Monologue: OpenAI Could Kill SoftBank and Oracle

In this week's Better Offline monologue, Ed Zitron runs you through how OpenAI’s collapse could mortally wound SoftBank, throw the Paramount/Warner Brothers deal into chaos, kill Oracle, and destroy Larry Ellison’s empire. To celebrate the one year anniversary of the premium newsletter, I’m offering a sale on one-year subscriptions. Between now and midnight July 22, you can get a permanent annual rate of just $60— a $10 discount on the usual price of $70 - for life - https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/N9bqSLKBoS?ref=wheresyoured.at 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.

• 0:00Speaker 00

  This is an iHeart Podcast. Guaranteed Human. My name is Jessa. One of the things I love the most about working for United Healthcare is that everybody matters. Every moment matters. There's a person behind every problem. I care because it's what I was put on this earth to do.

• 0:20Speaker 01

  I'm Ben and I work at United Healthcare. I am just one piece of a larger puzzle, but every piece matters. It's more than just work. We want to make the healthcare system better for everyone. I care because I want to make a difference. That's what committed to care means to me.

• 0:34Speaker 02

  Snoring, gasping for air during sleep, daytime sleepiness? I'm Shaquille O'Neal and this shouldn't be anybody's experience. Ask your doctor about Zepbound Trisepotide, the first and only FDA-approved prescription medicine for moderate to severe obstructive sleep apnea in adults with obesity.

• 0:50Speaker 03

  Zepbound is a prescription medicine used with a reduced calorie diet and increased physical activity to help adults with moderate to severe obstructive sleep apnea, OSA, and obesity to improve their OSA. Zepbound is approved as a 2.5, 5, 7.5, 10, 12.5, or 15-milligram injection. Zepbound contains trisepotide and should not be used with other trisepotide-containing products or any GLP-1 receptor agonist medicines. It is not known if Zepbound is safe and effective for use in children. Don't share needles or pens, or reuse needles. Don't take if allergic to it, or if you or someone in your family had medullary thyroid cancer, or if you've had multiple endocrine neoplasia syndrome type 2. Tell your doctor if you get a lump or swelling in your neck. Stop Zepbound and call your doctor if you have severe stomach pain or a serious allergic

• 1:35Speaker 03

  reaction. Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes before scheduled procedures with anesthesia, if you're nursing, pregnant, plant-to-be, or taking birth control pills. Taking Zepbound with a sulphonal urea or insulin may cause low blood sugar. Side effects include nausea, diarrhea, and vomiting, which can cause dehydration and worsen kidney problems.

• 1:58Speaker 02

  Talk to your doctor. Call 1-800-545-5979, or visit zepbound.lily.com.

• 2:08Speaker 04

  Every small business owner has that one moment that could have broken them, but remarkably, it didn't. Hi, I'm Kathleen Griffith, co-host of The Unshakeables, along with Stevie Barron, CEO of Chase for Business. We have more incredible stories of overcoming the impossible still to come in season three. Listen to The Unshakeables wherever you get your podcasts and learn more at chase.com/podcast. JP Morgan Chase Bank, N.A., member FDIC. Copyright 2026 JP Morgan Chase and Company.

• 2:44Speaker 05

  Jardiance has a big story to tell. Discover Jardiance: Empigliflozin 10 or 25-milligram tablets. Visit jardiance.com, call 1-888-968-6648, or talk to your doctor to see if Jardiance is right for you.

• 3:05Speaker 06

  What's up? It's Better Offline and I'm your host, Ed Zetron. It's your Better Offline monologue for the week.

• 3:22Speaker 06

  Folks, it's been a long few months and I've taken the vast majority of this week off to recover after writing about 100,000, 200,000 words in the last few months, not even including my upcoming book, The Hater's Guide to Silicon Valley, coming out in 2027. If you want to support my work, I'm currently doing a week-long sale for the premium newsletter, 10 bucks off the annual rate for life. That'll be in the notes. Please do, if you feel like supporting me, do that. Newsletters and the podcast are now my principal source of income. It's happened. The era of smiles has begun. Join me and receive the bounties of words every week, except this one, as I'm taking the week off. So let's begin, and I wanted to start by saying how you, the listener, might help me. First of all, my signal is ezitron.76.

• 4:04Speaker 06

  The things I'm looking for right now that would help me are Anthropic's S1, or any and all documentation of its cloud spend and financial condition, especially if you can get me something from Amazon Web Services or Google Cloud that shows me how much this company is spending. That'd be very, very helpful to me. As would any and all information about the AI revenues of any major tech company that aren't public knowledge, and any and all information about the cloud spend of OpenAI, Anthropic, Perplexity, or any other major AI startup, and of course, any of the financials of any AI startup you can get me. The same goes for token spend at any corporation. Please use Signal. Please take photos of any documents. Do not send me PDFs. Do not send me documents for your safety and for mine. And please, please, please, do not send me stuff that's already public.

• 4:48Speaker 06

  This isn't because I'm chiding you, I'm just saying, people get excited and they want to help and they send me stuff that's already out there. I've probably already seen it. I'm a freak. I'm looking at this stuff all day. All right, folks, let's roll to the actual monologue. So earlier in the week, I put out a 15,000-word piece called The OpenAI Bubble, a massive guide to how OpenAI is the cause, enabler, and justification for the entire AI bubble writ large, and how everything kind of collapses when it dies. I wrote it because I've heard a lot of people say, "It's an OpenAI bubble, not an AI bubble", over the last year, as a way of waving off potential detractors, suggesting that OpenAI could collapse and everything else would be left behind and fine. You're living in a bubble yourself if you think this way. That's a crazy way to live one's life.

• 5:32Speaker 06

  And please, please, please stop emailing me about the bailout. I've gone over the sum total. Anyway, in truth, OpenAI is the largest consumer of AI compute, accounts for over $800 billion of remaining performance obligations across hyperscalers and NeoClouds, the people that rent out AI GPUs and basically just exist to funnel Nvidia money, and likely over $100 billion of the future revenues of Broadcom and Nvidia themselves. I go into detail about it in the piece, but I kind of wanted to go over it a little today and today's monologue, too. OpenAI is also a material risk to both SoftBank and Oracle. If OpenAI can't go public, SoftBank is going to face a massive liquidity crisis. It has $45.9 billion in debt that matures within the next 12 months, and they'll either

• 6:16Speaker 06

  have to refinance it or pay it. Except that's going to be much more difficult, because they've jettisoned most of its valuable stocks in T-Mobile and Nvidia, all while pushing up against the limits of what it can borrow against its holdings in the chipmaker arm, which it bought, I think, 2023 for $32 billion. It went public at $50 billion, but the holdings are worth hundreds of billions of dollars. Except, that's kind of a problem, which I'll get to in a minute. But SoftBank will never truly go bankrupt. That doesn't mean it's not a problem if OpenAI fails, because it would be put in a historic crisis, one worse than the dot-com bubble, where Masayoshi Son had bet everything in like GeoCities. And even the horrors of 2022 and 2023, when the Vision funds had losses of, what, $32

• 7:01Speaker 06

  billion? Back then, SoftBank had plenty of other valuable stock and ways to raise debt. They had the Alibaba stock, they had their holdings in Betfair and other things like that. Except, most of that is gone now. And now S&P Global has downgraded its outlook to negative, which means they think they might actually downgrade its credit in the future. And just to be clear, they specified that the reason that S&P did that was OpenAI. They said the words. They literally said it was the case. Except now, what the hell is SoftBank meant to do? It doesn't have anything else to flog, really, other than its ARM stock. And the problem there is that SoftBank is the largest holder of ARM stock in the world, which makes it difficult for it to liquidate too much without spooking the market.

• 7:45Speaker 06

  Think of it like this: if the largest holder of a stock says, "I'm just going to start selling it off for liquidity," it officially stops being about the stock in question, but the company's selling it. The value of ARM will turn into a bet on whether SoftBank can afford to pay its own bills. It's already taken out a bunch of margin loans on the stock, and further loans will be difficult to raise for the very same reason. While it would be likely rescued by the Bank of Japan and other local financial institutions, there has never been a more dangerous time for Masayoshi Son. Check out my Hater's Guide to SoftBank. I know it's a premium thing, but there's a deal going on. It's a beautiful deal. I'll stop doing the Trump impression now. And get on to one of his friends, Oracle. Now, in Oracle's case, its entire future rides on OpenAI's ability to pay it about

• 8:29Speaker 06

  $70 billion a year in annual revenue, and that rides on Oracle's ability to build about 7.1 gigawatts or so of data center capacity in the next two or three years. I'm not kidding, it's genuinely, that's what they need to do. Oracle and OpenAI have a $300 billion contract that's meant to have started on June 1st, 2026, with said revenue coming from the Stargate data centers that Oracle is building for Clammy Sammy. That's right, Mr. Altman, Clamuel, we don't like him. The problem, of course, is that 7.1 gigawatts of capacity needs to be built and barely 400 megawatts of it actually exist. And that's in Stargate Abilene, a project that broke ground in the middle of 2024

• 9:12Speaker 06

  and was meant to be done either the end of last year or a couple of weeks ago. And everything I hear from the people inside Oracle is that they keep firing all the people who know how the fucking business works. It's a terrible thing for them. Oh, and another thing is that Oracle literally warned in its annual report that it may or may not get paid by OpenAI, and that said non-payment would potentially also mean that it couldn't lease the GPU capacity to anyone else. As in, no one else really exists that could buy it, and if they did manage to sell it to them, it'd be at a massive loss. Is that good? Also, tell me, is it good that S&P Global also downgraded Oracle? Just one step above junk grade, they're barely investment grade credit-wise for now,

• 9:57Speaker 06

  for an angel status, incoming maybe? I'll explain what that means in another monologue, you don't really care. Let's get to the funny stuff, though. Larry Ellison, CEO of Oracle, well, sorry, chairman of Oracle, CEO is currently two different Mr. Bean-type characters. He's also used $346 million of his $1.16 billion Oracle shares for an estimated $21 billion of margin loans, personal ones, just to be clear. Otherwise, he has about $10 billion in cash and $15 billion in Tesla shares. Why'd you care about that? Well, this is material, because he also has to conjure up about $20 billion in cash, actual cash, to push through the Paramount-Warner Brothers deal by September 30th, otherwise he gets fined about $500, $600 million a quarter.

• 10:39Speaker 06

  And to do so, regardless of whether it happens, whether it's stopped by then or whether it's meant to go through, he's likely going to have to take out further margin loans on his Oracle stock, and depending on how said stock is doing, getting that loan might be quite problematic. I think I just said problematic, but I'm just going to keep on going.

• 11:07Speaker 06

  Alright everyone, I'm back talking about Quince, one of my favourite clothing brands. And as we speak, I'm currently wearing one of their excellent cotton knit over shirts. They're like a jacket, nice pre four piece to wear as things cool off a bit. I've also been eyeballing one of their heritage water resistant Harrington jackets too for later in the year to pair with their Mongolian cashmere sweaters I bought. And I have several of them and I really can't recommend Quince's stuff enough. I love Quince because they focus on high quality wardrobe staples made with premium materials, jackets, pants, fitted tees and polos, activewear and even travel gear. Everything at Quince is priced 50 to 80% less than similar brands and because they work directly with ethical factories and cut out the middlemen, you're getting more for less. Find the four pieces you'll reach for most at Quince.

• 11:50Speaker 06

  Download the Quince app for app exclusive offers or go to quince.com. Get free shipping on your order and 365 day returns. Now available in Canada and the UK too. And when Quince asks where you heard about them, let them know it was on Better Offline. It's the best way to support the show.

• 12:06Speaker 07

  Snoring, gasping during sleep, feeling fatigued? Ask your doctor about Zepbound Terzepatide. The first and only FDA approved prescription medicine for moderate to severe obstructive sleep apnea, OSA, in adults with obesity. Zepbound is a prescription medicine used with a reduced calorie diet and increased physical activity to help adults with moderate to severe obstructive sleep apnea, OSA, and obesity to improve their OSA. Zepbound is approved as a 2.5, 5, 7.5, 10, 12.5 or 15mg injection. Zepbound contains Terzepatide and should not be used with other Terzepatide containing products or any GLP-1 receptor agonist medicines. It is not known if Zepbound is safe and effective for use in children.

• 12:51Speaker 07

  Don't share needles or pins or reuse needles. Don't take if allergic to it or if you or someone in your family had medullary thyroid cancer or if you've had multiple endocrine neoplasia syndrome type 2. Tell your doctor if you get a lump or swelling in your neck. Stop Zepbound and call your doctor if you have severe stomach pain or a serious allergic reaction. Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes before scheduled procedures with anesthesia. If you're nursing, pregnant, plan to be, or taking birth control pills. Taking Zepbound with a sulphonal urea or insulin may cause low blood sugar. Side effects include nausea, diarrhea and vomiting, which can cause dehydration and worsen kidney problems. Talk to your doctor.

• 13:31Speaker 07

  Call 1-800-545-5979 or visit zepbound.lily.com.

• 13:37Speaker 08

  We believe in starting with your financial goals, not a formula. At Oppenheimer, we put the full strength of our longstanding expertise to work, understanding your life and your ambitions, and designing the precise strategies that build and protect your wealth with confidence across this generation and the next. Put the power of Oppenheimer thinking to work for you. Wealth management, capital markets, investment banking.

• 14:04Speaker 09

  Football season is back. Stop by Total Wine & More before kickoff for cold beer, craft bourbon and ready to drink cocktails. Get the lowest prices and get your game day lineup ready at Total Wine & More. Spirits are not sold in Virginia and North Carolina. Drink responsibly. B21.

• 14:23Speaker 06

  So to explain, a margin loan works by offering up a certain amount of shares as collateral, a little like a mortgage. So if you were taking out a 25% loan to value loan for $1 billion, you'd offer up about $250 million in stock, maybe a little more depending on how volatile it is. When the value of said stock drops below a certain amount, you get forced to do something called a margin call. Well, a margin call happens to you, I mean, where you're forced to either proffer up more cash to cover the shortfall or far more likely in Ellison's case, give up more Oracle stock. The problem that Ellison faces is the very same one that SoftBank has with Arm. He owns 40% of Oracle's shares, which means that liquidating them would be very difficult.

• 15:07Speaker 06

  If he started selling them off, the market would say, oh Christ, is he going to sell his 40% holdings in Oracle? Sell, sell it all. The piss index is crashing. And to make matters worse, he's collateralized over $50 billion worth of Oracle shares, the ones I mentioned earlier, which means that if Oracle's stock drops below, say, I don't know, $60 a share, he'll be put in a vicious cycle where he'll either have to hand over more and more shares to cover the shortfall or worse still, have to sell them to keep up. Hey, hey, stop laughing. Stop it. Stop laughing. Mr Ellison is in real trouble. Larry Ellison could be in a real pickle. Stop it. I'm just kidding. Fuck Larry Ellison.

• 15:47Speaker 06

  Anyway, the worst part is that OpenAI doesn't even have to collapse for this to happen. The AI bubble isn't based on anyone's actual revenues, productivity or ROI. No hyperscaler actually reports their AI revenues. Oracle kind of bundles them within OCI, their infrastructure bucket. And outside of OpenAI and Anthropic, the industry is actually incredibly small revenue wise, very loud and annoying though. The markets have conflated a capex bubble, as in buying GPUs and the surrounding gear for data centers, with a thriving AI industry, which is a nice way of saying that the current slate of prices for Microsoft, Google, Amazon Meta and Oracle, their current AI focused bumps, are based on vibes and mania. Vibes can break.

• 16:31Speaker 06

  Mania subsides. All it takes for things to go pear shaped is for the market to believe, to become convinced that Oracle won't get paid by OpenAI, for them to start dumping the stock. All they have to believe is that all of that capex, all of that negative cash flow is just for nothing, is for a company that either won't exist or won't be able to actually afford all of that data center capacity. Every time I say this out loud, I feel crazy. The biggest myth though about Oracle is that it's this healthy profitable business and that this AI thing is just yet more good stuff that they've added on top, when in fact, every other business segment other than renting out AI GPUs is either plateaued

• 17:16Speaker 06

  or in active decline, meaning that Oracle's entire future rides on whether it can monetize its Findom relationship with Nvidia and Jensen Wong. And really, Oracle's story is fundamentally insane right now. It's spending $340 billion or more on AI data center capacity for one client, OpenAI, in the hopes that OpenAI can bring it $70 billion a year in revenue for a contract that began a month ago, except most of the capacity is barely under construction and because data centers take 18 to 36 months to build, it's unlikely that more than a single gigawatt will be ready before the beginning of 2028, if at all. Building this capacity is costly and Oracle's cash flow has been negative $20 billion or

• 18:00Speaker 06

  worse for the last two quarters with plans to spend another $90 billion in the next fiscal year, which just begun in June. The 22,000 people that it laid off in the past six months were, based on discussions with many sources, load bearing parts of its infrastructure, throwing parts of the business into active chaos and genuinely causing problems with renewals for its Oracle database products that are the cornerstone of how Larry Ellison's heart beats. I don't know what to say. I don't know. I am just a guy. Why am I the one that found this? It's sitting in broad daylight, maybe people just don't do mathematics. I don't know. But this is, this is quite bad.

• 18:42Speaker 06

  And the point I'm making though, just to simplify, is that for me to be wrong, OpenAI will have to bring in hundreds of billions of dollars a year in revenue for themselves by 2030, which will require it to become either profitable, massively profitable too, like, not just like a little bit of a bit of profitability, I mean, 20, 30, 40 billion dollars a year plus, or just continually raise money. I'm talking hundreds of billions of dollars a year. And no, no government bailout will cover the shortfall. The government's talking about 5% share, that'd be $42 billion. That won't even cover their fucking inference costs if they last to 2027. It's a joke.

• 19:21Speaker 06

  Oh, and by the way, even if OpenAI does that, Oracle will have to complete the single most ambitious construction project of all time. Building enough power to power multiple cities, erecting giant data centers in multiple states, make them fully operational with far less people and a shortage of both talent and the core materials like electrical grade steel, and also do so on a timeline that doesn't put it in breach of contract with OpenAI. Would it shock you if I told you that this is considered radical thinking? Would you be surprised if I told you that many journalists simply shrug when you tell them this? And they go, they'll work it out. They'll work it out. It'll all work out. It'll work out. Don't worry about it, Ed.

• 20:06Speaker 06

  You're crazy, Ed. Ed, why are you outside my office? Why are you dressed as a duck? Why do you keep saying, I'm the deterioration duck? Quack, quack, quack. The market's going to hell. And the answer is, that's a bit I'm working on that I'll go to later. In any case, I am kidding and I do need to say, the future really is one strewn with chaos and carcasses and I'm not sure the world is actually ready for it, thanks to a captured media industry that refuses to do the messy work of reconciling with the projections that range from unrealistic to fantastical. When the time comes, people are going to be asking why we didn't see this coming and as I've said before, it's because nobody wanted to fucking look. Anyway, thanks as ever for listening. Things are going to get real interesting over the next few months.

• 20:51Speaker 06

  I just got me a Bloomberg terminal and it's a source of unfathomable power that I believe will take my coverage to the next level. If you're on there, shoot me a message. Shoot me a Goot on Ploop, that's another social network I'm on. And I really do genuinely, deeply and meaningfully appreciate the many wonderful messages and emails I receive every day. And I'm so grateful to have such incredible fans and followers. You're all amazing. Like I hear from so many of you and you're very thoughtful and smart and you pick this stuff up very quickly. I love you all and I assume you'll bellow, we love you chef in response. See you next week.

• 21:24Speaker 07

  Snoring, gasping during sleep, feeling fatigued? Ask your doctor about Zepbound Terzepatide. The first and only FDA approved prescription medicine for moderate to severe obstructive sleep apnea, OSA, in adults with obesity. Zepbound is a prescription medicine used with a reduced calorie diet and increased physical activity to help adults with moderate to severe obstructive sleep apnea, OSA, and obesity to improve their OSA. Zepbound is approved as a 2.5, 5, 7.5, 10, 12.5 or 15mg injection. Zepbound contains Terzepatide and should not be used with other Terzepatide containing

• 22:09Speaker 07

  products or any GLP-1 receptor agonist medicines. It is not known if Zepbound is safe and effective for use in children. Don't share needles or pins or reuse needles. Don't take if allergic to it or if you or someone in your family had medullary thyroid cancer or if you've had multiple endocrine neoplasia syndrome type 2. Tell your doctor if you get a lump or swelling in your neck. Stop Zepbound and call your doctor if you have severe stomach pain or a serious allergic reaction. Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes before scheduled procedures with anesthesia. If you're nursing, pregnant, plan to be, or taking birth control pills. Taking Zepbound with a sulphonal urea or insulin may cause low blood sugar. Side effects include nausea, diarrhea and vomiting, which can cause dehydration and

• 22:53Speaker 07

  worsen kidney problems. Talk to your doctor. Call 1-800-545-5979 or visit zepbound.lily.com.

• 23:02Speaker 10

  Summer's still going strong. Make a stop at Total Wine & More for white wines, beer and ready to drink cocktails. Just know you're getting the lowest prices. Keep the summer celebrations going at Total Wine & More. Spirits are not sold in Virginia and North Carolina. Drink responsibly. B21.

• 23:18Speaker 11

  Small businesses are the pulse of every community. They bring people together, create opportunities and drive growth. That's why Chase for Business helps small business owners like you by offering personalized guidance and digital tools that can help your business grow. With our guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com/business. Chase for Business, make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JP Morgan Chase Bank, N.A., Member FDIC. Copyright 2026 JP Morgan Chase and Company.

• 23:52Speaker 12

  What if you could have even more and more and more help to pursue your goals? At LPL Financial, we offer more ways for advisors and their clients to thrive. So what if you could?

• 24:02Speaker 13

  Paid advertisement. Investing involves risk, including potential loss of principal. LPL Financial, LSE Member FINRA, SIPC. This is an iHeart Podcast. Guaranteed human.