What Happens If AI Fails?, Subprime Data Center Crisis, How Bad Can SpaceX Get?

Ranjan Roy from Margins is back for our weekly discussion of the latest tech news. We cover: 1) Could trouble for AI stocks lead to a recession or worse? 2) How the wealth effect might slow consumer spending if AI causes a stock market pullback 3) One scenario that might lead to a collapse 4) Google stock falls on spending concerns 5) Could the switch flip very quickly on big tech capex 6) Subprime data center crisis 7) How much does the data center buildout resemble the financial crisis? 8) What type of revenue is needed to prevent a collapse 9) SpaceX stock tanks 10) Will SpaceX acquire Tesla? 11) Will SpaceX acquire OpenAI? --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. Want a discount for Big Technology on Substack + Discord? Here’s 25% off for the first year: https://www.bigtechnology.com/subscribe?coupon=0843016b Stop online threats before they become real-world attacks. Visit ironwall.com/BIGTECHNOLOGY and request a free Risk Assessment to see exactly how exposed your executives are Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

  If the AI buildout stumbles, does the rest of the economy go with it? Is the data center buildout a ticking time bomb? And will SpaceX and Tesla merge? We'll cover it all on a big technology podcast Friday edition right after this. This episode is brought to you by Genesis. What does it actually take to put a Gentic AI to work across an entire enterprise? I recently spoke with Genesis chairman and CEO Tony Bates about why orchestration is emerging as a competitive advantage in customer experience and what companies need to get right in the AI era. Then I sat down with Adam Mitchell, head of enterprise business solutions at Voya Financial to go inside a large scale agentic CX transformation, including the business decisions, trade offs, and lessons along the way.

• 0:45Speaker 00

  You can watch both conversations now on my YouTube channel today. It's never been more challenging to get frontier compute. How do you know where to look, who to trust, or how much to pay? Akash is an open cloud that provides easy access, flexibility, and peace of mind. That's how companies like Razor were able to cut their inference cost by 15 times. Visit akash.network/alex for a free consultation. That's akash.network/alex for a free consultation. Welcome to Big Technology Podcast Friday Edition, where we break down the news in our traditional cool-headed and nuanced format. We have a great show for you today. We're going to talk all about what would happen if AI fails, if even one leg on the AI stool

• 1:28Speaker 00

  starts to crumble, what the implications will be. We're going to talk about whether we're heading towards a subprime data center crisis and how bad SpaceX can get and whether it's planned to merge with Tesla are currently even feasible. Joining us as always on Friday to do it is Ranjan Roy of Margins. Ranjan, good to see you. Welcome back.

• 1:50Speaker 01

  Good to see you, Alex.

• 1:51Speaker 00

  This week, I have to say, as I was putting together the show, I definitely felt a little bit more downtrodden than usual, and I can't tell whether that's my mood influencing the way the show is being put together or the world events influencing how we're going to talk about AI this week. I think probably the second, everything else is going well. It's beautiful outside, we're full swing in summer, you and I are both about to take some vacation and, and right now, you know, things couldn't be better on the outside, but on the inside in AI, things look kind of rough or potentially rough because I think with this AI story, we always go back and forth between the technology being very promising, which it is, and the economic story being somewhat in question.

• 2:36Speaker 00

  And that's always been in the back of our minds and I'm sure of our listeners' minds. And this week, seemingly everywhere, there were certain, certainly signs for caution and concern. So let me, to begin with, just cite this New York Times story that asks what will happen to the economy if the AI boom starts to tamp down. The story says if investor confidence in AI falters, the economy actively built atop it could come crashing down. AI-related stocks account for roughly half of the rise in the S and P 500 this year. Declines in stock prices, even drastic ones, don't necessarily have much impact beyond, beyond the world of finance, but what can make this time different is the sheer scale of the stock market.

• 3:20Speaker 00

  Economic research has found that for every $100 investor gain in their stock portfolios, they spend about $3 more on goods and services, a phenomenon known as the wealth effect. But the wealth effect also operates in reverse. When stock prices fall, investors become less willing to spend, and at present valuation, a 30% decline in the stock market could lead to a nearly 700 billion pullback in consumer spending. That could be enough to set off a recession on its own. So basically, you know, obviously, none of this has begun yet, but the, the story argues that if we were to see a pullback on the AI stock bonanza, that could leave, lead to

• 4:02Speaker 00

  real world problems, potentially even a recession because people are spending so much because they see their portfolios rise. And a large part of the reason why their portfolios are rising are AI stocks one way or another.

• 4:16Speaker 00

  Legitimate area of concern, Ranjan, or what do you think about the, the potential negative effects of an AI bust here?

• 4:22Speaker 01

  Well, I think when we examine it in terms of the wealth effect, I think it's always a little difficult of what you can actually directly attribute. I will say, maybe we're all feeling a bit down because the World Cup is over, but I would also say anyone who tried to get tickets during that could feel the wealth effect just front and center when people, normal people you're talking to are spending two grand, three grand on a ticket, and it just seemed normal. So I think like, in all kinds of especially luxury spending, we've seen the wealth effect, you know, like live and very present. So I think how much of that can actually be attributed to people's paper gains is, it's interesting.

• 5:03Speaker 01

  It's always difficult to actually do like, you know, a direct correlation there, but I do think like, I mean, some kind of pullback, especially in the last few days, Mag7, I think yesterday, we're recording on Friday here, on Thursday, it was the largest aggregate decline in Mag7 in five years, I believe I saw it was. So this stuff, and that's not counting SpaceX, which we can, we're going to talk about later. So I think it's going to be real. To me, it's always like, it was going to happen at some point. The only question is, is this going to be like a dramatic negative effect on the economy overall?

• 5:44Speaker 01

  Or does it just mean if the World Cup was today, you could get tickets for like a grand instead of two grand?

• 5:50Speaker 00

  Right. Some of the spending is so outrageous that, you know, even a small pullback will sort of bring it back to normalcy, right? Like, things have gone crazy to the extreme, but you could also see some of the spending, you know, as the article indicates, in non-extreme luxury purchases, right? If you, people are going out to dinner more often, they're going on trips more often, likely because their portfolios are doing really well, right? We're basically on the back of two 20% plus, you know, gains in the S and P years in a row. And then this year, we're, you know, a little bit more than halfway through and the S and P is up about 8%. So the increases in people's portfolios are leading to more spending and the concentration

• 6:34Speaker 00

  in the market is in AI, right? So 25% is in the Mag7. And then there's now these additional memory companies that are also pushing up the, the value of people's portfolios. So, so this is how the article argues that, you know, one scenario for how things might end up unraveling, and you let me know if you think this is feasible. They say if companies find that their AI investments aren't paying off as quickly as they hope, as they hope, they might pull back their spending, forcing the AI labs and their suppliers to trim their growth projections. Such a disappointment could incite a market sell-off, which would make it more difficult or more expensive for companies to raise the capital they need to fund the AI buildout.

• 7:17Speaker 00

  That in turn could lead companies to delay or cancel plans to build data centers, power plants, and related infrastructure, giving way to layoffs in the construction industry. And at the same time, the drop in the market would push wealthy consumers to pare their spendings, their spending leading to wider job losses and ultimately a recession. What do you think? Plausible?

• 7:39Speaker 01

  I think certainly plausible. I mean, it's like any downturn, the, it's, it's not the initial downturn that's going to kill you, it's the secondary, second and third order effects of it. But I don't know, I still feel what we've seen in the market, especially this week, and whether that's just kind of like a slight correction or whether it actually signifies something much deeper. And we're going to get into Google's spending and free cash flow and, which I think is actually really notable. To, to me, timeframe, with the whole AI discussion, I've said this regularly, like, the timeframe is the most interesting part of the entire thing because, you know, if

• 8:23Speaker 01

  Google is investing now for two to three years down the road and you're really not going to see anything, or maybe even a year down the road, but in the near term, it causes more issues. How much of that affects spending in the near, like tomorrow and next month? I think it's definitely going to be there, but whether people continue to believe in that medium-term story, I think could be the difference whether or not we're actually seeing something much more systemic and worse.

• 8:50Speaker 00

  Yeah, there's a great line that ends this story, which is a quote, "Right now, the burden of proof is on the skeptics, but once you have the slow trickle of disappointing information, then the burden starts to be on the optimists."

• 9:02Speaker 01

  Oh, that's beautiful.

• 9:03Speaker 00

  Yeah, it is beautiful.

• 9:04Speaker 01

  Yeah.

• 9:05Speaker 00

  Right, because ultimately, like, everyone has gone along, you know, with the story of more spending will inevitably be worth it because AGI, right? Like, that's basically been the logic. And this could really unravel very quickly if the big tech companies, like a Google, like Microsoft, like Meta, determine, hey, maybe we don't need to, you know, make these massive infrastructure spends and we can have some of the benefits of AI from, from, you know, other sources.

• 9:35Speaker 01

  Do you think this is, we're seeing the Kimi K three effect here on Mag seven? Do you think people have already kind of directly connected the two and suddenly more efficient spend? Maybe Jevon's paradox will take a little longer for us to get to. So, so everyone's like, actually, you will be able to do things more efficiently and cheaply now. So that whole capex story doesn't quite make as much sense. Or do you think this is just a little bit of a, it's gone up a lot and it's not going up as much?

• 10:08Speaker 00

  Yeah, I don't think Kimi K three, I think, I don't think that is, you know, a direct lead into people saying you can do it more cheaply. Again, if we spoke about this a little bit last week, but Kimi K three actually is, is not very token efficient. So even if the prices are cheaper, you still need the data centers, you still need the cloud hosting and you're going to run a very token hungry model and not necessarily get the, the savings that you expected. But I do think that this is a cumulative situation of, you know, the models getting cheaper, people showing that models outside of OpenAI and Anthropic can work. OpenAI and Anthropic not really being close, you know, at least in their projections to long-term profitability.

• 10:50Speaker 00

  More and more models like Meta and Grok, you know, being cheaper. And, you know, effectively the gains not really being found outside of OpenAI and Anthropic. Right? So, so those two companies, which you've talked about as the sort of dual points of failure in this whole thing. You know, I think that that is starting to, you know, be a cause of concern if you're not one of them in terms of, well, how are you going to make money off of this? And then I think, by the way, you mentioned Google earnings, right? That leads right into this big problem with Google. So Google this week is down like eight percent and it dropped immediately after its earnings after its capex went from,

• 11:31Speaker 00

  went up to two hundred and five, more than two hundred billion in terms of its, our AI infrastructure spend. Right? So, so this is from the Wall Street Journal, after the four trillion dollar company raised its estimated capital expenditures to a new range that extends past figures while reporting on its second quarter earnings, investors punished the stock, which fell more than four percent and after hours trading before recovering slightly. Right? So basically what's going on is, you know, the, the analysts are saying this two hundred billion in a year was a do not cross line. Previously it was supposed to be a hundred eighty, a hundred ninety billion, right? And now it's going to be one ninety-five to two hundred and five billion.

• 12:14Speaker 00

  And, you know, going back to that New York Times scenario, people are asking, hey, where's the payoff here? Right? Like where is the associated growth that we're supposed to see? And Google became this linchpin, I think, because it's not having the model success as, as OpenAI and Anthropic. It's not having, you know, the growth that we're seeing in something like Claude Code. And these questions are finally the market saying, listen, you can't just spend based off of this optimistic scenario if you don't show us the results. Now, cloud is growing for Google, but it's, it is, we're beginning to see the pushback. And this, like I said, this could unravel very quickly, don't you think? If, if the market does not allow for it.

• 13:00Speaker 01

  Yeah, but it's still, I don't love this idea that, like, looking at it as unraveling. I guess going back to the idea that the burden starts to be on the optimists rather than the skeptics. Like, it was crazy to me, September twenty twenty five, where you were rewarded by the market for saying you're going to spend a lot more money on a technology that has not had the economics of it actually worked out yet. Again, Oracle is down sixty-five percent from the peak up in, back in September. That was when, like, any market environment where you are rewarded for saying, I'm going to spend a ton more money on something that's unproven is already a bit crazy to me.

• 13:43Speaker 01

  So I'm still going to look at all of this as rational, like the rationalization of the markets rather than the unraveling of the markets so far. I mean, let's wait a week, but.

• 13:54Speaker 00

  Yeah, but, but this, okay, so can't rationalization lead to unraveling? Like, there's going to be a point, don't you think, where investors are going to look at this, you know, this emerging technology? And so far they've been willing to bet on it. And again, like going back to the story at the top here. The reason why people's portfolios are up is because there's been this collective belief in AI, in the AI story. First as a technology story, but then in like tradition and typical, you know, Silicon Valley mode, spreading to the whole economy. There's also been this belief that they'll figure out the business model. I think what we're seeing with the market right now is, hey, maybe they won't figure out the business model.

• 14:35Speaker 00

  Just where four years past ChatGPT, the spending continues seemingly unimpeded. The business models maybe are emerging, I don't know, right? The best business model is just providing the infrastructure for these things. And the products are, are, you know, obviously improving, but not across the board. And the only ones that seem to have the product momentum are OpenAI and Anthropic. And I'll go to a tweet from Mr. Ranjan Roy this week about the Google product. Gemini is quickly achieving co-pilot status, no idea what's going on over there.

• 15:10Speaker 00

  The, so, so basically my point is maybe this blank check from the market goes from, you know, hey, we're going to, you know, it doesn't seem like they're going to, there's going to be this middle ground between blank check. And, and you can't spend on AI anymore. I just don't see them saying you can spend fifty billion, right? I feel like it's either, you know, you go all in and, and you're going to build AGI and that'll be worth a ton of money or you don't. I don't see the middle ground. You see the middle ground?

• 15:37Speaker 01

  Alex, I like my markets healthy. I don't know about you, but I like my markets healthy. And I think this is just a little bit of a, again, you, you, you use the word correctly, blank check. And that's what it's been for so long. And like, again, in the last, call it twelve months more than anything, there have just been so many of these little moments where, again, back in February, like senior executives bragging about their Claude Code spend. Those are the moments that you always look back on and you're like, something was a little bit off. The market rewarding Oracle for taking on a bunch of debt to, and all these crazy commits from OpenAI and these deals being structured around like

• 16:19Speaker 01

  these very optimistic, if not crazy scenarios and being rewarded for it. So, so I still think this is good for the market and the, this had to happen. And it like, it's better that this happens in a kind of controlled way where people start. And again, I, as regular listeners know, I'm very optimistic about at least the medium term and the world of agentic AI. And I think like, it's better that this happens in some way, rather than it's just a straight line up forever until it's not.

• 16:54Speaker 00

  So what is the healthy market story that investors tell themselves to be like? We're, we are gonna spend like, we're gonna give these big tech companies that leave it to spend, let's say a hundred billion a year. And, you know, instead of flushing their entire, all their free cash flow, maybe use half of it on AI.

• 17:14Speaker 01

  Yes, yes, that's exactly it. Like, again, the, the reason this raised alarm bells is, I think this was Google's first quarter of projected negative free cash flow ever. So, I mean, ever, like, that's crazy. So the, like, maybe just don't make it negative. Maybe just say, we're going in, we're going in, you know, a hundred billion dollars is a lot of money. Like, we, we seem to, I feel forget that now when private companies are valued at a trillion. But going in where we are not going to fundamentally put our entire cash cow that has made all of us so much money at risk for this, and we're going to do it in a slightly more measured but aggressive way.

• 17:59Speaker 01

  To me, that's a healthier story versus Meta and Google and everyone just looking at each other. And again, Microsoft is not doing this, like all of them looking each other in the eye and being like, all right, you're going for it, I'm going for it, we're all going to like sink or swim on this and just shovel money in and see what happens. So that's my healthy market.

• 18:20Speaker 00

  Right, but I'm, I'm asking like, what is the narrative about AI? Like, what does the market, market believe about? Let me, let me just get the question out.

• 18:27Speaker 01

  Yeah, yeah, yeah.

• 18:28Speaker 00

  Like, right now, like, basically the market is investing blank check, there's going to be AGI. You know, if there's, if there's a complete pullback, basically it means like this is not an economically feasible technology. So does the market thesis then sort of become, you know, AI might not be like the next, I don't know, iPhone or the next internet. But it will be this sort of helpful new mode of computing and we will, actually this might make sense. And we will just keep investing in it to grow incrementally. And, and sort of make our bets that way, you know, have big tech make their bets that way. Versus, let's say, and we're going to talk about it with Paul Kudrowski in a couple of weeks, but a call option on AGI.

• 19:12Speaker 01

  That's what, to me, I love it. That's all I want. That's what I've wanted the market to actually think for a long time that, and I love that call option on AGI that you just put all your money in and either it works or it doesn't. That's not healthy to me. That's like the economy trading on Robinhood as like a D gen versus let's make this work, let's scale it out. And maybe it's not even incremental in the traditional sense, it's still aggressive. But it's not that kind of like, the economy is a call option right now.

• 19:44Speaker 00

  Okay, but then just for the sake of argument.

• 19:47Speaker 01

  Please.

• 19:47Speaker 00

  An AI bull might say, this is the best thing that I, like, let's, let's say I'm one company and I'm a believer in this. You might say, this is the best thing that I want. Let's say you're OpenAI, because OpenAI is the most likely candidate. I want Google, Microsoft, Meta, Amazon to believe this is an incremental technology. I'm going to make the bet that it is an exponential technology. And isn't this the way that big tech companies lose? Is that they don't bet big enough on the thing that will effectively disrupt them and an upstart comes in, right? And so, so I'm, just to, just to take it one level deeper.

• 20:30Speaker 00

  If you're Sundar, you've already sort of started late. Isn't this you just seeding the battle to OpenAI if you listen to the market and spend less? Because this, if this does become this ultra powerful technology, you, you are effectively losing it. It's almost like. Can you rightfully with your CEO brain take your foot off the gas pedal? If you believe there's even a 10% chance that this becomes the technology that OpenAI believes it will be?

• 21:02Speaker 01

  But that that's the way they have been thinking, at least Zuckerberg, Sundar and others. I mean, I think Zuckerberg made lots of comments around that, around like even whatever billions of dollars is not enough, given the potential. To me, again, I like this theme of healthy competition and economy because that's kind of normal for time immemorial. Like, uh, large incumbent, not just large, four trillion dollar incumbent, giant of the entire economy, does not approach things the same way as upstart company does. And incumbents have done very, very well for a long time and like, but, but it all, I guess it all comes back to that question of

• 21:46Speaker 01

  if one company reaches AGI before others, does everyone else lose and only they win? And actually, maybe that's the biggest shift right now. To me, that mentality, I have not, I've never had that. I feel more and more people with the Kimmy K three conversation and everything else and model routing. I don't know if you saw Stripe might buy like, uh, open router for 10 billion, like, like everyone. And, and I've been thinking, saying this, this is what I work on for a long time, model interoperability. It's about the harness and the product, like the more, it feels like that is a giant vibe shift right now. And that idea that AGI or bust, whoever wins owns the entire thing.

• 22:31Speaker 01

  Do you think anyone other than OpenAI and Anthropic still believe that as of Friday, July 24th today?

• 22:39Speaker 00

  No, but I think that's because the game has been played a certain way up until this point. Just hear me out here, right? Which is that, um, OpenAI and Anthropic have been sellers of intelligence, not products. Effectively, I mean, yes, they have the chat GPT and the Claude, Claude code. But that's like, they've always had this API business on, on the side that's been very important to them. I will posit that there's a chance that these companies think the API business is going to be a liability to them. Because the only way, okay, the only way you, you reach AGI and still lose is if you make that AGI available to others.

• 23:21Speaker 00

  And the way that you reach AGI and win is if you hoard it and basically say, uh, I've been making all these models available. I'll still make less powerful models available to people that want to build thing, build things. I just made open, I just made GPT 10 and GPT 10 is the big one. And actually, you know, GPT eight and nine and 10, uh, I'm not going to make available to people. I'm going to make that only available for use in my proprietary products. And I'm going to go upstream and make, you know, OpenAI CRM, OpenAI Design, OpenAI Customer Service. You want, you want the, the access, you want the power of AGI? You use it on my products.

• 24:05Speaker 00

  And by the way, that also prevents some distillation, uh, as well. And that is, that is how you, you turn what you've done into something that you can reap economic benefit from while keeping everybody else at bay.

• 24:18Speaker 01

  So I love that actually. And I think if you believe it, that the AGI or bust story, that actually is the right strategy. So why aren't they doing it if they really believe it?

• 24:33Speaker 01

  Because they didn't listen to Alex Scantor.

• 24:36Speaker 00

  I don't have any information to suggest that they're going to shut off their APIs. I'm just saying, we might've seen the beginning of, the beginning of it as well. With the mythos thing, with the slow rollout of GPT 5.6. Just wait, because they may have no choice but to shut those APIs off.

• 24:55Speaker 01

  I mean, it, I, going back to what is healthy competition, I kind of like this. If you have very distinct strategies for the frontier labs, our strategy is it's always been about AGI or bust, owning the intelligence, turning that into products. This is going to be our entire business. They should go for it and then let everyone else take the other route, which is what a lot of the world has been talking about over the last week of model interoperability, infrastructure, harnesses, all these kind of other things. And you have two, then it's like, then it's like a cleaner competition, who's going to win? Yeah, they should do it, listen to it.

• 25:36Speaker 00

  And by the way, yeah, the other, the, you, or you could even make API sort of accessible only, uh, in your like trusted forward deployed engineer version. Like if you're, for instance, if you're JP Morgan and want to build with our, you know, GPT 10, we'll send some consultants over, make sure you don't get to touch the code and we'll build products for you. But if you're Salesforce, I think that, you know, maybe we're going to compete with you. So sorry, you can't, you can't have access to anything beyond GPT six.

• 26:06Speaker 01

  But that's where, I mean, there was, how long ago was Claude design? Only like three months ago, right? Like, you know, there's that moment of giving Anthropic access to your systems and they're just going to copy your products, which I do feel is still there. Like, I mean, that's still, which is kind of the model you're talking about here, which is in, if you own intelligence, you can just do these kinds of things. But I don't know, how do you, how do you actually see this playing out over the next few months?

• 26:37Speaker 00

  Yeah, like that, like that.

• 26:39Speaker 01

  Okay, okay.

• 26:40Speaker 00

  I, I, look, just, just, you know, we've seen so, it sounds crazy, the way I'm saying it, it sounds crazy. But we've seen some crazy stuff happen, uh, in AI so far. I don't think we're done seeing crazy things. So I think that, you know, just, just, uh,

• 26:57Speaker 00

  I don't know, prepare for the API to go away.

• 27:00Speaker 01

  Well, to, to Sam and Dario, I say, I think if you, if you are AGI or bust, follow Alex's advice. No, I mean, I think that that's

• 27:11Speaker 00

  I don't want them to do this. I mean, I think it would be better to have more AI for everybody, but it seems like they won't have a choice.

• 27:16Speaker 01

  But that's the only, I agree, that is the only actual logical approach, rather than the current kind of piecemeal one that doesn't really say like, and, and we're seeing that. We're seeing you come out with Mythos and Kimmy comes out and like, we're seeing it in real time. And then you're complaining about distillation, et cetera, et cetera. Like, if you're, if you're close to AGI, own it. And yeah, that's the, and then you got a story too, for the IPO.

• 27:46Speaker 00

  That is a story. Okay, so what, what happened? Let's can keep going with our, you know, sort of what could go wrong theme, uh, this episode. I want to point you to a piece from Ed Zitron, uh, this week. He calls it the subprime data center crisis. Now, um, as somebody yourself who was on the floor of a trading desk during the financial crisis, I'd like to run this scenario by you and you can tell us whether you think it has any parallels. And we can go from there. So, so this is kind of Ed, uh, outlining what happens when someone wants to build an, an AI data center and sort of the financial machinations around that. He says, when somebody decides to build an AI data center, they form a special purpose vehicle,

• 28:31Speaker 00

  which then raises debt, in some cases slices it into tranches. And in most cases, sells them to institutional investors, asset managers or banks. Think of a SPV as its own little company. And when somebody signs a contract with an AI data center company, uh, let's say OpenAI, they're actually signing a deal with the SPV. When the SPV receives funds from the debt it raises, it makes payments to contractors and suppliers like Nvidia for GPUs and receives the revenue, uh, from the customer contract, assuming said customer is paying or has anything to pay for. During construction, interest payments are taken out of, taken out of the SPV from a pre-funded interest reserve account.

• 29:11Speaker 00

  When a customer pays, the SPV uses those funds to pay for operating expenses of the data centers and then creditors based on their seniority. And that, then if anything is left, the holding company, uh, all this money counts as revenue. So basically what I just saying is, um, you know, this is, this is a risky build out. It's being, uh, put together by these SPVs, um, that, you know, you would hope you would get the money back if you invest, but you're not sure. Uh, and there's got to be revenue from these AI dentist data centers to pay it back. What do, what do you think about, about this, uh, setup? We've talked about it a little bit, uh, but let me, let me just give the bottom line from Ed.

• 29:53Speaker 00

  Put simply, every time somebody builds a data center, they form a completely separate entity that owns the chips, owns the debt. And in many cases, owns most of the risk.

• 30:04Speaker 00

  What do you think about this in terms of a riskiness, uh, quotient?

• 30:08Speaker 01

  I think. It's interesting. And again, like, I actually really like how we're starting to get much more granular about how how this compares to the financial crisis and mortgage-backed securities and like, because again, the the story is actually very similar in that you have the underlying asset, whether in the past it was real estate, now it's digital infrastructure, data center infrastructure. You have, in the past, the value, the the kind of marked value of real estate was how it was measured and it kept going up. Now you have both kind of the marked value of companies,

• 30:51Speaker 01

  but also you have this kind of circular financing, and we've talked about this for a long time, that is inflating the price. Before, it was the mark of a house or entire housing market. Now, it's like how that revenue is being recognized. But then the risk has already been passed off and sliced up. And then any kind of downturn, going back to where we started this conversation, who owns what, who pays what, is very murky. And then actually trying to get your money back, even a piece of your money back, becomes very difficult. So all of those parallels are, I mean, very similar, I think, like, not to not to bring us down even further after no more soccer in the

• 31:34Speaker 01

  World Cup, but it definitely, uh, that it's it's a logically consistent argument. I'll give it that to start for now.

• 31:44Speaker 00

  Okay, so now let's let's keep going with what Ed is arguing here, right? So basically, what he's saying is a lot of this debt is, you can't really see it, because it's in these special purpose vehicles, as opposed to held by the companies. And then it's in these opaque, opaque, SPVs, and chopped up and farmed out through the economy. So how much debt is there actually? Well, this is from Ed's story. Bloomberg estimates there's over 500 billion in outstanding AI data center debt, at least 200 billion of it held by private credit, making up roughly 8% of outstanding private credit loans. That being said, the number is likely much higher. Nikkei Asia reported this

• 32:27Speaker 00

  week that Meta, Google, Amazon, Microsoft, and Oracle have accrued around 1.65 trillion in outstanding debt over the last five years, with the additional with an additional hundreds of billions of dollars worth of off-balance sheet debt, meaning that the corporate structure allows the company to not include it as part of our, a part of its liabilities.

• 32:49Speaker 00

  What do you think about this? That's pretty, pretty bad.

• 32:52Speaker 01

  No, no, I mean, now that we're, and then, I mean, also, I want to note the piece continues around that the money that goes into these SPVs doesn't count as a capital expenditure. So Meta recorded 88.6 billion in capital expenditures, but that doesn't include the Hyperion SPV, which had its own 46 billion dollars of exposure. And this process is very similar. I mean, sorry, I'm like, trying to see how many parallels I can draw to 2007, 2008, but like,

• 33:22Speaker 00

  It's already too many, man. It's already way too many.

• 33:25Speaker 01

  But but but what counts is what? This needs to be a little bit more of a

• 33:28Speaker 00

  Yeah.

• 33:29Speaker 01

  research story here. But but I think, I mean, at the simplest level, the risk is being pushed off of like, the initial asset, the same way the actual house. Risk was so far away from the initial asset. Now, even Google, Meta stock, when you have 46 billion dollars of exposure, the of a bunch of circular financing and revenue recognition that none of us have any really clear idea on. And like, that level of risk, and and Ed does continue about how he's estimating 70% of this capacity from Microsoft, Amazon, and Google is OpenAI and Anthropic. So that's the

• 34:12Speaker 01

  other big part of this, is those two companies have committed, like, all of the other side of the trade are OpenAI and Anthropic actually being able to meet these commitments and give them that money to fund this SPV to actually make the whole thing work. And as I'm saying all of this, like, my God, how?

• 34:32Speaker 00

  Dual points of failure. It's a problem.

• 34:36Speaker 01

  Is it? Is it only those? Is there a world, actually, is there a world where everyone else fails and OpenAI and Anthropic come out okay? They're not the points of failure? Oh, I guess the AGI.

• 34:48Speaker 00

  AGI.

• 34:49Speaker 01

  And hoarding. Yeah, yeah, yeah. It all comes back. I thought Sam said AGI is not a thing anymore. Remember?

• 34:55Speaker 00

  I don't I don't recall him saying that.

• 34:57Speaker 01

  No, remember after GPT-5, I think, he was like, it's not as important. I'm gonna let you.

• 35:04Speaker 00

  Oh, yeah. He basically talked about how we should probably agree that we've like, kind of breezed past AGI and are on our way to superintelligence. But either way, the concept remains. So let's go back to Ed. He's Ed says, to be abundantly clear, the vast majority of AI data center compute revenue is contingent on the continued ability of two unprofitable, unsustainable AI companies to raise tens or hundreds of billions of dollars a year. This is not an overstatement. This is not hyperbole. This is quite literally the situation we're stuck in. So so let me see if I can outline Ed's argument by taking the latter, you know, one by one. We have these SPVs that have created a lot of debt throughout the economy, and a lot

• 35:46Speaker 00

  of that debt is being held by private equity and banks. The size of the debt that they are holding is massive, you know, potentially trillions of dollars, or more than a trillion dollars. The only way that this doesn't end up in a disaster is if, basically, OpenAI and Anthropic have the exponential increases in revenue continue in a way that, you know, will have to be massive to make this, to pay this money back. And if OpenAI and Anthropic's revenues do not continue to accelerate, accelerate exponentially, effectively, the entire economy is

• 36:29Speaker 00

  going to be like, the bag holders here. And they're going to, there there will be a cascading, you know, financial crisis because of the amount of debt that will not be able to be paid back

• 36:45Speaker 00

  because of the way that this is all structured and the dependencies. What do you think about that argument?

• 36:50Speaker 01

  No, but the entire economy as the bag holder. I mean, I think in that analysis, too, OpenAI and Anthropic certainly are holding some bags there, because that's basically saying that they're not going to be like, going entities at a certain point. I think, I don't know, I guess it all, again, it comes back to timeframe. And this is where, like, how fast the data centers need to generate cash immediately, and how fast can they generate cash? And that's kind of been what has been hammering Oracle, is that very quickly, especially because that was actually, to their credit, straightforward debt fuel, like, and everyone's very quickly realizing,

• 37:32Speaker 01

  actually, this might take a little longer. So I think, again, yeah, the question of, does it happen? And then how severe? I think those are the two very important ones. And and does it happen? There's no way this all demanded perfect execution from everyone in the industry, like, perfect execution. Again, I feel like the expectation set, OpenAI, like, post ChatGPT for a while, was in perfect execution mode. Anthropic, from the release of Claude Code, for like, six, seven months, was in perfect execution mode. But as we already see, that is

• 38:15Speaker 01

  not a thing in infinite, like, in an infinite timeline. So something has to give, is just, yeah, how much? But I don't know, I still always wonder, too, like, shouldn't there be more information about this? And like, Ed Zitron, to his credit, has been talking about this for months now, maybe even years. Like, I'm actually more surprised this isn't a more deeply reported thing by every major publication, or every analyst itself.

• 38:47Speaker 00

  Well, Ed basically makes that point in his in his piece, saying that, like, there should be more coverage of this, and it's surprising that it isn't. I don't know, I think there should be. I honestly think publications should be running with this stuff. And, and, you know, to go back to our prior quote, that the burden of proof is on the skeptics right now. And, you know, if it flips, it will be on the optimists. Well, I think that part of this discussion, and by the way, you and I, we're very optimistic about this technology, but we've always kept in mind that the business could be a big problem because of the magnitude and the dependencies here. And I think that the narrative should should be more balanced, in a way that we try to do here, right? Like, you know, there, there might be some people out there who are like,

• 39:32Speaker 00

  why are you spending, you know, 15 minutes on Ed Zitron, you know? And I'm like, like, we got to tackle these arguments.

• 39:39Speaker 01

  It matters. Yeah.

• 39:40Speaker 00

  It matters. So I don't know. I think you have a good point here. Yeah, let me read Ed's, Ed's last last bit here. He writes, he reads, writes, for me to be wrong, there will have to be dramatic amounts of AI compute demand, hundreds of billions of worth, within the next three years, at a time when there's a little more than 120 billion, with 80% or more of that coming from two companies that can only afford it because they have near infinite sums of venture capital behind them. And for some context, the entire global software market is estimated to be around 779 billion in 2026. Just my attempt to add some nuance here.

• 40:16Speaker 00

  I don't think anybody would have predicted OpenAI and Anthropic getting to 120 billion as quickly as they have. So I'm not saying they'll necessarily bring all that demand online, but it's not an impossibility.

• 40:31Speaker 01

  Well, that's the thing, too, that, I mean, that's the frustrating part. And this is why I'm like, the burden of proof being on the optimists is is a good thing. It's like, their growth has been spectacular, unprecedented. I mean, choose your, choose like how you want to describe it, but it's still not enough currently to make all this work. And I think that that is, that's like, again, why I do not consider this healthy. Like, you have unprecedented growth, earth shattering growth, and it's still not enough.

• 41:10Speaker 00

  I know it's unfair to ask you to predict this, Ranjan, but what do you think the chances are for us to have, like, in, you know, sort of unraveling of our economy, maybe not to the tune of the financial crisis, but one that is, you know, let's say, 30% of it because of these AI

• 41:27Speaker 01

  investments? See, I still, again, having sat there on a trading floor during the entire crisis, like, the big difference here is it's still like, at a minimum, this is going to only affect a class of capital holders that like, it's not everyone who has a house, that's everyone. And so the like knock on effects, the actual like acceleration of housing prices declining, leading to like instant wealth effect issues versus anyone who has been able to invest in a Hyperion SPV, you're going to be doing okay. Like, you're, you're going to be doing okay.

• 42:06Speaker 01

  If you are a retail shareholder of Micron or like SpaceX or whatever else, you might get hit more quickly. But I still think a difference and like, what are the, so I think the systemic effects are potentially to the market as a whole. And then you could have your second and third order effects on what that could do to other companies and retail shareholders. But the big, big difference here is everyone, or I mean, lots of people own houses, not everyone is able to invest in the Hyperion SPV.

• 42:44Speaker 00

  You know, an interesting thought experiment here is what does this do to the OpenAI's and Anthropic's of the world, who are, you know, basically triple levered on reaching AGI, you know, so to speak. And is an outcome that we could potentially see is everything that Ed anticipates comes to fruition. And that they can't pay back these contracts, leads to debt, they can't raise any more money. Do we end up like seeing them be acquired by, you know, big tech companies and just like, you know, Amazon and Microsoft?

• 43:16Speaker 01

  Satya on stage with a smile on his face, or John Turnis, as per our Turnis fanfic from last week, on stage, acquired OpenAI for far less than the value of even their like, three rounds ago, saying Siri is finally going to get actually good. I mean, I don't think that's, that's not an unreasonable outcome to any of this, like, which is again, back to normal economies, like, normal, healthy economies, that fast growing startup has massive acceleration, valuation increases, something doesn't pan out, larger company with a strategic interest buys it. It's not crazy.

• 44:00Speaker 00

  I was gonna say, you know, if we hadn't seen the past month play out the way that it has for SpaceX, you know, does Elon go full circle and acquire OpenAI? It actually could happen in the combined Tesla and SpaceX entity.

• 44:16Speaker 01

  I mean, that would be something. That would be, I mean, it is crazy. When we talk vibe shifts, though, like, this is what's going to be really interesting to see. On this show, I don't think we have ever discussed the acquisition of either of those two companies. This might be the first time we've ever started hypothesizing around what does that look like? Which is crazy, because we hypothesize about everything, including John Turnis and what his personality behind that veneer of calmness might be. But like, if we're doing that, if other people are doing that, that's, I mean, that's a big shift. And I think, I think it's

• 44:57Speaker 01

  already happened. I think that's already here. And we've seen plenty of pieces of it. I guess I'm curious, like, did, I saw this one tweet around, like, OpenAI, and we had brought this up on the show last week about how them not being able to invest in AGI by having like normal business pressures is effectively negative for the economy and humanity. Like, then I, this one tweet around that, like, all the responses from like, very tech VC types was basically like, they can't fail. We should not allow them to fail. They're too big to fail. Like, it's bad just for everybody. And you could just feel the level

• 45:40Speaker 01

  of kind of like, overinvestment into them. I don't know, across at least large percentages of the population.

• 45:50Speaker 00

  Yeah, no, I've seen that, too. And I think, I think it would be bad for them to fail, right? If you think about all the energy in AI, a lot of it has been sparked by OpenAI, right? Like, Google, Google missed, you know, the chatbot moment, and only entered because of, you know, ChatGPT. And sort of, you think about the enterprise side of things, OpenAI sparked that. I don't know, I think it would be, it's, the energy of a company like OpenAI is overall good, despite its shortcomings, and it has plenty. I think it's overall good. And sort of, you would, you would, you'd likely lose a lot of that if they sort of went in a house at Microsoft, or especially Apple.

• 46:34Speaker 01

  I'm going to push back heavily on that, mainly because actually, that energy, again, working in enterprise AI for a company that is only focused on enterprise AI since its founding, you see how that energy distorts the proper conversation very quickly when OpenAI comes in. Like, suddenly, the way people approach it, the scale with which you need to actually approach and try to solve problems and build things out, which is what I think has happened to a lot of AI across on the consumer side as well. It's like, that it has to be thought of and done as a certain way, rather than, this is technology, it's great technology, let's figure out what to do with it, just have a normal path to actually

• 47:17Speaker 01

  doing something with it, rather than that manic energy. And I think that's what the promise of AGI and the conversation around it is created. It's, I'm really liking this returning to a healthy economy and going back to, I believe, actually, I believe the burden of proof should be on the optimists, not the skeptics. Do you agree?

• 47:41Speaker 00

  I am gonna say, and this is, won't be a surprise to our listeners, the burden of proof should be on anybody saying anything. Like, we shouldn't give any side of free pass.

• 47:51Speaker 01

  Well, no, no, but, but I guess it's more, like, if you are selling something, yeah, you should, I agree, if you are heavily skeptical, if you're the Ed Zitron in this case, you should also be sharing your burden of proof. But I think what happened is, like, the assumption was that, yeah, like, optimism is a default inherent good. And actually, this is kind of like a bigger philosophical thing, I feel, in the valley where you hear all these people saying, like, even to just question something is bad, and you have to have unfettered optimism, and that's what's powered the valley since its kind of incarnation. But like, I don't like it. I don't like it. I just ask some questions.

• 48:34Speaker 00

  I'm pro introspection. I like introspection.

• 48:35Speaker 01

  Yeah.

• 48:36Speaker 00

  Yeah. Well, that's what we do here. That's why we pod. All right. Let's go, let's go to break. Before we go to break, I just want to give folks a heads up on what scheduling is going to look like over the next couple of weeks. So Ranjan and I are going to be on break for a bit, but the show will continue. So we're going to have our typical Wednesday episodes as usual. The Friday episode will look a little different until we both come back. So I'll give you a heads up as to who we have coming on. Looks like Dick Costolo, ex Twitter CEO, will be on our Friday show next week. The following week, MG Siegler will step in on the Friday show. The week after that, we're actually going to do a replay

• 49:21Speaker 00

  of an old interview that I did with Johann Hari about the impact of Ozempic on our economy and health. I really liked that interview. And it happened before many of you were joined, joined the show as listeners. So that's coming on Friday, the 14th of August, and then Ranjan and I will be back on the 21st of August. So.

• 49:43Speaker 00

  We're gonna do as best as we can to get through these these summer weeks, but don't worry, show hasn't changed. Just slight break for both of us and we look forward to seeing you then. And yes, two episodes a week on the show, at least coming at you. So with that, we're going to take a quick break and come back right after this. This episode is brought to you by App Point. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data and most teams have no single way to see it, secure it, and prove it's under control. That's exactly what App Point does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended

• 50:28Speaker 00

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• 51:53Speaker 00

  Learn how to stop online threats before they become real world attacks. The link's in the show notes.

• 52:02Speaker 00

  And we're back here on Big Technology Podcast Friday Edition. Wow, a lot, a lot of news developments this week. We really only have time for one more, though. So maybe Ranjan, you and I, when we come back, we can talk a little bit more about distillation and whether open source AI should exist. Although the consensus is now going towards, yes, everybody's coming out and saying, we should have open source AI. So we'll, we'll keep covering that story. But you have brought up that you want to talk about whether SpaceX and Tesla might merge and how, how steep the fall of SpaceX could be. And I think it just fits thematically

• 52:44Speaker 00

  with our episode this week. So Ranjan, take it away in terms of what you think is going to happen with these two companies.

• 52:51Speaker 01

  I think those are two separate questions around, you know, will SpaceX, SpaceX and Tesla merge? And then the other is what is actually happening with SpaceX? As we're recording, SpaceX is at around 114, which is still one and a half trillion dollars in market cap. This is a company that has $18.7 billion in revenue last. So one thing to note that's interesting is like, already it's down significantly from when it had crossed 200 and Elon Musk, everyone was not just became a trillionaire, but a multi-trillionaire.

• 53:26Speaker 00

  No, no, he was worth more than, more than, he was worth 2 trillion? No way.

• 53:31Speaker 01

  No, no, he was closing in on it. Like, there's one day, I think, when it went to like 220 or so in intra-day. Basically, after crossing 1 trillion, he very, very quickly started, it started skyrocketing. And then everyone was like, oh, we might, we might hit the second trillion quickly. He did not actually.

• 53:47Speaker 00

  You never hit the second trillion.

• 53:49Speaker 01

  Valuation, yes. I love that this is even an actual conversation because that's for a company with $18.7 billion in, in revenue. To me, what's interesting is already we've seen this drop, but it's still like, a lot of people have said, like, you know, it's already happened. This is crazy. But there's still, again, given its revenue, plenty of room to go. The other big thing is on August 6th, there's another wave of shares that will be unloaded into the market and it's two days after they report their earnings. So suddenly, this is, remember, they brilliantly went out to the market saying it is worth this ungodly valuation and kind of anchoring things there, only releasing

• 54:33Speaker 01

  less than 5% of actual available shares to the market to actually create that kind of artificial restricted demand and played it all perfectly. But basically, I think we are going to see, and, and I guess a big question is, is it a leading indicator for AI? Or is it just kind of a referendum on what you think about Elon? I mean, I think the next month and a half are going to be really, really interesting for SpaceX itself before we get into the merger. Do you think, do you think it's in danger? Or do you think this is just kind of a healthy rationalization, going back to the question of the day?

• 55:14Speaker 00

  You know, I will recall before SpaceX went public, I, I think this was in one of our conversations, I told you that I got angry at the S1 that they had filed with the SEC, because it was detached from reality and said that I expected a pop, but, you know, eventually it would come back down to earth. And that is obviously what's happened. It's going to fall more, I think. I mean, this is obviously not investment advice, right? Just talking my, my personal opinion here. But as you mentioned, there are going to be not just one pocket, but many pockets of employee shares that are going to come on and be available to be sold.

• 55:54Speaker 01

  Yeah, the, the August 6th.

• 55:56Speaker 00

  They're gonna make their money.

• 55:57Speaker 01

  The August 6th is going to be a bigger allocation than the initial IPO of what's actually available to be sold.

• 56:03Speaker 00

  So what, what are we not expecting? I mean, it's simple supply and demand, right? When you have more sellers than buyers, number go down.

• 56:10Speaker 01

  Total. Yeah. Now you, you just, yeah. Diamond hands. I haven't said that in like three years.

• 56:18Speaker 00

  Yeah, it didn't really worked out well for all those people. Okay. More interesting, are they going to merge with Tesla? Because I put down the market caps before we started talking and Tesla's at a 970 market cap, a billion market cap, and again, SpaceX 1.5 trillion. So do they merge? Can they merge? What happens there?

• 56:37Speaker 01

  Well, I think, I mean, Elon, being Elon and what he does so well, already just starting to hint and seed this. And I think whether it's a good or bad idea is going to be interesting. But he had already on Tesla's earnings call, you know, said, as you can tell from the many collaborations on so many fronts with SpaceX, there's more and more overlap. We can't talk about, you know, combining companies and that kind of thing on an earnings call. It's got to be done with the appropriate process. Just brilliant and just giving that little nugget to the world, starting to seed that idea. And I think it's almost, it has to happen. Because these two companies, again, Tesla has a car

• 57:20Speaker 01

  business, SpaceX kind of has a space business, still has an internet satellite business, but they are kind of bets on Elon Musk. And he's been a very good bet for a long time. But like, splitting them out is actually very difficult. Like, if you're an Elon fanboy, which one do you put your money in? When do you put your money in? Because you're basically, you're betting on the same thing, basically. And a lot of, remember, Tesla had an AI story to it that's kind of gone away, which is not good for a car company because it can never be valued as a car company. So to me, they have to merge.

• 57:58Speaker 00

  Yep. All right. Actually, I'm going back to this SpaceX IPO. Because, you know, we, we reacted that week and we called it SpaceX, or I called it SpaceX's IPO triumph. And we both commented on how well they executed the IPO. And sure, they made a lot of money for the people on the inside, you know, on IPO day. But do we still think it was flawless execution?

• 58:22Speaker 01

  Well, this is where, and I apologies to listeners in terms of, sometimes it's hard for me where I'm like, I will, like, differentiating between what is good and right versus what it actually, just given a flawed system works. And to me, the flawless execution was manipulating the system to, in a way to enrich yourself and a few others. And that's a very cynical use of the word flawless execution. But in that game, I still think it was flawless. It, for having $18.7 billion in revenue and losing $4 billion on that revenue to get that valuation, how could you, can you argue that that's not

• 59:06Speaker 01

  just in terms of like, the game itself, pretty fricking good?

• 59:12Speaker 00

  Yeah, I'm watching, ever watch Alice in Borderland?

• 59:16Speaker 01

  Wait, no, what is that?

• 59:17Speaker 00

  It's a great show on Netflix. It's this Japanese show where basically like all these contestants end up in these games. But if you lose the game, you die. It's so good. It's like one of the best shows.

• 59:28Speaker 01

  Isn't that Squid Game?

• 59:30Speaker 00

  It's, it's a different, it is, that is, Squid Game has a version of that, but it's a different take on it. It's so, so good. Uh, and, um, and yeah, and it's all just like, well, I'm just playing the game. And you know, you end up leading to other people's deaths. So I don't know. I'm thinking about cynical, you know, game playing.

• 59:52Speaker 01

  Hold on.

• 59:53Speaker 00

  Playing the game the, the best way is, uh, I have different thoughts about it now and after watching this.

• 59:59Speaker 01

  Wait, sorry, what's the plot again? I'm very curious now.

• 1:00:02Speaker 00

  They are, there's just these series of games that you go into.

• 1:00:06Speaker 01

  And you willingly go into, you willingly choose to.

• 1:00:10Speaker 00

  Well, maybe, maybe not.

• 1:00:13Speaker 01

  Okay.

• 1:00:13Speaker 00

  Probably not.

• 1:00:14Speaker 01

  We don't want to give it away. We don't want to give, I still want to watch it myself now, but, uh.

• 1:00:19Speaker 00

  I'm not saying it's the exact parallel, just making the point that like, I can't, you know, too often I think we're like, oh, you played it well, you know, even if people get hurt. And I think that that's, that is, I'm not, there's not a criticism on you.

• 1:00:34Speaker 01

  No, no, no. I would like to add a recurring disclaimer. When discussing Elon Musk, I will, I mean, we can get into what it actually means for the overall economy and society versus he executed the SpaceX IPO to benefit existing shareholders of SpaceX very well.

• 1:00:57Speaker 00

  Yep. And only some of them that could sell. Okay. We'll take it. Do you think, all right, we're, we recon, you and I recon, we'll still have the Friday show going, but you and I reconvene, uh, 21st of August. Has that move, has that move been announced?

• 1:01:14Speaker 01

  Oh.

• 1:01:14Speaker 00

  The merge?

• 1:01:15Speaker 01

  Okay. Oh, let, let's get into predictions for 21st of August. And I think that's a good way to walk out of here. No, I think it's too soon. Elon told us it would still require the appropriate processes, but I think we're going to get a lot of, even though I don't even know what that would mean in the world of Elon in terms of like his ownership and control over both companies. I think you could just say it. I think he's going to be hinting a lot more aggressively over the next few weeks.

• 1:01:45Speaker 00

  Does that benefit SpaceX or Tesla more?

• 1:01:48Speaker 01

  I think, I think equally it benefits them both. And I like, I think I'm neutral on that. I don't think it necessarily benefits one more than the other. They're both incredibly overvalued companies that are, no, no, but that, that are betting on a much larger promise of a robotic economy that Tesla and Optimus Robots everywhere or spaced center, data centers in space. So neither of those are rational things in the near term. So there's, they're the same bet. So why not combine them?

• 1:02:20Speaker 00

  You know who makes that even more attractive? Combining with OpenAI.

• 1:02:27Speaker 01

  By, okay, hold on. Where is the state of AI optimism and skepticism? And what are the optimists proving and, um, within their burden of proof by August 21st, by the time we're back?

• 1:02:43Speaker 00

  Well, we're about to, we're like basically at the face of all this big tech earnings. So I think that like the Google thing might've just been the beginning. Let's see what Amazon says on CapEx. Let's see what Microsoft says on CapEx. Let's see what Apple says, uh, about AI. Let's see what Meta says about AI. I think we're heading towards a, you know, I, I don't, I asked at the beginning, why am I feeling down about things? I would argue that there's, we're probably about to go into a period where the, the questioning of AI's economics. And I don't think that's like, I don't think that, that is like a bad thing, just to be clear. I just think that like the clouds, the dark clouds are looming and it's about to get, uh, rainy.

• 1:03:27Speaker 01

  I think the, uh, the Murphy, Murphy, Murphy's law of the moment you go on vacation is when the most news happens. I think we're already going to be having to message each other and risk our marriages and families too, as we're like, do we, look what's happening? Must leave on.

• 1:03:48Speaker 00

  I shouldn't even, I mean, I'm, I am, I'm open to, I shouldn't even admit this, uh, my, I'm doing a solo vacation because, uh, my wife recently started a new job and, and does not have enough off days. And I'm just going to hit the road on my, on my own. So.

• 1:04:03Speaker 01

  All right, all right. Sitting, where, where are you going again?

• 1:04:06Speaker 00

  I'm going to go to Indonesia.

• 1:04:09Speaker 01

  Uh, okay.

• 1:04:10Speaker 00

  So how about you?

• 1:04:11Speaker 01

  I got, I'll be in London and Spain.

• 1:04:15Speaker 00

  Ooh, very nice.

• 1:04:16Speaker 01

  As long as we, let, let's see what happens, but August 21st feels a long time away.

• 1:04:22Speaker 00

  It's a long time away. Yeah, I was going to say I beseech the, uh, the gods of AI news to leave us alone for a couple of weeks, but it won't happen.

• 1:04:29Speaker 01

  Just slow down, guys, slow down.

• 1:04:31Speaker 00

  You know it, you know it.

• 1:04:32Speaker 01

  Nothing, no more model releases, no more competition, no more, just, just leave it alone for a few weeks. Let everyone rest. We'll be back.

• 1:04:41Speaker 00

  Came out, Opus 5 out today. The latest and greatest. All right. Should we break? Let's do it.

• 1:04:48Speaker 01

  All right.

• 1:04:50Speaker 00

  Ranjan, I'm going to miss you, man. I will.

• 1:04:52Speaker 01

  I'm going to miss you. I'll see you in a few weeks.

• 1:04:54Speaker 00

  We'll see you each other in a few weeks or before. TBD. All right. Thanks again for coming on. Great to see you.

• 1:05:01Speaker 01

  All right.

• 1:05:02Speaker 00

  And great to be with you all. Once again, thank you for listening and watching, and we will see you next time on Big Technology Podcast.