Meta’s AI Promise, Microsoft’s Disappointing Beat & Why Google Should Spin Youtube

Scott and Ed open the show by discussing the U. S.’s GDP growth, Reddit’s earnings, Eli Lilly’s third quarter drug sales, and xAI’s new funding round. Then Scott and Ed break down big tech’s earnings and discuss how the tech companies are using capital as a weapon. They also examine the shifting media landscape and explain why advertisers have been cutting their spending on legacy media. Finally, Scott offers his prediction for the Presidential election. Check out Prof G Markets in Spanish and Portuguese on Youtube. Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 0:30Speaker 01

  Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.

• 1:00Speaker 02

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior light beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 1:29Scott Galloway?

  Today's number, $20 decillion. That's how much Russia has fined Google for blocking its news channels on YouTube. A sexual predator, a racist, and a Russian spy walk into a bar, Ed. The bartender says, what can I get you, President Trump?

• 1:56Scott Galloway?

  Boom, a little election humor there. We're gonna have us election. We'll count some votes, says James Carville. That guy's gotta be like 110, the LSC. That guy, that guy, I like him. Do you like him? Do you like James Carville?

• 2:08Ed Elson?

  I think I prefer your, your impression of him. I think that's sort of my highlight so far.

• 2:12Scott Galloway?

  I appreciate that. It must be bonus season. Someone's being, someone's kissing someone's ass. Hello, plucker up, you little, you little podcast co-host bitch. Today, we're discussing earnings from Google, Microsoft and Meta. But first, here with the news is PropG analyst Ed Elson. Ed, what is a good word? How are you?

• 2:32Ed Elson?

  I'm doing very well. I didn't know that 20 decillion was a number, but I looked into it. It's 20 trillion times a trillion times a billion. And the global GDP is 100 trillion. So that should put it into perspective. Just shows you, the Russians have their head screwed on straight. That's what I'll say about that.

• 2:51Scott Galloway?

  That's actually what our producer Claire requested as a bonus for managing young, irresponsible podcasters.

• 2:58Ed Elson?

  That's right.

• 2:59Scott Galloway?

  We can't quite get there. This is a profitable business, but no, I had never heard the term decillion either. Where are you at? You're in New York?

• 3:06Ed Elson?

  I'm in New York, as always.

• 3:07Scott Galloway?

  Wait, we're past Halloween. I need more banter. Pretend I'm interested in your life. What are you doing for Thanksgiving?

• 3:13Ed Elson?

  I haven't made a Thanksgiving plan yet.

• 3:15Scott Galloway?

  I know what that's like. It's okay, soldier. Things will get better.

• 3:18Ed Elson?

  I could go, but I could go back to London, but it's kind of weird to celebrate Thanksgiving in London. It's not really.

• 3:23Scott Galloway?

  Well, yeah, they don't have Thanksgiving. We, we left them.

• 3:26Ed Elson?

  Yeah, exactly. What are you doing for Thanksgiving? Are you gonna celebrate now you live in London?

• 3:30Scott Galloway?

  No, I'm doing my world tour. I'm back and I got back to London yesterday and in two weeks, I head to New York for a speaking gig, then to Los Cabos for Baja Summit where I'm speaking, and talking about vertical farming and doing mushroom chocolate at night and listening to some DJ who supposedly is hot. And then I go to Vegas or I go to LA for another writer's room, because I don't know if you've heard, I'm working on an original scripted drama for Netflix.

• 3:57Ed Elson?

  So what do you do in the writer's room? Do you, do you kind of like, sort of shout over them at sort of things they're doing wrong? Or how does it work?

• 4:06Scott Galloway?

  Uh, no, it's the guy, the showrunner and the lead writer will say, well, what do you think, Scott? And I'll say, no, they would never say that, even though I'm not listening. I just, I pretend that what they're saying is unrealistic.

• 4:17Ed Elson?

  Okay, so I'm kind of on the right track.

• 4:19Scott Galloway?

  I'm supposed to be the person that puts you in the room that makes it feel authentic. And I'm supposedly the person that understands these people, which is, which is kind of comical, but yeah, it's fun.

• 4:29Ed Elson?

  It sounds very fun. You don't actually have to do the writing. You just kind of like opine on what's happening. It sounds.

• 4:36Scott Galloway?

  You know, you know me, I don't like to actually work.

• 4:40Scott Galloway?

  It's, there's no real work involved in this whole Prof G enterprise for the, for the Prof G. It's actually a lot of fun. I get to envision scenes and I'm working with this really talented guy named Scott Burns and Meteor Res and all these super talented people. So, you know, so far, so far we're in the honeymoon period. We'll see.

• 4:59Ed Elson?

  Sounds like the best job ever.

• 5:00Scott Galloway?

  All right. Enough of that shit. Ed, stop the line. Get to the news.

• 5:02Ed Elson?

  Well, before we get started, just a quick reminder to subscribe to Prof G Markets on its dedicated feed. Type in Prof G Markets. Wherever you get your podcasts, hit follow and tune in to our interview with Anthony Scaramucci on Thursday. That interview will only be available on the dedicated feed. And now let's start with our weekly review of market vitals.

• 5:28Ed Elson?

  The S and P 500 declined, the dollar fell, Bitcoin rose, and the yield on 10-year treasuries increased. Shifting to the headlines. US GDP grew 2.8% in the third quarter. That was slightly slower than the previous quarter and just below expectations. However, economists were largely encouraged by the growth, driven by strong consumer spending on goods. Reddit turned a profit for the first time ever, with revenue reaching almost $350 million in the third quarter. That's up 68% from a year earlier. The company also reached nearly 100 million daily users and those strong earnings sent shares up more than 40%. Shares in drug maker Eli Lilly fell more than 6% after its third quarter profit and revenue

• 6:10Ed Elson?

  missed analyst expectations. The company also reported disappointing sales of its weight loss and diabetes drugs. And finally, Elon Musk's artificial intelligence startup XAI is in talks for a funding round that would value the company at $40 billion. That's nearly double the valuation from its previous round. Your thoughts, starting with this national economic data GDP growth in America, 2.8% in Q3.

• 6:37Scott Galloway?

  A GDP number doesn't mean a lot unless it has a benchmark. So just some benchmarks there. Japan's annual GDP growth was up 0.3%. So we're growing nine times faster than Japan. France up 1.1% and Canada up 1.3. I mean, this is just.

• 6:54Scott Galloway?

  The economy here, it's just really striking to listen to these kind of person on the street interviews about how people feel about the economy. It's so obvious that there's kind of a vibe session, as Kamala Scanlon called it, or people, again, have this habit of crediting their character and their grip for their raises and blaming everyone else or blaming the government for whatever price hikes there are. But our growth is impressive. And 2.8% may not seem a lot, but what that means is about every 25 or 27 years, the size of the American economy would double.

• 7:26Ed Elson?

  In addition, we have this new inflation data that just came out. It's down to 2.1%. In other words, inflation has officially been dealt with. Meanwhile, you look at other developed nations that have struggled with not only higher inflation than we had, but also longer inflation. So it sort of makes the case, well, not sort of, it does make the case for Kamala Harris. If you believe that Kamala Harris is just a continuation of the current administration, and if you care about the economy, then this is a big reason to vote for Kamala Harris. But if, you've made this point before, she should be making a way stronger argument about how she's sort of the economy vote. If you care about the economy, you should be voting for Kamala Harris. It hasn't really resonated.

• 8:10Ed Elson?

  But for those of us that care about statistics, that care about data, what the data is actually telling us, and when you look at the US compared to other nations that have struggled with problems way worse than ours, you know, the answer is, is pretty clear. Statistically speaking, Kamala Harris should be your answer.

• 8:27Scott Galloway?

  I so badly want to be head of comms for like 11 days for the Harris campaign.

• 8:31Ed Elson?

  I've heard people saying you should be, by the way.

• 8:33Scott Galloway?

  I just think she should have in her back pocket. Every time someone starts complaining about the economy, saying the economy is saying, okay, Sean Hannity, there's 190 sovereign nations, you're an intelligent guy. What? Economy globally is stronger than ours right now. Name it. Instead, they always go to this democratic self hate of, I know things are tough out there and we have work to do. It should be bitch, we are on fucking fire. Get your head out of your ass. Anyways, okay Reddit, why don't I listen to my own advice? I bought some stock here, but not enough. I believe the stock is now at about triple where it priced in its IPO about two months ago.

• 9:12Ed Elson?

  Can I ask how much you bought?

• 9:13Scott Galloway?

  You can ask.

• 9:15Ed Elson?

  May you answer?

• 9:17Scott Galloway?

  I think I bought about $3 million for the stock, but I pared some of it. So I don't own nearly as much as I'd hoped, but I've done very well. But it pops so big, the first day I trimmed some of my holdings and I just didn't listen to myself. I knew this thing. I still think it has more room to run. Anyways, it's revenue of 68% year on year. Daily users is up 47%. They're going global. They're being really smart. They've translated their posts via AI into French, Spanish, Portuguese and German. And it's international daily active unique visitors increased 44%.

• 9:49Ed Elson?

  Which was huge. And it's just such a simple innovation. It's such a great use case for AI, just simply translating the language of your content. But it's so, so effective. It essentially just 10X is your total addressable market. And that is what we're doing, or at least we're trying to do it. We're using AI to translate this podcast into Spanish and Portuguese at the moment.

• 10:27Ed Elson?

  But I think this is something that everyone in content should be looking at. How can we figure out a way to just overnight flip a switch and make this all available to the eight billion people across the entire globe? It's just a really quick and nice way to just skyrocket your total addressable market. So that would be the first thing that I would, I would commend Reddit on. The second key driver of their growth actually was not intentional, but it's very interesting. And that is, Google recently changed the way it ranks search results. So they they made this update called the Hidden Gems update. And what they've done with the algorithm is they're now preferring what they call authentic

• 11:08Ed Elson?

  content, which is the content that is generated by users, content you find on forums and on chat rooms. And so as a result, you will find that Reddit is showing up more and more when you search things on Google. It's also appearing higher in your rankings. And here's a great stat. Reddit is now the sixth most Googled word in the US. So it's this great combination of, you know, this intentional play with AI, but also the market dynamics are shifting to Reddit's benefit. And it's just, it's just translated to this explosion in the business and in the stock. So incredible quarter for Reddit.

• 11:45Scott Galloway?

  And when you were talking about flipping a switch and accessing a global market using AI, and again, the operative term there was flip the switch and go global. You sound like me in our all hands last week, where at that point, the person who runs the company, Catherine Dillon, said, bitch, you translate this shit into Farsi and try and find the equivalent of ZipRecruiter in Iran to advertise. It's not quite flipping a switch is what the pushback I got.

• 12:12Ed Elson?

  It's flipping a million switches.

• 12:13Scott Galloway?

  Yeah, it's and and someone actually has to build the switch and manage it while I I just, you know, the podcast hosts say, flip a switch and let's go global.

• 12:22Ed Elson?

  This is strategy versus operations.

• 12:24Scott Galloway?

  Yeah, this is the difference between being front of front of house and back of house, right? So I interviewed the CEO at their annual advertiser event, and they have big, they had big advertisers in the room. I saw the CMO of Mars, the they had the biggest media agencies there. It feels to me a little bit like, kind of, I don't know, Meta or Pinterest or Snap in the early days. One of the reasons I'm going to kind of kiss the ass of the CEO, that he seems like a nice man, is I bet my prediction is they're going to have an amazing party at Cannes in the next one or two years. They're going to decide, we need to be, you know, stroking the hair of people who we are putting out of business and get, bring them to some great

• 13:04Scott Galloway?

  party and get Dua Lipa or, or Bad Bunny or somebody. Anyways, we're going, we're going to the Reddit beach party. That's what I take away from all of this.

• 13:13Ed Elson?

  I can't wait. I'm, I'm waiting for my invite. Let's move on to Eli Lilly. As many of our listeners probably know, Eli Lilly sells Zepbound and Munjaro, which are these GLP-1 drugs. They are the alternatives to Ozempic and Wegovy. And it's not selling as much as people had thought, or at least that Wall Street had thought. And the obvious question is of course, why? What is going wrong? Now, what's interesting is that the CEO's answer to that question was that there isn't a problem with demand, but there is a problem with supply. So supposedly, the suppliers of the inventory for these drugs, those suppliers cut down on their stock and it affected Eli Lilly's ability to get the

• 13:55Ed Elson?

  drugs out. But as a Barclays analyst pointed out, if that's true, that could only have accounted for around 20% of that drop off in revenue. In other words, there must be something else afoot here. Something else is going wrong in the Eli Lilly GLP-1 drug story. And it can't just be this sort of chokehold on, on inventory. And certainly, Wall Street doesn't believe that story either. So I, I have a few thoughts of my own as to what might be going on, but I will throw it back to you. What do you think could be the problem at Eli Lilly that the CEO did a bad job of explaining, or at least won't tell us?

• 14:36Scott Galloway?

  I wonder if we keep hearing about all these compounded GLP-1 producers being able to sell, I don't know if you call it off market, but there's a bit of a glitch in the matrix or a loophole where if a product is sold out, you can build almost like a generic version of it that costs much less. I gotta think that that's denting demand a little bit. And I would think that, and not only that, you have a lot of these kind of upstarts are sort of scrappy. And maybe don't take as institutional approach, but are great marketers and understand new mediums. So I wonder if it's some of the new guys or these compounded GLP-1 producers maybe slowed their growth. What are your thoughts?

• 15:17Ed Elson?

  I was thinking that too. And if you look at Hims, which we have discussed before, they have been getting into the GLP-1 game. Yes, the compounded version. Their revenue increased 52% last quarter and a large part of that was their weight loss drug business. And there are several other companies that are offering these compound alternatives. It's sort of becoming a growing space. And I think it is possible that this duopoly that we've seen on semaglutide that has been owned by Novo Nordisk and by Eli Lilly, it could be a little more fragile than we think. The other thing I think is worth mentioning, which one of our team members, Jessica Lang, pointed out, and it's a simple but important

• 15:58Ed Elson?

  point is, you know, when you think of GLP-1s, Monjaro and Zepbound do not come to mind. The two names that come to mind are Ozempic and Wegovy. And so it could be just a simple brand recognition problem that these products just aren't present in the public discourse enough. If you've been watching the World Series recently, you will likely have seen this Wegovy ad over and over, this new Wegovy jingle that is probably stuck in a lot of people's heads right now. So I think the other explanation here could be a very simple issue. It's just a marketing problem and a brand awareness problem. We know what Zepbound and Monjaro is because we study this stuff for a living. But for the average American,

• 16:40Ed Elson?

  you just think Ozempic and Wegovy, and you probably don't even know what GLP-1 is either.

• 16:44Scott Galloway?

  It's interesting. I agree with you. I usually don't like the idea of typically when I walk into a brand and they say they're, they want to show me a brand campaign and they're going to spend money on advertising. I usually say, well, if you're spending a lot of money on advertising, usually you have somebody who wants to hang out with really cool, interesting people, which ad agency people are, or you're out of ideas because the companies with the best products don't need a lot of brand marketing. In this case, I think an awareness campaign. Exactly around, you said around Zepbound and Monjaro. Awesome. Monjaro is awesome. If I came back and in my next life as an MMA fighter, I want to be called Monjaro. I think that's a badass name. It's a really cool name, Monjaro. So anyway, but I agree with you. I think they need- Fire up the ad budgets.

• 17:26Scott Galloway?

  Yeah, get some awareness out of that. There's so much money on the line here. Also, supposedly there's a lack of scarcity that finally there's enough production here to meet demand. I wonder what's going to happen though when it reaches into the markets it should be in. I'm just such a huge fan of this technology. Speaking of which, let's bring this back to me, Ed. I'm doing this NAD treatment. Have you heard of this?

• 17:50Ed Elson?

  Only from you mentioning it last week.

• 17:53Scott Galloway?

  Ed, that's it.

• 17:54Ed Elson?

  I'm fine. I'll, I'll leave.

• 17:56Scott Galloway?

  No decillion dollar bonus for you.

• 17:58Ed Elson?

  I'll make my way out.

• 17:59Scott Galloway?

  Just Claire's getting a decillion dollars. Anyways, this NAD stuff is really, really powerful, but I wonder if it has a similar compound as GLP-1 because I have noticed, I'm losing my taste for the sauce and I don't, I'm going to fit right into Baja Summit. I told you about Summit last year. They, they all take drugs, but they don't drink. I would bet, going back to Eli Lilly, I apologize, I'm all over the place. This fucking NAD was supposed to give me focus. Maybe it isn't working. I think this is probably a buying opportunity. I think anyone in this market with two great brands or one great brand, Monjaro and Zepbound, that's a terrible-

• 18:40Scott Galloway?

  You're bound for Zep. Is Zepbound? That sounds awful. That's like some rock climber started, you know, some bad ropes company or something. I think other than the CEO making lame excuses, I'd say on this one, kind of, kind of buy the dip.

• 18:55Ed Elson?

  Our final headline is XAI, which Elon, this is Elon's AI company, which he is supposedly trying to raise a round at a $40 billion valuation. Just a reminder of what this company is. So people may remember the premise of this company was to create a competitor to ChatGPT that was, quote, more- Truth seeking. So for a while Elon was calling it kind of jokingly truth G P T. He saw how successful chat G P T had become and he wanted to make a competitor that was also less woke, pretty much. So X A I did build that product and the product is called Grok.

• 19:38Ed Elson?

  Many people may have heard of it and it's available to all paid users of the X platform formerly known as Twitter. I've used it. It's fine. There was a period where it tried to be anti woke and funny. And it felt like a not very funny guy who's trying to just crack jokes at every second. It wasn't a great product.

• 20:00Scott Galloway?

  Yeah, it's the Tony Hinchcliffe of L L Ms.

• 20:02Ed Elson?

  It's exactly right and they fall flat. So I'll get your reactions to X A I in this funding round. There are a few more details we can go into, but what are your thoughts on this round?

• 20:12Scott Galloway?

  So I think this is Musk's next opportunity to turn forty billion dollars into ten. My sense is this is now a distant fourth or fifth in the L L M market. And he did some sleight of hand trying to give, take the rights to the data, I think of Twitter and spin out X A I and he got a disproportionate amount of the firm. I would have gone ape shit crazy if I was a shareholder in Twitter. But Grok right now is a distant fourth, fifth or sixth, trying to trade at the same valuation as Anthropic and that's the analog here. And I would imagine Anthropic has dramatically more traffic, revenues, better technology, et cetera.

• 20:55Scott Galloway?

  And what they keep leaking is that Jensen Huang did say that it's easily the fastest supercomputer on the planet. X A I has built its own data center, but I'm not, I'm not sure if that ends up being much of a competitive advantage anyways.

• 21:09Ed Elson?

  I think that's an important point is, is, is that a competitive advantage? When I look at XAI, it's like there are three main differences that make it different from other AI companies. The first is that Elon Musk is leading. So that's a big deal. It means you can raise a bunch of money. The second is, as you said, they're building their own data centers. And that's what sets it apart from OpenAI. OpenAI does not own any data centers. Instead, they essentially rent their compute from Microsoft. And that's why they have that partnership. And then the third big difference is that XAI is building its own frontier models, and that's where it's similar to OpenAI, but not similar to a company like Perplexity,

• 21:54Ed Elson?

  which is building models on top of the models that are built by other companies like OpenAI. So in other words, their sort of strategic differentiation is that they want to own everything that they create. They want to be a truly independent AI company, which is a little rare these days because it's developed into this massive supply chain where you have the chip manufacturers selling to the data centers and the data centers selling the compute to the model makers and the model makers selling their models to the app makers. It's a big supply chain. And XAI has decided we're just going to own all of it ourselves.

• 22:29Scott Galloway?

  I just don't know if XAI is going to have the capital. They're starting from less than zero versus everybody else. And they want to raise at the same valuation as the number two or the number three player, Anthropic. So I have a bias because I'm not a fan of Musk. But on just a straight valuation standpoint, this feels to me like a bad deal.

• 22:47Ed Elson?

  Yeah, I mean, it sounds like the Elon Musk premium, but it's why he still deserves a premium like this to me is beyond me. The fact that he's destroyed 80% of the market value of Twitter. That was his last venture. I mean, it's crazy.

• 23:04Scott Galloway?

  It's loco. He's gotten Munjaro on us.

• 23:10Ed Elson?

  We'll be right back after the break with a look at big tech earnings. If you're enjoying the show so far, be sure to give Prof you Markets a follow wherever you get your podcasts.

• 23:26Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 23:56Speaker 01

  Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.

• 24:26Speaker 02

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior light beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 25:00Ed Elson?

  We're back with Prof G Markets. Most of the magnificent seven reported earnings last week, bringing AI demand and spending into sharper focus. Google and Microsoft both reported cloud revenue growth above 30%, beating expectations. But while Google's stock rose, Microsoft's fell as the company advised its overall revenue growth would slow in the current quarter. Meanwhile, Meta's stock also fell after the company missed expectations on user growth and warned that its AI expenditures would continue to increase in 2025. So. I think let's just start here. A lot of tech earnings telling slightly different stories. Let's just start with what Wall Street thought about these earnings. So for Google,

• 25:45Ed Elson?

  Wall Street was very happy. Revenue grew 15%, cloud revenue skyrocketed and the stock rose 4%. And I think the main story with Google is there was nothing that you could really fault the company for in that earnings report. Everything was going well. Microsoft and Meta, on the other hand, Wall Street was not so happy with. And it's a very similar story that we've seen before in tech, which is the top and bottom lines were very strong. They beat expectations at both companies, but there was just one tiny little pimple on the earnings report for both of them. And for Microsoft, it was that their guidance was a little bit soft, not as strong as Wall Street wanted. And for Meta, the user

• 26:28Ed Elson?

  growth was slightly weaker than expected. 3.29 billion active users versus 3.31 billion expected. I should remind you, that's daily active users. So it's still pretty incredible. As a result, Microsoft stock fell 4% and Meta stock fell 3%. So I think the summary with these earnings here is it is very strong overall, but again, incredibly high expectations for these companies. Let's just start with your headline reactions to the tech earnings that have come in this week.

• 26:59Scott Galloway?

  What you said was really prescient and insightful a few months ago, and that is the expectations are now that you're going to blow away expectations. So Meta, actually, their revenue and earnings beat expectations, increasing 19 and 35% respectively. But investors were disappointed by weaker than expected daily active user growth. And also, I think the thing that freaked everybody out is when Zuckerberg Wasn't threatening to spend tens of billions of dollars in mixed reality headsets. He was promising and he did it and he's and he kept spending well beyond any evidence that this was working. And when Zuckerberg says, no, we're going, we're going in on AI and get ready, folks. Hold on to your hats.

• 27:42Scott Galloway?

  It it kind of spooked, I think, his investors a little bit just because, you know, relative to the earnings and the revenue beat, the revenue and earnings were were amazing here. And at the same time, let's go to the other end of the spectrum. Everyone's sort of waiting and anticipating Snap to start a death rattle. And even though they their sales jumped 15%, not as much as the other guys, they, you know, their stock was up 10% because the expectation, people are sort of, when people listen to a meta call, they're waiting to see just how fucking amazing it is. When people listen to a Snap earnings call, they're kind of a little nervous.

• 28:23Scott Galloway?

  Like, is this the quarter that Snap announces that Meta is just putting them out of business? And the expectations here have gotten so crazy. And I know I'm jumping around a lot, but let's talk a little bit about Microsoft. They also beat revenue and earnings expectations. The stock was off 4% and after hours trading on weaker guidance. Good CEOs, sandbag guidance. They, you always want, in my opinion, under promise and over deliver. And when you start getting desperate or you're worried about losing your job, you start over promising and under delivering. Their total revenue increased, get this, at 16% off a huge number. That means that they have, they found another $8 or $10 billion per quarter in incremental revenue.

• 29:07Scott Galloway?

  And also, the revenue mix is getting more solid because their cloud offering, Azure, revenues were up 33%. And that is a business with incredible margins and 12 points of growth came from AI services. So in sum, this was just, I just, this was just striking. And the only thing that, the only wrinkle here, the thing I would offer that I noticed, and we've been talking about this a lot, is that if I were to ask you, what is, what comes to mind when I think of the, when I ask you, who is the leader in the streaming market? Who comes to mind?

• 29:44Ed Elson?

  Well, you know, you know, my real answer, but I think the average person would say Netflix.

• 29:49Scott Galloway?

  That's right. And yeah, but but it isn't right. It's YouTube. And YouTube's combined ad and subscription revenue over the past four quarters has surpassed $50 billion. So Netflix is at 37 billion over the same period over the last four quarters. So. So YouTube is a bigger streaming network, bigger revenue. I'd be curious what the growth rate is there. I'm not sure they break it out. But if you applied the same multiple to YouTube, you'd have a half a trillion dollar market cap company. And I wonder if there's opportunity for Alphabet to cut a deal with the DOJ and, among other things, in their remedy trial, say, look, what if we spin YouTube? But across all of these folks,

• 30:32Scott Galloway?

  you know, whether it was Reddit, which looks like it's becoming a truly big tech company, Meta, all of them, Snap showing that we're still here. Snap's like, hey, don't forget us. We're still here. We're still growing. We're still doing really well. And the other guys, the big guys, the alphabets, the metas of the world are just, you know, still on fire.

• 30:55Ed Elson?

  Yeah, a lot, a lot there. We'll start with YouTube. I just want to reemphasize that number you said. $50 billion in revenue in the past four quarters compared to Netflix at 37 billion. With the same multiple, YouTube would be a half a trillion dollar company in market cap. It'd probably be higher, given the margins and given the growth rate. But if it were broken up into its own company, which you have just suggested, just want to point out, it would be one of the top 20 most valuable companies in the world. It would be more valuable than Oracle. It would be more valuable than Mastercard. It would be more valuable than Johnson Johnson.

• 31:36Ed Elson?

  And yes, of course, it would be more valuable than Netflix. So I'm, I mean, we've discussed why we believe YouTube is basically the most underrated asset in the market right now. I think this should really drive it home for people. It's something that people don't seem to talk about. That much. And I think to your point, it's a little bit of the conglomerate tax. It sort of gets lost in the noise because of all of the other things that Google is doing. But this is just a juggernaut in the entertainment space. I am just fascinated by this business of YouTube and they continue to crush it. One of the other things you pointed out there is the idea that Meta, you know, they spent,

• 32:17Ed Elson?

  they spent really big on the metaverse and it freaked everyone out. And now they're spending really big on AI. And so the numbers are Meta is raising its capex forecast for 2024 to between 38 and 40 billion dollars. And that is slightly freaking the market out. They don't love how much that expense line is going to grow. Having said that, though, all the other tech companies are doing it. So over at Google, their capex rose 62% from a year ago to 13 billion dollars. Microsoft is doing it too. Microsoft's capex doubled from last year to 20 billion dollars. And this is just for the quarter.

• 33:00Scott Galloway?

  The ultimate business strategy has become capital as a weapon. Mark Zuckerberg goes, we have access to cheap capital, so I'm going to outspend you. I mean, there's kind of three or four, no one can, no one can keep up with these guys except each other. The biggest companies in the world that aren't big tech can't make these types of investments any longer. They're spending more money on, you know, on GPUs and Exxon spent on oil exploration at their peak.

• 33:26Ed Elson?

  I mean, so just some data here. Microsoft, Meta and Alphabet will spend more than 150 billion dollars on capex in 2024. And more importantly, Microsoft, Meta, Alphabet and Amazon account for roughly 40% of Nvidia's sales. So what we're seeing here is a dynamic where, you know, Nvidia is pretty much propping up the stock market. We've all kind of identified that. And Nvidia's entire top line is being propped up by the capex spend of Microsoft, Meta, Alphabet and Amazon. So in a way, that capex number is the most important number in the, in the entire global stock market right now.

• 34:09Ed Elson?

  We should all care a lot about how much they're spending. But as you mentioned, The competitive aspects to this, the idea that they're all ramping up spending, I wonder to what extent this is becoming a little bit of a big dick contest. Where if you're Mark Zuckerberg and you're seeing Sundar Pichai invest billions and billions into this space and you've decided to get into the space too. I wonder to what extent they're just going to start outbidding each other, not because it necessarily makes sense for the business, but because they don't want to be caught out and they don't want to look to the world like the loser or like the coward who wasn't down to double down on AI.

• 34:52Ed Elson?

  And maybe I'm not giving them enough credit, but I could certainly see if I were in their position, how I could get caught in that dynamic. Google's doing it, Microsoft is doing it, so we better do it too.

• 35:05Scott Galloway?

  Well, I think correctly, in hindsight, it looks like the stimulus plan during COVID that the Fed and the White House overdid it. They spent more money than was needed. And Janet Yellen, when faced with that question, that did you overdo it? She said, we decided. She said, yeah, we probably did, but at the time, the analysis was it's much riskier to underdo it than overdo it. And I think that's how these guys are approaching AI. And that is if they overdo it, they spend too much, that's not the same risk as being the company, one of the big tech companies that had all of the assets, all of the IP, all the customer interface, but got bested and saw their stock lag everyone else's because

• 35:48Scott Galloway?

  they underinvested in what appears to be the most seminal technology trend of the last 20 years. So I got to imagine that they're like, okay, we need 10 billion. The range of requisite capex to meet our plans is somewhere between, I don't know, call it 20 and 30 billion. You got to think the CEO says with a stock at an all time high, with access to cheap capital, I'm not going to be the CEO that missed on AI. You say 20 to 30 billion, here's 32.

• 36:17Ed Elson?

  We'll be right back. And if you're enjoying the show so far, hit follow and leave us a review on Prof G Markets.

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• 38:11Ed Elson?

  We're back with Prof G Markets. So Meta's revenue jumped 19% to $40.6 billion. It's that's its record revenue. Staggering number. And you mentioned earlier about revenue mix. You know, the point that Microsoft has done a really good job of diversifying its revenue, which makes it that revenue a little bit more stable. They're able to weather a storm. That's a great, it's a great reason to diversify your revenue. So I want to point out, there's one stat about Meta. 96% of their revenue still comes from advertising. So. They're not in a very strong position from a longevity perspective,

• 38:52Ed Elson?

  but it sort of highlights just what a juggernaut this advertising business is. The fact that this company is one of the top ten most valuable companies in the world, and it's all just from all of that advertising. You talked about how they've been getting into AI, which has been massively increasing their ability to accumulate users and also monetize those users. I'm just amazed that Meta is worth this much and making this much money, and it's still just a pure play ad business. I just thought that was quite fascinating.

• 39:23Scott Galloway?

  I mean, these companies combined probably have ad-driven revenue growth of somewhere between, I don't know, 20 and 40 billion dollars in incremental ad growth. And I had dinner the other week ago with this iconic broadcast anchor. And this is someone who likely, I don't know what this person makes, but I imagine it's tens of millions of dollars, household name, outstanding at what they do.

• 39:49Ed Elson?

  You have to tell us.

• 39:51Scott Galloway?

  No, I can't. I can't in this instance because we're good, good friends, and I don't like to prostitute my relationships.

• 39:57Ed Elson?

  I'm imagining it's Anderson Cooper, and I'll just let you not comment.

• 40:00Scott Galloway?

  What I will say is it wasn't Anderson Cooper. I have a second friend. I have a second friend now in the media ecosystem anyways.

• 40:06Ed Elson?

  Oh, Tucker Carlson. Got it. Okay.

• 40:08Scott Galloway?

  Me and Tucky? Yeah, we fisted each other and we were screaming out the ghost of Rick Santorum. I don't know where I got that name. That's an image. That's an image. Anyways, and he said that every contract renewal that's coming up across the biggest anchors, the biggest stars in broadcast television, the conversations are going something like this. As you know, it's a stressed ecosystem. We know you are making 10 million a year. Now we're going to pay you three and a half. And it's directly correlated to these earnings because the economy is growing 3% a year, and all of these companies are growing 18%. Ad spending is not up 18%. This has become a bit of a zero-sum game.

• 40:53Scott Galloway?

  And that is, say, ad spending is up because it's a strong economy. Say, okay, fine, it's up 5%. Ad spending isn't up 15. So that incremental 10% is coming from somewhere else. And I can tell you where it's coming from. It's coming from, generally speaking, ad-supported media that isn't one of these guys. And so whereas if you hosted, you know, the ultimate Morning show program, right? And you were, they were just printing money. They could pay Hoda, you know, seven or 10 million a year. And now they're like, Hoda, we love you, but revenues are down 30%. Profits are down 60%. We're going to pay you too much. And it's like, fuck that. I'll just go drink white wine all day, you know?

• 41:33Scott Galloway?

  Also, just more generally speaking, I have spoken to two individuals. You know, I, I like to think I'm, I'm trying to be good about my word and I'm coaching young men. I've heard, I've had two men reach out to me and ask to speak to me. And they've both been men who are my age, who are both very successful in the media market. And they've either quit or been laid off and they have no idea what to do right now. Because the, the motion picture and television market in Los Angeles, and generally speaking, the media market is really strained if you're not working for one of a handful of companies that are, that are just killing it. And it strikes me that these folks haven't connected the dots. There is real pain on the other side of these revenue numbers.

• 42:18Scott Galloway?

  And that is, it is a terrible time to be a CBS or an MTV. Does anyone even remember what MTV is? Or newspaper, newspaper revenue is off 80% in the last 30 years. You know, billboards, drive time. If it wasn't for the election, local news stations would be just gone.

• 42:37Ed Elson?

  Yeah, that's a great point. And you think about the other beneficiaries of that revenue growth. Where is that advertising going? It's going to the people who are creating content on Instagram and on Tik Tok and on YouTube. Those are the beneficiaries. Granted, they're not getting multimillion dollar contracts. But the reason you're seeing those millions getting shaved off of the Anderson Coopers of the world is because frankly, it's going to the Scott Galloways of the world and people a lot less famous than you. People who are creating content on Instagram, who are making videos, who are commentating on things in the news. There are thousands, probably millions of these people out there who are making a living and who are making real money by creating on the digital platforms.

• 43:22Ed Elson?

  And what I just can't wrap my head around is how. Those people continue to not be taken seriously by the mainstream media. It's been almost like mainstream media just sort of covers their eyes and pretends like they're still in their heyday. Well, what's happening is we're seeing the social media companies having this explosion in growth. And meanwhile, legacy media is completely drying up.

• 43:45Scott Galloway?

  Well, it's really interesting. So election night, and I'm bragging right now, but I was, I was asked to appear on a variety of cable networks, right? They want to bring in, they, they go for 12 hours straight. They have a lot of time to fill. So they're like, oh, bring in the guy on Young Men, just tell him not to tell dick jokes. Right? So almost every network called and said, do you want to come on an election night? And the one I chose, I'm going on Amazon with Brian Williams. And that's kind of telling, right? It used to be you go on CNN or Fox or CBS or ABC, because those are the high prestige. Now I'm like, no, I'm going with the new guy. And today on Pivot, we interviewed Margaret Brennan, who I just think is so talented and sober.

• 44:26Scott Galloway?

  And as I was listening to Margaret, I thought she's going to get hired by YouTube or Amazon, and she's going to be positioned with the right technology, in the right format, in one of these mediums, and she's going to drive so much more economic value for the parent company and herself. And even our little podcast, we just started posting our videos on YouTube. We're now making $40,000 or $50,000 a month in incremental ads from YouTube, just by putting our stuff on YouTube.

• 44:57Ed Elson?

  Not to mention all the stuff on, that's happening on Instagram, where you'll post an Instagram reel, and it'll go viral, and then you'll get speaking engagement requests. I mean, the flywheel is up and running.

• 45:09Scott Galloway?

  It's flying.

• 45:10Ed Elson?

  Yeah, in social media.

• 45:11Scott Galloway?

  One of the things I've learned over the last 10 years, we're in an attention-based economy, full stop. If you can command attention. You can get revenue, otherwise the person running the firm should be let go. And what you want to find is companies where the, there's a delta between the two. So newspapers used to get 30% of the advertising and they were getting 10% of the attention. You knew they were in trouble. And the web was getting 30% of time and had 8% advertising. You knew those two were going to true up. Right now, the greatest delta in terms of attention to revenues is podcasting. Total consumption is up 15 or 20%. And revenues are solid and growing, but they're nowhere near the attention.

• 45:55Scott Galloway?

  And in addition, I think if you collapse that with the following, and that is there are very few ways, or increasingly fewer ways, for an advertiser to reach you. You're the great white rhino for advertisers. And that is at the age of 26, you're, you're what I would affectionately refer to as stupid. And that is you're in your mating year. So you'll spend 150 bucks on that stupid crew net shirt you're wearing. You'll join Soho House. You'll spend $7 on coffee.

• 46:28Ed Elson?

  You, on the other hand, would never do any of these things.

• 46:30Scott Galloway?

  No, no, I'm much more down to earth, Ed. I'm much more down. By the way, did I tell you about the Global Express? I flew back here from Miami. Anyways, the, I'm not nearly as superficial as you, Ed. Anyways, but advertisers love young people because they're stupid and they're in their mating years. So they will spend a ton of money on high margin products trying to attract a mate. They are the ultimate target. And the problem is MSNBC's average viewer is aged 70. MTV is like 52 or 54. And you or your cohort is listening to podcasts. So you not only have growth in attention, but you have growth in attention across a group that is increasingly difficult for advertisers to reach.

• 47:14Scott Galloway?

  So I, I think you're going to see, I, in one of my predictions, I'm doing predictions, Zach. I think that podcast revenue is going to grow faster than every digital platform's revenues, maybe with the exception of TikTok, who rely and claim their numbers are lower. But I think you're going to see next year, revenues, ad revenues grow 25% plus. I think 2025 is going to be the year of podcasts busted open by these, these election or candidate interviews, attention, and advertisers are figuring out.

• 47:44Scott Galloway?

  The media landscape is dramatically shifting under our feet.

• 47:49Ed Elson?

  Let's take a look at the week ahead.

• 47:52Ed Elson?

  We'll see the Fed's interest rate decision for November. We'll also see earnings from Palantir, Novo Nordisk, Airbnb and Paramount. I doubt we will care about any of that because we'll have bigger fish to fry tomorrow. Scott, your predictions?

• 48:06Scott Galloway?

  Well, look, it's the election, Ed. I'm predicting that Vice President Harris is going to win the election. The gambling markets say that it's two to one in favor of Trump. You correctly pointed out that that might be skewed because of these markets over index young men who are much more biased towards Trump. A lot of people think these markets are being manipulated to send a signal of confidence around the Trump campaign. I also want to recognize I have huge confirmation bias here. I'm very emotionally caught up in this. I could not get over, I was happy to get back to London. I don't know if you've noticed it and maybe you don't notice it when you're in boiling water, but I cannot get over how tense things are.

• 48:50Scott Galloway?

  I wonder, and again, confirmation bias here, that people are just fucking exhausted and think, how can I take some of this temperature down? And distinct to the policies, distinct of whether, you know, perfect is not on the menu, or I think a lot of people are going to go, you know, I'd just rather not go back to that shit. So anyways, my prediction, simply put, is that it's not only going to be a Harris win, but I think it's, I think it's going to be a decisive win. And all of the odds and all of the data say that that's unlikely. But anyways, in sum, I'm predicting that in January of 2025, we're going to inaugurate Vice President Harris.

• 49:30Ed Elson?

  People forget how much it sucked, not from a policy perspective, but from just a day to day discourse perspective, having that guy plastered over the news, people freaking out about him 24/7, every single conversation is about politics and about how the US is in decline. And whether or not you believe any of that is true, are you really down for that to just dominate your life all day, every day for the next four years? That to me is just.

• 50:05Ed Elson?

  That was the big nightmare of the Trump, of the Trump presidency is how I just, we could never escape him. We had four nice years of some kind of boring politics. And I really hope that we can have four more of them.

• 50:19Scott Galloway?

  My favorite thing about Senator Bennett, I did a fundraiser at my place for him. And he said, they said, what would you be like as president? Someone asked him, he's like, I'm going to be the president you never hear about. And I thought, Jesus Christ, wouldn't that be refreshing?

• 50:33Ed Elson?

  I absolutely love that.

• 50:34Scott Galloway?

  He said, I want to be the, I want to be the president you don't think about. I'm going to do the job. I'm not going to say incendiary things. I'm not as charismatic as some of these other people. I'm just going to be the guy that gets the job done. Anyways, I hope that the guy that gets the job done is a she. And I really hope that when I move back to the US, it feels less tense, less anxious, that we keep this economy going, that young men recognize that their default operating system should be one of protection and that I genuinely do believe that women are under threat here and that men don't recognize how much this could affect us. So I'm hoping, I'm hoping and trusting

• 51:14Scott Galloway?

  that some of these things enter people's brains as they enter the voting booth. And I'd also just like to highlight, I acknowledge that a lot of people don't come to this podcast for politics. I endorse Harris in my newsletter, No Mercy, No Mouse. We have the greatest number of unsubscribes we've ever received. And as I've said before, there's no point in having economic security and people will love you unconditionally if you can't speak your mind. And also to all the people who unsubscribe, I just want to tell you a full refund is coming your way. Why don't you read us out, Ed?

• 51:43Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Allison Weiss. Mia Silverio is our research lead. Jessica Lang is our research associate. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our unpack on the election with Anthony Scaramucci, only on the Prof G Markets feed.

• 52:15Ed Elson?

  You held me In kind reunion As the waters

• 52:32Ed Elson?

  And the dark skies In love, love, love, love