made it really compelling to put more capital into the company. And I, my prorata was going to be a decent amount of money. And I called some friends and my friends are like, aviation is a sinkhole and never pays off. And I called and I usually do my prorata and I didn't. And I basically got washed out of my stake.

• 23:04Scott Galloway?

  Fast forward, Boom was working on a supersonic engine and they've decided that that supersonic engine can be used as possibly an off-grid source of power generation for AI for data centers.

• 23:20Scott Galloway?

  Now, I'm not sure. I'm scared to look because I'm going to want to find a time machine so I can go back, find me, kill myself, and then kill former me, or in reverse order, I guess I'd have to do it. I think the company's trading at 10 or 20 times what it was worth a year ago when I was asked to do my pro-rata. But I'm not, the equivalent would be if I went back and sued them because I was angry that I missed out on this incredible AI opportunity. I think it is going to be very easy to depict what this is. Seller's regret. This isn't about him giving a flying fuck about the safety of the world from AI as he goes on to create a Nazi porn bar, cosplaying an AI company called XAI.

• 24:02Scott Galloway?

  This is about him missing out on the one space of the internet he doesn't own that he wanted to control, and he has seller's regret. And I think they're going to have no trouble portraying him as a villain that has decided he wants to control all of it. It's not enough to control space. It's not enough to control EVs in the US. I wanted to control all of AI, and I fucked up, and now I want back.

• 24:27Ed Elson?

  And by the way, something he admitted in the lawsuit is that XAI has been using OpenAI's models and distilling them for their own models. So he kind of admitted in the middle of the court, which is now going to be publicly known to everyone, that they're basically copying OpenAI's technology, that they're almost reliant on OpenAI's technology, which is kind of a big thing to admit on the global stage. So this is going to continue to go on, and I wonder what other things we're going to find out about these guys. I mean, it's interesting because both of them are highly controversial figures, and it's kind of two, they're both villains in different ways to the world.

• 25:11Ed Elson?

  And ultimately, this is really about reputation. Like, a lot of the legal bases for this case are kind of irrelevant, and they don't even matter. A lot of it basically just depends on like, how did people feel about these guys at the end of the day? Are we going to feel pro OpenAI? Or are we going to feel pro XAI? Or are we going to feel pro anthropos? Ultimately, public sentiment, at least among the consumer products, has been the thing that has driven the revenue for these guys. Anthropic's revenue exploded right after they came out as the good guys in a fight against the White House and OpenAI came out as the bad guys. So this is kind of like the question, like, who's going to show, who's going to end up being the more likeable figure at the end of all of this? And I think it's a really interesting question.

• 25:55Ed Elson?

  And I think it's highly possible, as you say, that compared to Elon, Sam is going to come out of this actually looking pretty good. And maybe it will be good for his business.

• 26:06Scott Galloway?

  I don't think OpenAI would settle at this point. I think OpenAI wants it all to come out and they want to, they want a clean, clean, crisp decision that exonerates them and shows Altman is the good guy here. And I think that's exactly what's going to happen. And also, if you look at the filings, my understanding is that Musk was putting it off because he wanted that cloud of uncertainty to hover over OpenAI. And so I don't, I, I think that my prediction is this is going to be a win for OpenAI.

• 26:37Ed Elson?

  We'll be right back after the break. And if you're enjoying the show, come join us on tour and hang out with us live. Get your tickets at profgmarketstour.com. We will be on tour at the end of May. Link is in the description.

• 26:56Speaker 00

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• 28:31Ed Elson?

  We're back with Prof G Markets. Big tech delivered across the board last week with Microsoft, Amazon, Meta, Google, and Apple all reporting earnings that beat on the top and bottom lines. But the market's reaction was far more mixed. So Scott, let's take a look at some of these earnings and we'll get into why investors were less than impressed with a few of them. Let me just run through the numbers really quickly here. This was just, I thought, an incredible quarter from everyone. So let's just look at Google first. As we mentioned, double beat revenue up 22% to $110 billion for the quarter. I should mention cloud revenue up 63% to $20 billion.

• 29:16Ed Elson?

  Search revenue grew 19%. And they also raised their capex to 180 to 190 billion dollars for the year. So I mean, we're just seeing more of the same, which is incredible growth on practically every business line, and they are investing more and more into AI. Turning to Amazon, double beat revenue up 17% to $182 billion. Cloud revenue up 28%. Capex for 2026, $200 billion. Looking to Microsoft, revenue up 18%. Cloud revenue up 29% to $55 billion. Meta was also a double beat, revenue up 33%. Ad impressions were up 19%. Prices per ad were up 12%.

• 29:59Ed Elson?

  2026 capex raised to between 125 billion to 145 billion dollars.

• 30:06Ed Elson?

  And then closing out with Apple revenue up 17%, iPhone revenue up 22%. I mean, the numbers start to become a little bit meaningless in a lot of ways, but the net, net here is unbelievable quarter from all of these companies. And the reactions from the market was a little bit different. Google was majorly rewarded. It's up 9% the stock is since they reported. Apple's up nearly 5%, Amazon's up 2%, but Microsoft and Meta have been punished. Microsoft is down 3% since they reported their earnings. And Meta is down nearly 9% since they reported. Where do you want to start here, Scott?

• 30:43Scott Galloway?

  And these are just staggering. The ability for Meta was up 33% year on year in terms of revenues. It's ad served us up, the price it's getting per ad, it's time. The way I would describe it is you have this nitroglycerin upward explosion of incredible usage and expenditures on AI by both enterprises and consumers. And demand appears to be actually almost keeping up with expenditures or expectations. But also the thing that's less talked about is, I think at the end of the day, these companies monetize attention, specifically attention on a screen, specifically attention on a phone.

• 31:25Scott Galloway?

  And I think over the last three months, we're all just fucking glued to our phones. If it's not, if it's not, if it's either Trump saying something incendiary or bombs dropping somewhere, I gotta think that just total time on a screen has, has had a step change upward. And these companies are able to monetize that. The theme around bifurcating the winners and losers from a markets reaction standpoint, I think is the following, and that is they're all performing. But what the market wants is what they believe that Amazon, Apple, and to a lesser

• 32:07Scott Galloway?

  extent, what Alphabet is offering, and that is they want the great taste of AI without the calories of what feels like just extraordinary increases in CapEx. And I think the, I think the thing that sort of set the tone or depicts the tension here is that I believe OpenAI and Anthropic illuminate the kind of what investors are looking for. And that is, I think why Anthropic is now above a trillion dollars in the secondary market is that Dario Moda is seen as a more responsible steward of CapEx. And the stat you quoted me that just blew my mind is that Anthropic is anticipating

• 32:50Scott Galloway?

  getting to profitability on one twelfth of the cap of, of, of the cash requirement. And so it basically, you look at this, they want the growth, but they're a bit intimidated. When these companies keep saying, well, we lied last quarter, the extraordinary CapEx is going to be even more extraordinary, it kind of freaks people out. So Big Tech didn't disappoint on performance. It, if it disappointed anywhere, it disappointed on timing. And that is the earnings say the businesses are extraordinary, but the reaction says the expectations were you would maintain this growth without the type of step change up in CapEx that you're asking for.

• 33:31Scott Galloway?

  And it, it's not, I mean, the way I would, the way I would think about it is that expectations are, are perhaps even greater. If expectations are, are kind of a combination of what you should be able to do on this amount of CapEx, the expectations. Possibly aren't being met because they're meeting them on the top line. But unfortunately, it's requiring even more CapEx than initially been anticipated. Does that make any sense, Ed?

• 34:00Ed Elson?

  Yeah, I think that makes a ton of sense. That's the big question. I mean, we're seeing some of the largest investments we've ever seen. As I mentioned, a lot of these companies are approaching $200 billion in CapEx for the year. That's how much they'll spend on building data centers for the year 2026. And the gigantic question for all of these companies is where is your return going to come from? Now, we've discussed how it'll work for OpenAI. And that is, I mean, they're not going to see a return until they say 2030. That's the time that they will see their first year of positive free cash flow. But that's a big bet. And also, the spending numbers just keep on bouncing all over the place. And we've talked about that.

• 34:44Ed Elson?

  But I think for some of these bigger companies, we are actually starting to see a return here. And that's, I think, what the market is starting to realize. The only company for which there is a gigantic question mark, and it is explained by both the valuation of the company and also the stock performance of the company since the earnings, is Meta. And that is Meta is spending, they raised their CapEx to $125 to $145 billion for the year. It's comparable to the amount that Microsoft is spending, Amazon's spending, Google's spending. The only difference is that Meta is the only one that doesn't have a cloud business. I mean, you've got Microsoft, which is selling their compute through Azure, Amazon doing the same thing through AWS, Google doing the same thing through Google Cloud.

• 35:30Ed Elson?

  Meta doesn't have that business. They generate 97% of their revenue from advertising. It is purely an ad business. And so the question for Meta is, what are you actually going to do with these data centers that you're building? Are you going to monetize these things? Or are you just going to own the stack and use it to, I guess, increase the revenues on your existing businesses to get AI to turbocharge your ad business? But the reality is they haven't really explained what they're going to do here. They've basically just sort of used these kind of vague allusions to how AI is the next transformative technology, it's going to change the world and you know, we want to be ahead of the curve. And you know, okay, fair enough, like that, that all generally

• 36:14Ed Elson?

  makes sense. But you look at the other businesses and you're like, well, I can see the ROI right now because they've already built these businesses and we're already seeing a return. They're monetizing these businesses or these data centers and these assets as we speak. Meta isn't doing that. And so they, they need to start getting their messaging straight on this front and they need to tell us, they need to tell Wall Street what their plan to monetize these data centers actually is, because right now they don't really seem to have a plan. And you're basically just praying and hoping that Mark Zuckerberg is going to figure it out. And given what he did with the Metaverse, which was a very similar example, where he just plowed a bunch of money into this distant dream and

• 36:57Ed Elson?

  said, don't worry about it. Trust me. And it didn't work out. You're asking for a lot from investors. And so if we look at the valuation of Meta right now, the forward PE is 20. It is the lowest of any of the companies we've just named here. Google's at 34, Amazon 33, Apple 32, Microsoft is, is down. We've talked about that at 21, but Meta is now the lowest, 20 times forward, forward earnings at the moment.

• 37:21Scott Galloway?

  Yeah, I think if you were to have a headline, I'm fascinated with Meta's earnings because it's just hard to imagine a company reports 33% revenue growth on a base of a this larger number. I'm just trying to think of the last time a company with this, this larger business grew 33%.

• 37:39Ed Elson?

  Right.

• 37:39Scott Galloway?

  But.

• 37:39Ed Elson?

  Fifty six billion dollars. Yeah.

• 37:41Scott Galloway?

  I mean, it's just staggering. But I think if you were to have a headline for the market's reaction, it would be, it's not that the headline isn't growth. They were hoping it'd be growth. 33% should be the headline. Growth should be the headline. But really, the headline from the market back was it's durability versus doubt and that the revenue is there and the margins are still strong. But the market is asking a different question. Is the AI spend actually going to pay off? And you're right, it's probably less clear with Meta than all of the others. And then I'm talking my own book here because Amazon is our stock pick for our big tech stock pick for 2026.

• 38:23Scott Galloway?

  But in Peter Golders, a colleague of mine at NYU Stern, he taught strategy. Now he's at the Tuck School and he had one of the great pieces of research and strategy that sort of one of those things I've just held on to when I first heard him talk about it 15 years ago, and that is innovators aren't the ones that reward shareholders. A true innovator goes first. And if you look at the first in PC computing and smartphones and online platforms, those companies probably don't exist anymore, whether it's CompuServe or AltaVista or the first PC company. The companies that reward shareholders are fast followers. Or put another way, it's usually the second mouse that gets the cheese.

• 39:08Scott Galloway?

  And I would argue Amazon is second mousing like no one's business. They're trying to play, they've said, there's an opportunity for a number two space connectivity company to SpaceX and we're going to be the number two with Project Leo. And now I also think they're saying there's a number two to AMD, CoreWeave and Nvidia. And now they're saying, Jassy is saying that Amazon is now one of the top three data center chip businesses in the world. And their chip business is actually now becoming a big business.

• 39:44Ed Elson?

  Yeah, 20 billion ARR, Tranium, Graviton, Nitro, all of their chips really starting to ramp up.

• 39:50Scott Galloway?

  And I think what the market wants, the market wants it's both ways, right? It wants the great taste of AI growth without the calories of like, oh, guess what? We're increasing CapEx by another. And so I think the narrative, if you will, that the street responds to is no longer, I'm going to raise a trillion dollars and buy 300 billion dollars of compute from Oracle. This is the Altman narrative to.

• 40:17Scott Galloway?

  Yeah, I'm going to participate in the AI boom. We're going to be a leader here, but we're adults and we know how to manage capex. And I think that is why, even more so than the growth story, I think that's why Anthropic is surging and OpenAI is kind of gone flat to down. And I think that this earnings call was basically an assessment of to what extent are you participating in the AI boom and your core businesses are really strong while at the same time showing some sort of, something resembling some level of discipline around capex.

• 40:53Ed Elson?

  That's right. The capex is almost the tail that's wagging the dog here. It doesn't even matter. They're all growing at ridiculous clips. So that's a given. That's Wall Street expects that. The question is, you say, is are you responsibly managing the balance sheet? And this is something that I was saying at the end of last year, that the market sort of rewarded in 2025, the, the growthy, ridiculous, uh, daydreaming stories of these companies like an OpenAI who just throws out these big numbers and says, we're going to achieve AGI, it's going to be incredible. But that 2026 would be the year where the responsible AI companies would be rewarded, such as an Anthropic, which is exactly what we've seen. And I think what we're starting to see here is that in a lot of ways, the most important

• 41:34Ed Elson?

  executive at each of these companies, these AI companies, it's not the product people, it's not even the CEO, but it's the CFO. It's the guy who's in charge of managing the balance sheet, making sure that there is a responsible, uh, uh, rate and, and plan for spending. And that's essentially what we're seeing in, in the way these stocks react. It's basically dependent on, are you proving that you're building AI and investing in AI in a responsible manner and that you have a plan? Uh, and most of these companies are doing that except for Meta. We should also maybe mention Apple. Uh, notably, there was no change to their capex, uh, guidance.

• 42:18Ed Elson?

  However, they did announce that they're going to buy another $100 billion worth of shares. I mean, this company just loves buybacks. Uh, I think. Eventually, they are going to get punished for this. Honestly, I think, I mean, we're seeing the return on AI. We'll see if John Turnus ends up deciding to actually invest more in this. But, you know, what we're seeing with all these tech companies, they want to own the rails, they want to own the infrastructure. That's what they're doing. They're getting paid for it. I think they will continue to get paid for it. So this was arguably the most important decision for Apple of the last 10, 20 years. Probably 10 years, deciding not to invest in data centers, not to participate in the AI race.

• 43:03Ed Elson?

  Jury's out on whether it was the right decision. But the more I see these numbers, these cloud numbers from Amazon, Microsoft, Google, the more I think, you know what? They might have made a mistake here, but the market's rewarding them. I mean, Apple is is up there. iPhone revenue was ridiculous, up 22%, $57 billion worth of iPhones. The business is still firing on all cylinders, but it is a huge question. Why didn't they get into AI?

• 43:27Scott Galloway?

  So Apple has what appears to be the greatest asymmetry in terms of trading at what feels like a very rich multiple on the lowest growth. But I think what the market has said is this is your under the mattress stock because

• 43:43Scott Galloway?

  Aswath Damodaran said, companies need to behave their age, right? That it's very difficult for a company that's grown really fast to acknowledge, okay, I'm no longer a teenager. I'm a mature company. I'm a baby boomer and I need to start returning shares to returning capital to shareholders who share buybacks, be more measured, thoughtfully manage costs. Recognizing I'm probably not going to grow 30 or 40% again, like when I was a teenager. And Apple, I think definitely has taken the other side of the trade and said, similar to how they decided not to engage in the search wars and just own custody of the billion most important consumers in the world and wealthiest, and then trade off all the warriors in the search wars against each other

• 44:28Scott Galloway?

  and extract $20 billion a year in a royalty payment of which 97% flows to the bottom line by being the the default search engine on iPhones. I think they have made a similarly conscious move to say, we're not going to go into this this out of control AI capex war. We're just going to be the front end that owns custody of the consumer and at some point play anthropic off against. Off against OpenAI and extract an enormous royalty statement. And to a certain extent, while Apple doesn't offer the upside, they're not going to announce thirty percent, thirty-three percent revenue growth anytime soon. At the same time, if you said to me, or you know, said to us, all right,

• 45:08Scott Galloway?

  all of these companies shit the bed in two quarters, but one kind of held on or didn't nearly have the down quarter. I think you'd likely say, oh, it's Apple. The likelihood they continue to sell a lot of phones, their services business continues to grow at a decent clip. And quite frankly, they're just not as vulnerable. If this AI Lollapalooza of of fifty percent response of CapEx, it's now responsible for fifty percent of GDP growth in the US, doesn't live up to its expectations. So I almost see.

• 45:40Ed Elson?

  But but also equally vulnerable to if it does. And that's the thing. I mean, it's a seriously risky bet here. I mean, just think about that decision, like, would you rather invest a hundred billion dollars into building data centers, which is supposedly going to be the picks and shovels of the next generation of computing and technology? Or buy a hundred billion dollars worth of stock at what is already a decently rich valuation? I think that's kind of a, that's a very bold move to say, no, no, we'd rather buy Apple stock than do what everyone else is doing. And I feel like they almost have a responsibility to explain to investors. By the way, investors don't seem to care, so maybe I'm the odd one out here.

• 46:20Ed Elson?

  But it seems like they they have a responsibility to explain, like, no, no, this is why we don't think this is the right move. We understand that everyone else in our position would be obviously going into data centers, obviously building out AI infrastructure. But the reason we think that is not the right move is XYZ. But they're not really doing that. They're kind of acting as if it's business as usual. But I guess, again, I guess it doesn't matter because investors are still happy with the stock. The stock rose, unlike, say, Meta or Microsoft.

• 46:51Scott Galloway?

  But there's different types of risk. The risk you're outlining for Apple is that they risk missing out on a lot of upside by not making this forward leaning CapEx investments in AI. But at the same time.

• 47:05Scott Galloway?

  They don't face an existential risk from AI. They're the equivalent of the masseuse or the plumber in big tech because no one is talking about vibe coding an iPhone or replacing the App Store or Apple Music with the latest cowork from Claude. So they are to a certain extent saying hardware in your iPhone, that's likely the most durable business in all of this. The most profitable product amongst all of these things is probably the most enduring. I don't see a lot of people saying, well, there's a scenario where AI could replace the iPhone or, you know, or their services. So the risk is they miss out on the upside, but they're not facing, a company like Microsoft

• 47:50Scott Galloway?

  faces an existential risk if they don't go hard at AI, right? They, if they miss the AI boat, that could literally disrupt the whole company. But I think Apple's saying, no, our job is to create the strongest, most aspirational, strongest signaling ecosystem in history with the premier signaling product in history. Nothing signals that you're part of the 1 billion most attractive mates in the world than having an iPhone and the ecosystem that comes with it. And it's a wildly profitable product. That supply chain, I don't think can be replaced by AI. Figuring out a way to get 2,000 distinct parts from probably 400 different sources to different

• 48:35Scott Galloway?

  regions in China and then build a phone for $400 that would cost $3,000 anywhere. That AI doesn't seem to be threatening that. Now, does AI threaten PowerPoint? Yeah. Does, you know, does AI, does AI potentially threaten?

• 48:55Scott Galloway?

  You know, YouTube, maybe, maybe not, less so. But I think that basically the market is saying it's kind of like P and G. If for a while, it doesn't, it's unlikely AI is going to disrupt detergent or diapers. And so P and G always trades at what feels like a fairly rich multiple relative to its growth. And I actually think that while Apple always gets arrows for not being as aggressive or as innovative. I think strategically, they are, they recognize we're a mature company. We're about managing our cash flow, returning cash to shareholders. And just as people shit posted us and second guessed us about not getting into the search wars. And also pulling the plug on a car, which was probably a smart move.

• 49:39Scott Galloway?

  We are not going to engage in this, this capex race around AI. And they might be wrong, but if they're wrong, the threat is they miss out on incredible earnings growth, growth. Not that they are disrupted.

• 49:52Ed Elson?

  Totally, totally. There's definitely a lot more downside protection there. But just on Microsoft, I, I agree that they are sort of in the thick of AI. But they're also leading in AI. And this is why I just think the valuation that I think they've got been so over punished here, trailing at 21 times forward earnings. I mean, the revenue is still exploding up 18%. The cloud revenue is up 30%. I mean, AI is not going to disrupt Azure. I mean, they essentially own, own the rails there. The question is, will they develop the technology to keep up with the likes of an Anthropic? Is Copilot going to continue to disappoint? I would argue they're probably going to get their act together on Copilot. They're probably going to come out with some incredible new product release.

• 50:37Ed Elson?

  And then suddenly the momentum changes on a dime, just in the same way that we saw the same thing happen with Google a year ago, a year and a half ago. When it was code red over at Google, because everyone just decided, oh, Google's behind because Gemini isn't that hot right now. And then suddenly everyone kind of realized, wait, no, this, this company is leading on AI. They continue to outperform every single quarter with their earnings. I think Microsoft is in a very similar position. It's still trading. I think it's around four to four ten at the moment. I still think that's incredibly low for the company. So I'm very, I'm very bullish on Microsoft still. I think all of these companies are performing incredibly well, but in terms of value,

• 51:21Ed Elson?

  especially compared to Meta, where I think the risks actually arguably are there because they haven't built their cloud business. I do think that Microsoft is really good value right now.

• 51:29Scott Galloway?

  Well, you're, you're depicting, you're illuminating something that's really important. And Microsoft, you were very bullish on it a few weeks ago. All of this has to be set against valuation. Bad companies can be good investments if they get cheap enough. Great companies can be shitty investments if they get expensive enough. Amazon year to date is up nineteen percent, say above our big tech stock pick for the year. Microsoft is down twelve percent. So this looks like to your point and the reason why you bought stock, that Microsoft, it's a decent entry point right now. Because year to date, it's the worst performer. And if you look at the earnings and the performance, you would say, okay, there's, there's some risk here. I don't know if it's overhang around

• 52:10Scott Galloway?

  disruption or the bullshit back and forth noise with OpenAI.

• 52:16Ed Elson?

  And it's in the software basket as well. It's part of the IGV. So it just gets sold off along with the rest of them. Yeah.

• 52:23Scott Galloway?

  Apple is, Apple's, you know, five percent. And Amazon, what was, what was the other ones? Oh, Meta. Let's look at Meta. Meta year to date is down six percent. So yeah, the, the entry point, I agree with you. Looking here and now, I think, you know, if, if Microsoft feels like this is a decent entry point and to your thesis that it might have been over punished, but the market, I think the market's just getting increasingly nervous with this capex. And likes that Apple's not engaging in this war and really wants CEOs who look a little bit more measured. And the good news about

• 53:10Scott Galloway?

  Zuckerberg is arguably one of the boldest CEOs in history. The bad news about Zuckerberg is that he is arguably one of the boldest CEOs in history. You know, see above, take $70 billion in shareholder cash and go into the middle of the street and burn it such that we could have a legless future. So fortunately, he has one of the most cash-generative companies in the world. So we can, you know, he can, he can break a leg and be up the next day and competing for, you know, in the giant slalom again. But the fact that they were up 33%, again, the earnings call that dictates how the market feels around this whole thing is, all right,

• 53:52Scott Galloway?

  there's growth here, 33%, but we're really interested in what we think is durability and whether or not anything resembling a return, can we get a return on this type of investment, on this capex that he keeps increasing?

• 54:10Ed Elson?

  We'll be right back. And for even more markets content, sign up for our newsletter at profgymarkets.com.

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• 55:57Ed Elson?

  We're back with Prof G Markets. Spirit Airlines is shutting down. After two bankruptcies in two years and a spike in fuel costs tied to the war in Iran, the company was facing a fatal crisis. At the end of last week, the Trump administration submitted a final offer to bail out the company. The administration was reportedly offering a $500 million loan in exchange for 90% of the company, but the deal fell through. This still raises a larger question, however, and that is, should the government have tried to step in and save Spirit Airlines at all? Scott, what do you think?

• 56:35Scott Galloway?

  Really, just one question here. What the actual fuck?

• 56:42Scott Galloway?

  The whole point of capitalism is we have winners and losers. The whole point of the private sector is they engage in full body contact violence. And if they figure out a way to develop margin power and bring together resources and sell them for more through IP, def management, culture, distribution channels, access to capital storytelling, there's no limit. We don't say, oh, it's ridiculous that you're worth $850 billion after being founded just five years ago. Have at it. At the same time, if you can't pay your debts, we let you go out of business. And by the way, as someone who has had companies I've started go bankrupt, who has invested in companies coming out of bankruptcy, bankruptcy is a feature, not a bug.

• 57:27Scott Galloway?

  Quick lesson in bankruptcy, chapter 11. A company cannot meet its obligations. Okay, but it still might be worth something. It declares Chapter 11. The equity holders who take bigger risks than bondholders get washed out. Sucks to be a grown up. You are looking for two, 300, 10x gains. Occasionally goes wrong. They get wiped out. The creditors seize control of the company. And under the protection of bankruptcy, they can get out of leases, out of gate obligations, out of union contracts, out of debt obligations. And they can restructure into an airline that actually works. And then other people come in and bid on it. And then with the smaller Spirit Airlines, it opens up opportunities for new airlines

• 58:11Scott Galloway?

  that might be better fucking operators than Spirit. And we have a snake of an economy shed its skin and come back stronger and more powerful. The whole point of having successful companies is that you let other companies go out of business. And when you bail out companies and the government starts picking winners and losers, which it is much worse that than consumers in the market, you end up with gigantic warehouses in Ireland full of DeLoreans that nobody wants, or Air France. Occasionally, you bail a company out because it presents existential risk to the economy. It made sense to provide banks and financial institutions with a credit line because if JP Morgan or Goldman Sachs or Bank of America went under,

• 58:56Scott Galloway?

  that could create literally lines around the corner in food lines. I get it. And by the way, most of those companies didn't need it. They were forced to take it such it wasn't a run on the companies that took it. That's existential risk. That's why Sarbanes-Oxley was put in place such that they wouldn't be back hat in hand with too big to fail. This fucking airline means nothing to the economy. It has a 3.4% market share in the US. If it goes away, it doesn't mean anything, anything.

• 59:25Scott Galloway?

  So the notion that there is any reason to bail this out, other than saying to the economy and the world and startups and investors from abroad, we have gone full Cronus, capitalism on the way up, socialism on the way down, that's Cronyism, attacks at the core fundamental belief of capitalism, and that is, we believe in winners and losers. This company should be allowed to go bankrupt, it'll reemerge stronger, it creates space and opportunity for new companies. And the notion somehow that airlines are some jewel or national pastime that we need to bail out makes no fucking sense. And we have been to this movie before. We bailed out United, Delta and American because the CEOs said, "We're all in this together." Well, guess what? Pre-COVID, they spent all of their

• 1:00:07Scott Galloway?

  free cash flow on share buybacks so that they could artificially juice the stock and the three CEOs could take $150 million in compensation. And then when COVID comes along and airline traffic absolutely goes to zero, all of a sudden they're fucking socialists and decide, "We're all in this together" and go hat in hand to the government. Burn, baby, burn. There's no, there is absolutely no justification other, any whatsoever to putting a single government dollar into Spirit Airlines, just as there was no justification for bailing out Delta, American and United. This company is meaningless to the economy. What is meaningful to our economy is that we believe in winners and losers and full

• 1:00:48Scott Galloway?

  body contact violence of competition that creates better companies, stronger companies that create more tax revenue, more jobs, more startups, better new airlines, better management incentives. What incentive does this give to other airline CEOs if they get bailed out by the government? Oh, fuck it. I'll just make bad decisions and maybe I'll get bailed out. I don't like bailout of student loans or medical debt either, just so I can piss off my friends on the left. You can't have moral hazard. There has to be a downside in business to making really bad decisions, or quite frankly, just getting really unlucky. And Spirit Airlines, if you want Spirit to be around in five years, let it go bankrupt.

• 1:01:31Scott Galloway?

  Because traditionally, across all Western economies, when you bail out a company what's? All you're doing is planning the next bailout. Because they never get the opportunity to right-size and they never have the incentives to actually do what's required to make the hard decisions to turn into a more robust. Survivable company. Anyway, thank you for my TED Talk.

• 1:01:50Ed Elson?

  I mean, just sort of the data here. I mean, how badly this company has been managed. They've been losing money every year since 2020. They lost $2.7 billion in 2025. This year is going to be even worse because of fuel prices. And according to J P Morgan, if fuel prices remain elevated where they are, then Spirit's operating margin is going to go from negative 7% to negative 20% this year. And then you compare it to like the other airlines who are basically just figuring it out. Like Delta is dealing with the fuel costs by cutting 4% of their flights this quarter. They're also already raising prices and also planning to raise prices even higher to offset the fuel costs. We're seeing that

• 1:02:30Ed Elson?

  with some of the other airlines as well. Like, I mean, there's a way to prevent going into bankruptcy and that's basically means like managing your business correctly. And so what I don't really understand, I mean, you you made the point, they're a very, very small airline, 3.5% of of domestic US airline market share, like extremely tiny as a business, really doesn't matter, no systemic risk, no issue for consumers. Why is he doing this? The only answer I can come up with is that he kind of likes this practice of investing in companies as the government. Like, he enjoyed doing it with US Steel. It feels macho. You

• 1:03:12Ed Elson?

  take a stake. He enjoyed doing it with Intel, which we should mention is absolutely ripping right now. And now he gets to brag about it because the stock's up. I think it's doubled within a month. And so now he gets to say, oh, I made I made a huge return on this investment. It seems like that's probably the reason that he just finds it fun. But all the while, I mean, he's using taxpayer money to fund this stuff. He might as well just burn the money itself.

• 1:03:38Scott Galloway?

  He's a rich kid with terrible business judgment that leaves a trail of bankruptcies and unpaid subcontractors that cosplays a business person. He thinks it's fun to play business. And by the way, he's conscripting you into owning Spirit Airlines. If you're a taxpayer, you're becoming an unwilling unwitting equity holder at fucking Spirit Airlines. And also, true story, I was a bartender outside of college and the CEO of Spirit Airlines came in and said, I want to draft beer. And I said, that'll be 50 cents. And he said, that's really cheap. And I said, well, look. It's also $3 for the glass, $4 for you to stand, $8 if you want to sit down and three times every, $3 every time you want to use the bathroom. Get it? It's sort of a Spirit Airlines joke. That wasn't easy to stitch in a Spirit Airlines joke. That wasn't easy, Ed.

• 1:04:23Scott Galloway?

  Look, I mean, granted, he's doing worse shit in this. A lot of people are thinking, okay, I didn't sign up for spending between 25 and 80 billion dollars to bomb Iran. But capitalism, the whole point is I get to choose what I invest in and I have no desire to be an equity holder in Spirit Airlines. So this notion somehow that there's, this makes no sense. And I hope, what's so striking to me, or what's really actually encouraging to me is a lot of Republicans are saying, this makes no sense.

• 1:04:53Ed Elson?

  It's the least Republican, it's the least conservative thing you could do. It's like the most out there. I mean, it's practically communist in a lot of ways.

• 1:05:01Scott Galloway?

  There are a bunch of great companies on the verge. Saks is a great company. We let Saks go bankrupt. It's a great brand.

• 1:05:10Ed Elson?

  Honestly, that's a good, that's a good target for Trump. He'd love, he'd love to take over Saks with us.

• 1:05:14Scott Galloway?

  Oh my God, I loved taking my mom to lunch at Saks and I love the beauty and cosmetics counter there and they, God, we can't let Saks go out of business. No, we can't. And then it repackages and it reemerges as an online thing. I mean, oh my God, we can't, Ed, we can't let all birds go out of business. For God's sakes, have you seen those plush velvet shoes? It's a, it's an innovator, Ed. We can't let all birds go out of business. Sure we can. Anyway, I, this is, this is totally head up your ass. I don't understand capitalism. I don't understand economics. And the CEO here is happy to pay himself on the way up and then go hat in hand and ask for a bailout.

• 1:05:56Scott Galloway?

  It reminds me when that dipshit from Shake Shack figured out a way to get around the loopholes with the PPP Act and get a bunch of money for all the Shake Shacks that were making a shit ton of money and claimed that we were all in this together. Yeah, fuck you, you're in it for you and you're taking money from, you're taking money from taxpayers. This is insane that they would accept.

• 1:06:19Scott Galloway?

  And or ask and or receive a bailout from the federal government. And all you are doing, if you are at Spirit right now and you're an employee there, yeah, a lot of you are going to lose your job under the auspices of bankruptcy. I bet the most, most of you are going to keep your jobs. And in five years, more of you will have jobs. If you're granted Chapter 11 bankruptcy, the only people that get hurt here and they get hurt hard are the equity holders who take risks. That's the point. And people stop, people will stop by, people will be afraid to, to, to, to invest in debt if all of a sudden equity holders are consistently bailed out. There are some people, some bondholders who went into this thing.

• 1:07:01Scott Galloway?

  And, you know, I'm beside myself, Ed. I'm beside myself.

• 1:07:07Ed Elson?

  Yeah, it's also going to create real incentives to continue to sort of suck up to Trump. We are increasingly seeing this sort of kingmaker economy dynamic where he'll basically just bail out and give handouts to anyone who sucks up to him. So honest, like what you mentioned Sax with Av there, like honestly, a great strategy for, for, for Sax right now is to just go up to Trump and just like start becoming friends with him because there's a genuine possibility that if he likes you enough, he'll bail you out and he'll give you free money. Cause that's exactly what we've seen with Spirit here. And it's exactly what we've seen with plenty of other companies, including the people that he has pardoned, the crypto fraudsters who were set to go to jail for ripping people off billions of dollars.

• 1:07:50Ed Elson?

  And then they suck up to him and then he gives them a pardon and then he gives them free money. That's essentially what we're seeing here. Just want to go back to Intel for a moment because we, as, as I mentioned, Trump and the US government did take a stake in Intel. That I think was, you could sort of make more of an argument for, like that there's more of an argument to be made that Intel is systemic in some way, although it's honestly quite hard to make that argument, but it's certainly easier to make it about Intel than it is about Spirit. But just on the topic, Intel is going crazy right now. They're up, the stocks up 115% in the Past month, it's up 366% in the past year.

• 1:08:34Ed Elson?

  And actually, it is one of the companies that you pointed out as a fallen angel is what you called it. You picked a few companies in your, in your no mercy, no malice post in, in the fall of 2024. Companies that you thought were undervalued, that had some opportunity. You said, quote, Intel just needs to show a pulse to substantially increase its valuation. Indeed, I mean, it's been one of the best performing stocks of the year, perhaps the best. I need to check that. Any reactions to Intel absolutely skyrocketing right now?

• 1:09:06Scott Galloway?

  We got this right. It's up fivefold since we said that.

• 1:09:10Scott Galloway?

  And here's what we're doing, Ed. We're going the other way. This company's off 50% plus in the next six months. It now has the highest forward PE multiple of any large cap chip stock. It trades at 118 times forward earnings versus AMD at 50, Amazon at 32 and Nvidia at 26. And at the same time, its business is expected to grow slower than all the peers that are trading at a lower PE. This thing, was it buy 80% ago? It is a short at 5X right now. It is a short at 118 times forward earnings. This company is way out over its skis. Good for the people who bought in when the thing was almost left for dead.

• 1:09:54Scott Galloway?

  It is not, it is not at a, at 118 times earnings. Look out below. We are reversing our prediction here. After seeing a 400% increase, we are going the other way. Our prediction, Intel cut in half in the next six months.

• 1:10:12Ed Elson?

  All right, let's take a look at the week ahead. We'll see earnings from Palantir, AMD, ARM, Pfizer, Novo Nordisk, Walt Disney, Uber, CVS, McDonald's, Airbnb and CoreWeave. And we'll also see the employment report for April. Scott, do you have a prediction?

• 1:10:30Scott Galloway?

  I just made one, Ed.

• 1:10:31Ed Elson?

  You just made it. Intel cut in half over, over what timeframe?

• 1:10:35Scott Galloway?

  118 times earnings growing slower than all of its competitors. Look out below. I get the timing wrong. Let's, let's, let's say 12 months.

• 1:10:43Ed Elson?

  12 months.

• 1:10:44Scott Galloway?

  I think this is an easy one, unless it becomes a meme stock. But, or, or Trump weighs in and tries to merge it with Spirit Airlines. I just.

• 1:10:53Ed Elson?

  I like that. It could happen. It's not that crazy. It's not out of the question. I still think the Saks, I think the Saks takeover is the best idea we've come up with on the pod. I like it. My prediction is that Elon is going to get his $40 million back. OpenAI is going to win the larger case, but ultimately they say, okay, if you're so upset about being ripped off, here's your money. He'll get the $40 million. He'll complain about it because it's not exactly what he wanted. He wants the whole company to come falling apart. This isn't going to be the reason that happens.

• 1:11:23Scott Galloway?

  So by the way, what you just described is a 99.99% win for OpenAI. You're predicting a near total win for OpenAI.

• 1:11:30Ed Elson?

  A near total win for OpenAI, but I think he gets his money back. I think he's not going to be happy about it.

• 1:11:39Ed Elson?

  This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is Dan Shalun, Isabella Kinsel, Chris No Donahue, and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof you Markets from Prof you Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the markets.