Monologue: AI Isn't Getting A Bailout

In this week's Better Offline monologue, Ed Zitron breaks down how economically irrelevant AI is, and how no bailout is coming to save the Large Language Model era. Want to support me? Get $10 off a year’s subscription to my premium newsletter: https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/w08jbm4jwg It would mean a lot! YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/ Discord: chat.wheresyoured.at https://discord.com/invite/QUUQUP9szv Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [email protected] mailto:[email protected] See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

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

• 0:00Speaker 00

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• 0:39Ed Zitron?

  Hello and welcome to this week's Better Offline Monologue. I'm your host, Ed Zitron.

• 0:51Ed Zitron?

  A lot of people have emailed, messaged, and plucked me that the natural end of the AI bubble is some kind of government bailout, something resembling the TARP program, the bailed-out financial institutions over-leveraged during the Great Financial Crisis. And I want to be clear about something. This is different, and a bailout is very, very, very unlikely. As a reminder, TARP stood for Troubled Asset Relief Program. It existed, unsurprisingly, to buy the distressed assets that banks had invested in during the Great Financial Crisis, primarily the ridiculous bets made on the housing market made up of people who had got mortgages they could not pay for. Now, these bailouts existed to stabilize banks that were going out of business, along with consumers' money being set on fire if they did so, as well as auto manufacturers like GM and Chrysler that the contagion had spread to.

• 1:36Ed Zitron?

  And while I'm not going to go into massive amounts of detail I haven't got all day, I can make it pretty simple. These bailouts existed to stabilize systemically necessary companies that, had they died, would have tanked the US economy and markets at the same time, and also lost people's money. Unlike the great financial crisis, very few of the major players in AI are either systemically necessary or in danger of dying as a result of the AI bubble bursting. Furthermore, there really isn't anything to bail out. So let's start with Nvidia, the largest company on the stock market. While GPU sales make upwards of 88% of its revenue, Nvidia will not die if the AI bubble bursts, though it will see a massive contraction as a result of its biggest business line collapsing. It's also important to know that Nvidia's massive stock price is a direct result of

• 2:21Ed Zitron?

  its incredible growth. It isn't enough for Nvidia to continue selling lots of GPUs. It must continue to increase revenues by at least 60% year over year, every single quarter, which means that for Nvidia to continue being the most beloved boy in stock in the in history of the stock market, it needs to make $91 billion in revenue in a year's time, and that's just in one quarter, by the way. This isn't something a bailout can fix, even in the most crony capitalist fantasy you can think of. A bailout would have to continually sink tens of billions of dollars directly into Nvidia, buying GPUs in increasing amounts every three months in perpetuity to continue its valuation. And while some of you may say, "Trump will do the man, man."

• 3:05Ed Zitron?

  You'd live in a boring, doomerous fantasy based on nothing, and I'm sick of hearing about it. Good lord. Listen to me. TARP was a $700 billion program that only ended up investing around $443.5 billion or so. Or put another way, less than the $500 billion of orders that Nvidia CEO Jensen Huang claims are on Nvidia's books through the end of 2026. Are we meant to do this forever? Is that the plan? Are you saying that Trump is just gonna go, "We're gonna buy GPUs for everyone, we're gonna buy them every year, every year, we'll buy so many, the most we've ever..." No, it's not gonna happen, though I guess he has kind of done that with the Department of Energy. You've probably heard of this deal, by the way. It's 100,000 GPUs, that isn't gonna do shit.

• 3:48Ed Zitron?

  Jensen Huang needs all your money, and he needs it now every quarter forever. Okay? Okay? It's not gonna happen. Now, okay, another annoying talking point you've probably heard is that OpenAI is somehow too big to fail, when in fact it's too small to pull apart into enough parts to eat. OpenAI has promised 1.4 trillion dollars in compute deals, convincing Oracle and others to build massive data centers in its honor. Yet the reality is that this company isn't even going to hit its 13 billion dollars in projected revenue this year, and will burn billions of dollars in inference alone, and doesn't really have a path to profitability. Too big to fail means that something may kill our economy or markets if it dies, and

• 4:30Ed Zitron?

  as loud and annoying as clammy Sam Altman might be, OpenAI's death wouldn't kill either of those. Let's break it down. OpenAI dying would be symbolically lethal to the large language model era and create an immediate and permanent chill in AI investments. Don't get me wrong. Its death would also likely be an existential threat to Crusoe, the company building its data center in Abilene, Texas for Oracle. I spoke to someone on the ground there, and they say if the money runs out, everyone just stops and goes home. They'll be fine. I don't know the extent of Crusoe's revenues, however, but I do know that Oracle is on the hook for a billion dollars a year for Abilene for 15 goddamn years. And Oracle has also taken on massive amounts of debt to build Abilene and other data centers in Shackelford, Texas, and I think somewhere in Wisconsin, there's a New Mexico one now,

• 5:15Ed Zitron?

  and started this with an 18 billion dollar bond sale and an in-the-works 38 billion dollar debt package to build data centers for OpenAI. While Oracle does run the risk of default and credit default swaps, which is people betting again, well, betting that they might default on their obligations, that's going up. The risk is there, but they're still a real company that makes real things. Microsoft owns OpenAI's IP and research, which would mean that Microsoft would pretty much absorb those 800 million weekly active users directly into CodePilot. And that's if it even chose to retain them and just shut down ChatGPT, directed it to a very flimsy version of CodePilot, and didn't let people do half the shit they do with it.

• 5:56Ed Zitron?

  Bailing out OpenAI would not do anything, in part because OpenAI burns billions of dollars and doesn't really do much in the large economy itself. Its revenues, which I estimate to be at most $4.5 billion through the end of September. By the way, if you're listening to this and you think that my revenue numbers for OpenAI, my inference numbers were delayed somehow, it's accrual accounting. Stop fucking with me, I know what I'm doing. Anyway, those revenues are inconsequential. And the $8.67 billion it spent on inference in that period is, while a large chunk of Vizier revenue from Microsoft, only really accounting for 3.88% or so of the $223 billion Microsoft has made in that period. Losing OpenAI would hurt, but hardly threaten the health of anyone in Redmond.

• 6:41Ed Zitron?

  The same goes for Anthropic or any other generative AI company. These companies aren't really spending that much, nor are they fueling much of any actual real economic activity. There's only around $60 billion of actual AI revenue in 2025, in a tech industry where Amazon made $180 billion and Google $102 billion in their last quarters. The disappearance of LLMs writ large would have a minuscule effect on actual real dollars entering the economy, other than investments in data centers, which is where I think there's, if any, some kind of bailout. As I've mentioned recently, there's been about $50 billion, or more even, every quarter for the last three quarters going into building data centers.

• 7:26Ed Zitron?

  And I think that many of these projects end up defaulting. There's a chance, a chance, that these are somehow bailed out, if and only if they provide an actual existential risk to a major asset firm, a Blackstone, or an Ares or what have you. I don't know if Ares is in them, I'm just naming them at this point. Nevertheless, there is one, the one company I could see if any bailout happens, and I'm really hesitant to say I think there's any chance. Oracle. Oracle, I think, is the one chance. Oracle is currently massively leveraged and going into debt to the point it's eating into its free cash flow. And it's a close ally of the Trump administration. I could see them getting a lifeline to escape these ridiculous loans. And while you may say there's some sort of grand plan where the administration will

• 8:10Ed Zitron?

  agree to pay these companies to keep them alive, I don't see it happening. As doing so won't support the economy, the markets, or really do anything other than prolong the inevitable. It's not going to happen. And I, I don't know, I'm gonna, I wanna phrase this in a nice way, cause I don't want it to seem like an attack. Every time you say something like this, you're doing marketing for the AI industry. Dumerism is marketing at this point with AI. I'm so scared of what they'll, they'll create. They're gonna get bail out. OpenAI is too big to fail. All these are extrapolations of your fear, I get it. They're also marketing. You are helping them, you are helping them market their services by making them seem systemically relevant when they're not. By making them seem like they're innovative when they're not.

• 8:56Ed Zitron?

  Honestly, I need you to just live in reality and look at what's actually happening, which is sweet fuck all in many cases. Every one of these wanky studies you hear come out, someone was like, 10% of jobs can already be automated by AI. CNBC should be fucking ashamed of themselves for running a story about it. It's a PhD, congrats to the better offline Reddit user who saw this. It's a PhD paper. And also, it's referring to random skills rather than jobs. And skills and jobs are two different fucking things. I'm so goddamn tired of this era, good lord. But nevertheless, the next two weeks are gonna be really interesting. I'm working on a three or four part about my worries around Nvidia. And I'm gonna tell you all about Nvidia and how not similar they are to Enron.

• 9:39Ed Zitron?

  Nvidia is nothing like Enron or Lucen or WorldCom or Windstar, all these other companies I'm gonna go into as well. And tomorrow, I've got a fun interview with Nathan Grayson of Aftermath, your love. I might next week take a knee and just run the better offline in studio thing I just did with, with Lisa from CNN. Or I might do the three or four part, it really comes down to how I'm feeling. It's been a rough few weeks health wise, I'm doing fine, I was just being sick and I've just been quite stressed. I must again say thank you for all the lovely emails and messages you've been sending. You're all so lovely, I love you all. Couldn't be luckier with the listeners I've got.

• 10:20Ed Zitron?

  Tell your friends about the show, tell them about the newsletter, tell them about me, tell them about my strange proclivities. But also keep listening, I really do appreciate all of you. Enjoy tomorrow's episode and whatever I put out next week, and there will be a monologue regardless. Unless I do the three or four part, in which case that's gonna be your monologue for the week. And yes, by the way, I realize me just talking is always a monologue, I get it. You're so smart, you are though, really. Thank you for listening.

• 10:52Speaker 02

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• 11:23Speaker 03

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• 11:54Speaker 04

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• 12:07Speaker 05

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• 12:50Speaker 05

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• 12:53Speaker 00

  This is an iHeart Podcast. Guaranteed Human.