Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: GameStop & Market Manipulation + Is AI Becoming a Bubble, and Is Nvidia Safe? About this episode Scott shares his thoughts on the brief meme stock resurgence of last week and considers whether Keith Gill, otherwise known as Roaring Kitty, should be accused of market manipulation. Then Scott and Ed discuss xAI’s potential deal with Oracle and question if investments in AI could be reaching bubble territory.
Follow our new Prof G Markets feed to receive a new episode Thursday:
Apple Podcasts
Spotify
Order "The Algebra of Wealth," out now
Subscribe to No Mercy / No Malice
Follow the podcast across socials @profgpod:
Instagram
Threads
X
Reddit
Learn more about your ad choices. Visit podcastchoices.com/adchoices
Transcript 10,362 words · 11 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 The new LinkedIn Hiring Pro can't undo your last hire. The human postponer. They were the master of one phrase. I'll circle back on that. But three months later, you are the one doing all their work and wondering how big that circle is. But LinkedIn Hiring Pro can take the hiring load off your plate by automating the hiring busy work from the initial job post to scheduling interviews. Hire right the first time with LinkedIn Hiring Pro. Post a free job today at LinkedIn.com/quality.
0:30 Speaker 01 Energía baja, falta de concentración, nebla mental. You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.
0:59 Scott Galloway? Today's number one. This is our first episode on our brand new Prop G Markets feed. Ed, I've decided to class it up a little bit. No more profane, inappropriate jokes.
1:13 Scott Galloway? This is where you talk, Ed. This is where you speak.
1:16 Ed Elson? I was waiting for a punchline.
1:18 Scott Galloway? All right, all right, all right. You know me too well. Ask me, ask me why they call it Girls Gone Wild.
1:24 Ed Elson? Why do they call it Girls Gone Wild, Scott?
1:26 Scott Galloway? Because when girls go wild and not women, they show their tits. When women go wild, they drown their kids in a tub and murder their husbands. We're back, ladies and gentlemen. That's what you can expect.
1:51 Scott Galloway? That's good. Double the profanity.
1:53 Ed Elson? Okay.
1:53 Scott Galloway? Double the likelihood of being canceled. We're just going to take a quick five second break and find out if our producer is okay with this. Hold on, we'll be back in a second.
2:10 Scott Galloway? Everyone's traumatized. All right, Ed, here we are. Prop G Markets has gone to twice a week. What does that mean? I don't even know what that means, other than that we're doing it twice a week. How's it different?
2:22 Ed Elson? Well, this is our new Prop G Markets feed. If you're tuning in from the new feed already, thank you. If you're listening on the old Prop G Pod feed, be sure to subscribe to Prop G Markets to receive a new markets episode every Thursday. Thursday's episodes will run exclusively on the Prop G Markets feed, not on the Prop G Pod feed. And we have some pretty incredible guests lined up. I kind of want to disclose them now, but maybe we should save it.
2:44 Scott Galloway? Oh, disclose it. Like, like discretion is not our call sign here, Ed. Who do we have coming on?
2:49 Ed Elson? I'm just going to give everyone a hint.
2:51 Scott Galloway? Okay.
2:51 Ed Elson? My hint is biggest hedge fund in the world. Do with that what you will.
2:55 Scott Galloway? Wow, I don't even know who you're talking about. Great, excited to meet him or her. Is it Kathy Wood, the ultimate grifter? Is she coming on? Let me guess, she's now managing $10 trillion.
3:05 Ed Elson? Yeah, she's a huge fan of us now, after you railed against her for the past three years.
3:10 Scott Galloway? Jesus, like, all I gotta do is spew total nonsense about hash rates and wear chunky glasses and I can manage $3 billion?
3:18 Ed Elson? That's pretty much who you are.
3:19 Scott Galloway? Anyways, okay, so today, today we're discussing a meme stock comeback and ex-AI's deal with Oracle. Here with the news is Prop G Media Analyst Ed Elson.
3:31 Ed Elson? Let's start with our weekly review of market vitals.
3:40 Ed Elson? The S and P 500 hit a record high. The dollar fell, Bitcoin rose, and the yield on 10-year Treasuries declined. Shifting to the headlines. The Consumer Price Index showed inflation cooled in April, increasing just 3.4% from a year earlier and easing slightly from March. Following that news, all three major indexes closed at record highs. At its annual I O Developer Conference, Google rolled out a new feature that uses AI to summarize search results at the top of the page. The AI overviews feature will push links to other websites further down in the results, which could potentially hurt publishers that rely on the search engine for traffic. OpenAI unveiled an update to the AI model that powers ChatGPT. GPT-4O will be faster and cheaper than previous versions,
4:25 Ed Elson? and it'll give all users the ability to have a voice chat in real time with ChatGPT. Two days after that announcement, the company's co-founder and chief scientist, Ilya Sutskever, announced he was leaving the company. And finally, Comcast is offering a new bundle, which will tie up Peacock, Apple TV Plus and Netflix. The bundle called StreamSaver, which is expected to debut later this month, will provide the streaming services at a significant discount compared to subscribing to each service separately. Scott, your thoughts?
4:56 Scott Galloway? So it feels like inflation, I don't know, it cooled in April for the first time in six months. Analysts now expect two rate cuts. God, I'm so sick of talking about rate cuts. And the market doesn't seem to care. The S and P hit its 23rd all-time high this year and has surged over 20% since October of 2023, adding $10 trillion market cap. I was thinking about the Biden campaign, and I think they've done such a terrible job of getting the message out there around just how incredibly strong the economy is. I think what they've pulled off here is what we refer to as the Goldilocks economy. I think it's just incredible. Any thoughts from you on state of the economy or inflation?
5:35 Ed Elson? Yeah, I mean, I think the thing to remember with this report is, yes, it dropped, but it barely dropped. I mean, it went from 3.5% to 3.4%, which is basically a rounding error. And just one other point on the accuracy of this inflation data. If you look at the itemized CPI report, there's one category that stands out as especially bad, and that's shelter, i.e. rent. Rent is up 5.5%, you know, gas is up 1%, food is up 2%. It's really high. So it appears that rent is kind of out of control, and it's actually what's driving these high inflation numbers every month. It makes up a third of the weighting of the CPI. Now, here's the thing.
6:18 Ed Elson? That data probably isn't totally accurate. And the reason I say that is that if you look at price increases on Zillow, as we know, Zillow has this massive rental database and it even has its own rent price index. Prices on Zillow have risen only 3.7%, which is drastically lower than the official CPI number. So I think this brings up a pretty important point about CPI accuracy, which we should mention, which is that these numbers aren't actually exact measurements. They're actually just based on these surveys that are conducted by the government. And in the case of rent, the way that they do that is they go to existing homeowners and they ask them, how much do you think you'd charge if you were to rent your house out today? Even if these homeowners had no history of renting.
7:04 Ed Elson? And you know, that that gives us a rough idea of price inflation, but I place emphasis on rough. It's not an exact reading. So I think two takeaways here. One, I think that 3.4% number is a little high. And two, we should just never take these numbers totally at face value. They should paint a picture of where things are headed for inflation, but they're not the exact truth. And it's always good to look for other data providers. In the case of rent, Zillow is a great place to start. But let's move on to these AI announcements. Google had its developer conference and OpenAI announced ChatGPT 4.0. Thoughts on those two announcements?
7:41 Scott Galloway? I was really just fascinated by this OpenAI basically becoming, I mean, it really is the movie Her. The first thing I thought is this is absolutely a Siri and Alexa killer. And Siri, I would argue, is one of the worst tech brands of the last decade. It just consistently never lived up to the expectations you would have for a product from Apple. It's probably the most, I would argue, the most disappointing Apple product until the mixed reality headset, which will go down as one of its biggest failures. By the way, when did we get to actually call that thing DOA? Anyways, another talk show. But what's super interesting here, and it kind of sent chills down my spine thinking about it, is that essentially it's going to become more human-like. And when you think about why you go to the media, you go for news, right?
8:26 Scott Galloway? But almost everyone has access to the same news, unless you're spreading misinformation or disinformation, which is kind of their new go-to, so they can pretend it's news and act like they've discovered something new. And when they haven't, they've just made up something. Oh, Dominion voting machines are linked to Hugo Chavez. No, that's not news. That's a lie. But real news is very hard to find, and it's very difficult to differentiate a media product on news, right? We don't differentiate on news. We take other people's news and try and provide some insight or perspective, which is really just Latin for voice. Most people go to a media outlet for voice, and that is a take on things, or insight, or humor, or no voice. I really like Reuters, because I find Reuters is kind of just the facts, man, right?
9:08 Scott Galloway? I also like The Economist, because I find it very dry and looks at stuff through sort of a capitalist lens. Anyways, what it got me thinking about is the voice, if you will, of ChatGPT for Omni or O. Every morning, I could just say, hey, give me today's business news in the voice of Reuters. And I'll be able to say it, just similar to what I used to do with Alexa. And what this does is it's going to fulfill the dream of these big tech firms that are increasingly consolidated, and that is, what Google hated was that you left Google. You type in, you know, lowest airfare from New York to St. Bart's, right? And it would bring up a bunch of paid-for sites, including United, including JetBlue,
9:53 Scott Galloway? and then you would leave and go to JetBlue. And then they said, no, no, no, we don't want anyone leaving. So they started sending you to other components of Google, and Google has Google Flight or Google Travel, so they could further monetize it. Now, I think this could be really bad news for media organizations, because at some point, it just might be easier for me to go, give me a view on campus protests in the voice of Anderson Cooper, and I won't need to go to the CNN site. It'll just keep me right there. So this kind of blows my mind, that there's going to be an even greater consolidation and a concentration of power, or a seeding of power from traditional media outlets to these compute or these AI-driven
10:39 Scott Galloway? Compute powered L L Ms where you'll be able to instruct them almost effortlessly. Hey Omni or whatever they're going to call this thing or hey Gemini, give me today's business news on the UK in the voice of the Wall Street Journal with a mix of humor from Monty. I mean, you're going to be able to create your own media company and because they've crawled every other media company, they'll be able to mimic that voice and you'll never need to leave OpenAI. And then you think, well, but wait, Scott, there's an opportunity for those media companies to charge a lot of money to license their content for that L L M to create that voice. But what I also read that sent shivers down my spine is that
11:25 Scott Galloway? there are now L L Ms that are creating content for other L L Ms to crawl because they're running out of data to crawl. So this might be one giant internal walled garden.
11:36 Ed Elson? I think the real fear would be for the very, very small publishers. And it's possible that with this, you know, you mentioned that this sort of applies to the G P T four O update. I think it's most applicable to Google's update with this AI overview feature. But I think the fear would be that the, the very, very small publishers who don't, probably don't have the capacity to come up with these licensing contracts with these big AI companies. Those are the ones who are going to go out of business. Do you think that's right?
12:05 Scott Galloway? Yeah, it's, it's going to be, it's going to be a few big players that have original content that can command something. And then very niche players, right? Like William Cohen has a great voice and real insight because he was an investment banker. So he can kind of look around the corner and say, this is how the Paramount deal might play out because I was an investment banker and this is probably what's going on in the boardroom. You're going to have to have a really unique, deep voice or just such massive content and reporters all over the world. There'll be a space for those guys, but there'll only be a few of them. And then everyone else will just slowly but surely train. Their L L M or the three or four players with their compute capacity will just train their L L Ms to provide you with whatever kind of voice you want. You like CNN?
12:49 Scott Galloway? No problem. We'll perfectly mimic it and you don't need to go anywhere. I have an idea and I want you to respond to it. We have an enormous deficit. We have huge externalities or potential externalities from AI. We have a massive concentration and wealth and power. What if we put similar to the way we've put taxes on gasoline, if in fact, big tech are the new sort of compute energy companies providing energy to four or five, or there's basically Saudi Aramco, Chevron, Exxon, Shell, et cetera. What if we, just as we do with gas, we tax compute?
13:24 Ed Elson? I love that idea, but it reminds me of, I mean, the same idea was floated several years ago when we were all saying that data is the new oil. Now it seems like we're saying compute is the new oil. But, you know, there was this idea of the data dividend and that was put forward in California by Gavin Newsom. It didn't gather steam. I think it's probably a result of the lobbying power that nothing was able to go through. But I think that makes total sense to me. I mean, as we've sort of, we're slowly learning on this podcast. It's basically a commodity in the same way that all these utility companies get taxed. I mean, a data dividend made sense. I think a compute dividend made sense as well. But just, I want to shift over to G P T four O. It's pretty incredible and I don't think
14:08 Ed Elson? us describing it really does it justice. So what I would recommend to our listeners is if you want to get a real sense of this thing, just go on YouTube and watch the demo of the real time translation. They basically have a conversation in English and Italian between the C T O and one of the researchers and the G P T just translates the whole thing. And it basically just shows you this technology is going to shatter language barriers.
14:32 Speaker 04 Every time you hear English, I want you to translate it to Italian. And if you hear Italian, I want you to translate it back to English. Is that good? Perfetto.
14:42 Speaker 05 Mike, io mi chiedo se le ballene potessero parlare, cosa ci direbbero? Mike, she wonders if whales could talk, what would they tell us?
14:53 Speaker 04 Um, they might ask, how do we solve linear equations?
14:58 Speaker 05 Potrebbero chiederci come risolviamo le equazioni lineari?
15:04 Ed Elson? Now, the other news on OpenAI is that Ilya Sutskever, who's the chief scientist and the co-founder, he is leaving the company. And you might remember about six months ago, Ilya was one of those board members who moved to oust Sam Altman, who's the CEO. He later reversed course. He said, quote, "I deeply regret my participation in the board's actions." Now he's leaving altogether. What are your thoughts on this? And do you think this has to do with the board drama from back in, back in November?
15:31 Scott Galloway? He had less chance of surviving than Prigozhin. I mean, if you stabbed the prince, you better kill him. And he stabbed the prince. And then the true owner of OpenAI, Satya Nadella, said, no, I want Sam back. And you think Sam was, was going to say to this guy, oh, Ilya, we all make mistakes. I'm the next Steve Jobs and you fired me, but no, let's let bygones be. You spilled milk. Uh, no, that guy was going to go down. So it's no surprise. I'm sure he's going to make billions from his stake in OpenAI and has a very, I got to imagine he's getting a few calls saying, hey, would you like to come run, you know, whatever it is, llama. My guess is he's a fairly employable person.
16:16 Scott Galloway? But yeah, he was on the green mile. The moment that Microsoft called and said, uh, no, you guys fucked up. And you need to hire Sam back. And once this guy realized Sam was coming back, he tried to say, oh, I'm really sorry. Stand in front of the judge and say, Don't sentence me to death. I'm guilty and I throw myself at the mercy of the court. But he was on the Green Mile the moment that happened.
16:39 Ed Elson? And this streaming bundle, Apple TV Plus, combined with Peacock, combined with Netflix. I think what's pretty interesting here is the timing. I mean, this is coming less than a week after the same announcement was made by two other media giants, which we reported last week. Disney and Warner Brothers Discovery are teaming up to create their own, call it mega streaming bundle. And now this is happening less than a week after. So I'd love to get your thoughts on this. To me, it feels highly coordinated. I mean, I can picture a scenario where all these big media execs got together and they said, hey, you know, things aren't going great for us individually, so let's just split into two teams. We're going to put Bob and David on this side, Ted and Brian on this side.
17:23 Ed Elson? We'll combine forces and hopefully that'll solve our unit economics problem. You've worked with some of these people, I think, or at the very least you know them. Do you think that's how this all went down?
17:33 Scott Galloway? I think that essentially they're kind of running out of new subscribers, so they need pricing power. And one means the pricing power is consolidation. Basically, it strikes me that what's, you know, what's old is new again. It just feels like cable all over where they're bundling. And pretty soon you're not going to be able to, these companies have a problem because they would sign up for Apple TV Plus, download the season of Ted Lasso and then cancel. And when they bundle, they've probably done the math and said, okay, when we bundle, it's almost impossible to cancel because you can't disarticulate. It's like that South Park episode where someone's saying, I don't want the Food Channel 8.
18:09 Speaker 06 We want specific networks dropped from our cable. Oh, you have to pay for the bundle. You can't just pay for what you want to watch. Darn it.
18:17 Scott Galloway? They make these bundles that are impossible. It's like, you know, there is no perfect human. They're bundled, right? And you can't have certain attributes of an individual. Except maybe with ChatGPT for Omni, you're going to be able to say, oh my God, I just thought about it. If your spouse is not home, but you're lonely, you're going to be able to say. Please have Scott here, but without the anger and the depression. Oh my God, this is going to get very strange, very fast. Okay, anyways, yeah, this is they're bundling, which will give them pricing power and lower their churn. And my guess is in exchange for bundling across the pipes, it's just cable all over.
18:57 Scott Galloway? We're ending up with more channels than we need and we won't be able to cancel because even if you don't want Paramount, or even if you don't want Apple TV+, which people can can live without, you're not going to be able to cancel, you know, the Food Network 6.
19:13 Ed Elson? We'll be right back after the break with a look at GameStop.
19:25 Scott Galloway? Support for the show comes from NetSuite. They say every day your business is late to AI, you might fall two days behind. So how do you keep up with the competition when they're only moving faster? Enter NetSuite Next. You probably know NetSuite, the AI-powered business management suite that securely connects all your data. It's a unified suite that brings your financials, inventory, commerce, HR and CRM into a single source of truth, trusted by over 44,000 customers. NetSuite Next is the next big leap in how business gets done because AI is built into everything you do. It automatically surfaces customer insights throughout your day. AI agents work alongside you to solve problems and handle routine work. And anytime you have questions about anything, you can ask, just like you're having a conversation with a colleague.
20:09 Scott Galloway? NetSuite is customized for a wide range of industries, so it supports the way your business truly works. Whether your company earns millions or even hundreds of millions, it's time for NetSuite Next, where your business meets AI. If your revenues are at least in the seven figures, get our free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work at netsuite.com/prog. The guide is free to you at netsuite.com/prog. netsuite.com/prog.
20:42 Scott Galloway? Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentic Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?
21:27 Scott Galloway? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash prop G for $1,000 off.
21:49 Scott Galloway? Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentic Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?
22:34 Scott Galloway? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash prop G for $1,000 off.
23:00 Ed Elson? We're back with Prof you Markets. Meme stock mania returned last week, if only for a few days. The rally began after Keith Gill, commonly known online as Roaring Kitty, posted a picture of a gamer on X, formerly known as Twitter. As you may recall, Gill played a key role in igniting the frenzy back in 2021 and driving GameStop stock up more than 1,700% in a matter of weeks. His post on Sunday night was his first since that year, and followers quickly took it as a sign to start buying GameStop again. After the opening bell on Monday, GameStop's price swung so violently that trading was halted nine times in just over an hour. Shares ripped as much as 118% that day, and other meme stocks took off too, including AMC.
23:44 Ed Elson? By Tuesday, those two companies had added roughly $11 billion in value. But the rally was short-lived. On Wednesday, those stocks lost $4 billion. So Scott, we should note that things could change again by the time our listeners hear this. But it does appear that GameStop is coming back down to earth now. Do you think that is the end of the rally? Or is this not over yet?
24:06 Scott Galloway? Oh, who knows? It's just, it's just so insane. I mean, GameStop today is off 23%. It's at 30, and it peaked at 65 two days ago. So it's lost, it was up almost fourfold, and it's lost half its value. I mean, this really is, at this point, this is just pure speculation. So I would imagine, it feels like we're living through this but in faster cycle time because the market said, oh, you know, Roaring Kitty is back, the stock's going to go way up. People piled in and they said, okay, but we also know how the movie ended the last time, and it'll be the same here. Let's get out sooner. And you're already starting to see the return to earth of the gravity.
24:51 Scott Galloway? It feels as if, it feels as if it's just the same thing playing out much faster. What are your thoughts?
24:57 Ed Elson? Well, I think this brings up really interesting questions about market manipulation and securities fraud. Because what's happened here is pretty unprecedented. You have a guy who has no actual affiliation with GameStop, but who is Through the internet and through live streaming, just sort of culturally affiliated with the company, and he posts an arbitrary benign photo. And then overnight, he adds $3 billion in market cap to the company. And there's no question that it's all because of him. Now, again, the photo didn't say anything about GameStop. But I feel like he must have at least suspected it would do something to the stock. I mean, he hasn't posted anything in three years, and he's famous as the GameStop guy.
25:40 Ed Elson? So here's just a thought experiment for you. Let's say he bought a bunch of GameStop call options before he posted that tweet. And then after the stock exploded, he sold it all for a profit. Do you think that should count as securities fraud? And to be clear, whether or not it actually is fraud, legally speaking, is currently being debated by legal analysts, people who have more expertise in this than we do. But my question for you isn't whether it is fraud, it's whether you think it should be fraud.
26:10 Scott Galloway? It's an interesting question, but I think ultimately where I end up is no, because the easy one is you have material insider information. I'm on the board of a company, I know the earnings are going to be great, and the day before the earnings, I'll go out and buy stock. I have an edge over public investors that's insider trading. That's an easy one. Market manipulation is if, Ed, you were to announce that you're buying, you're going to put a bid in at $12 a share for Warner Brothers tomorrow, and you are a Carl Icahn, and you have some credibility doing that, and then you buy the shares, it runs up, you sell the shares, and it comes out that you actually had no intention of buying the stock. That's market manipulation. In this instance, I think it'd be a pretty serious leap legally to say that a picture
26:55 Scott Galloway? of a guy leaning forward is saying to the market, I'm doing something. I mean, this is a tough one. I guess the argument they would make is that it's clear you're about to go in. And buy the stock? I don't know. I think this would be a really tough one. I think this is free expression. He doesn't have any material insider information. Is he trying to manipulate the market? We don't know when he bought, when he sold. He's basically just saying, I think he would say he's trying to draw attention to the stock again, or he's thinking about getting involved. And that's his right as a consumer to buy shares and sell shares when he wants. They'd have to make the connection that he's trying to fool or mislead people such that he can profit off of false statements.
27:39 Scott Galloway? I think this would be a really tough one. It gets into intention and state of mind, which would be really difficult to prove. And also, to a certain extent, it's sort of buyer beware. The people who buy a stock at 60 bucks in a company whose underlying fundamentals don't justify that price, and then they lose money. Is a jury really going to feel sorry for them?
28:02 Ed Elson? I mean, it's tough. It sounds like a lot of what you're saying, I'm trying to figure out why you believe that this is okay as opposed to other pump and dump schemes. And it sounds like a lot of it has to do with, one, he didn't lie about anything. So he's not misinforming anyone. And two, it sounds like a lot of your belief has to do with the fact that he's not an insider, that he's not actually inside the company. So he kind of has a right as an outsider on the company to sort of say whatever he wants. Is that, would that be the right characterization?
28:38 Scott Galloway? Basically, almost every person who goes on CNBC is pumping. They're talking up or talking down a stock based on their own financial interests. Some are independent analysts, but a lot of them own stock. When Keith Rabois went on CNBC and started spreading misinformation about Open Door, that wasn't true. And to her credit, Deirdre Bolson fact-checked him in real time and said, no, this company is not profitable. You can't say that.
29:05 Ed Elson? And he threw a fit.
29:06 Scott Galloway? And he started saying she was stupid or crazy. In my view, that is closer to securities fraud, given he obviously has a financial interest in the company. And my guess is he's been selling like crazy since it peaked whenever two years ago. My guess is that's much closer to securities fraud than a guy putting out a sketch of someone leaning forward. I think this is, I think this is a tough one.
29:31 Ed Elson? Just to finish out this scenario, I mean, assuming he bought the options beforehand and then he posted the photo and then he sold, that would assume, or that would, I think a jury would say, okay, this wasn't just a, you know, benign photo. There was clearly intent there. He knew that he was going to profit off of it. And I think the argument to criminalize this would be that it generally erodes our faith in markets. If a dude who has all of this internet power can become a center millionaire overnight, just because he's associated with GameStop and he has a large megaphone on his Twitter platform, and he takes that stock up by $3 billion in 24 hours, it's sort of a signal to the
30:14 Ed Elson? rest of us investors that, you know, the market isn't totally serious and it can be manipulated and controlled by random guys in their basement. Do you think that that's enough, that's enough of a case to argue for criminalizing?
30:30 Scott Galloway? I don't, because if somebody claims they're about to put in a bid at $14 a share for a stock that's trading at eight, and it goes to 12, and it ends up they weren't sincere and didn't have, I think that Elon Musk stating that he was taking his company private at 420 and that funding was secured, I think that is securities fraud. He is claiming that he has the capital lined up to take a company private at $420 a share and the stock popped and he got wealthier. And then the people who believed him and tried to pile into the stock, thinking they were going to make money, that he was telling the truth, later found out he did not have funding secured. I think that is securities fraud.
31:13 Scott Galloway? If this guy says, so let's take the leap, he's saying, I am buying the stock.
31:21 Scott Galloway? Okay. And, and he thinks that because I am buying the stock, that it's about to ignite a rally that's going to go up. He's not lying. I mean, you'd have, first off, we don't know, we don't know if he's sold, right? As far as we know, he kept buying, thinking that him, the roaring kitty being back would take this thing to a hundred bucks a share. So I don't, I think this is a really, I think this is really a tough one. The, what you're trying to make is the leap that a drawing of him being interested again in a stock would naturally take it up. And he knew that. And then the other assumption is, is that when the greater fool theory kicked in, he got out. Well, again, I think you're going to have to show harm
32:04 Scott Galloway? to people who were fooled. And it's like, well, you saw what happened before. You saw the stock go up, you saw it go down again. There's no underlying dynamics here. There was no tangible offer to take this company private, or anything that would indicate it was worth more, that the intrinsic value had gone up, but only that this person was interested again. And we don't know if he ever sold. We, as far as we know, he's still, we don't know if he bought, and we don't know if he sold. And even if he did, I'll use you as an example. You go on CNBC ad and you say, I'm really interested in AT&T. And the stock pops, and you see the stock pop, and it goes down. And they go, well, you just said you were interested to see the stock pop. Is that market manipulation? I don't, I don't think it is.
32:48 Ed Elson? Yeah, it's, it's, it's a tough one. And I don't have the answer. Just a larger question on meme stocks. I mean, this idea of meme stocks is new. It's, it was kind of a pandemic era phenomenon. It began because of the GameStop saga and this guy Roaring Kitty. In fact, that's when we invented the word meme stock back in 2021. At the time, it seemed sort of like a one time event. It sort of came and went. But since then, we've seen lots more of it. We've seen AMC, BlackBerry, Bed Bath & Beyond, Truth Social, now GameStop again. This keeps on happening. Do you think meme stocks are just a permanent feature of capital markets today? Do you think they're sort of here to stay?
33:33 Scott Galloway? I think the idea, the financialization of everything and the politicization of everything, combined with access to phones and real time trading 24 hours or, you know, they're talking about taking the markets to 24 hours. Yeah, the lack of friction to buy and sell stocks. Yeah, I do think it's here to stay because as long as there's markets, there's going to be people trying to create hysteria or create momentum around those markets such that they can profit. And the question is, do they have insider information or are they manipulating the market to their own benefit? And then the term market manipulation is going to take on sort of, what you're saying is it needs to go further downstream and maybe have new inclusion of new, new activities potentially around what is market manipulation.
34:18 Scott Galloway? But then the question, if you were to find this guy guilty of market manipulation, then anyone going on CNBC, what you're essentially saying is if they had more influence, they would be accused of market manipulation. But because no one really gives a shit what they think and they can't move the markets, they're not guilty of market manipulation. So his guilt is a function of his authority and his power. So I think that's a really tough case to make. I think meme stocks are here to stay. And I think what people are looking for here, I don't think we should infantilize the people buying these stocks. I think if they look at the stock chart here or they know anything or they've seen the movie, Dumb Money, they know this is gambling. They know they're, they're, this is a pyramid scheme, right? It's fun. Someone's going to get hurt. Someone's going to get hurt.
35:03 Scott Galloway? This is, this is bungee jumping at night when the instructor isn't around and no one's tested the ropes and everyone's on X. It's probably, it's probably a lot of fun and it could be amazing, but there's a really good chance someone's going to get hurt. And they know this. These folks are, these folks are skydiving without a backup parachute. I mean, this is. The markets are, you are in the most volatile stock ever. You're in a stock that's going up 100% and getting cut by 50% the next day. It's just unlikely you're going to have a lot of widows up there saying, I didn't know I invested my pension in this. It's like, well, really? You didn't know? So I don't, I think this is what it is. It's gambling. Some people will make money. Some people will lose money. I don't see how you stop it. When do you decide a stock is a meme?
35:48 Scott Galloway? Is Nvidia a meme stock? He's throwing big events and people are excited about the future and they're talking up the future and they're talking about the future of AI and how it's going to be the next big thing. And he's talking about biology and how basically he's saying Nvidia, that his chips are going to start to cure disease. That's effectively what he's saying now, that the biggest opportunity for AI is in biology. Well, okay, that sends the stock up beyond an irrational level. And my guess is he's selling. Is he guilty of market manipulation? So I just don't see how you could go there. I think the SEC would rather say, anyone who files a plaintiff's lawsuit is like, we can't wait to get those shareholders on the stand and have them tell the sob story of how they thought they were going to make a bunch of easy money on a movie theater stock, but they feel like they were taken.
36:33 Scott Galloway? I just don't think that makes, it's like, these people would make for, these people would be worse witnesses or less credible witnesses than Stormy Daniels and Michael Cohen. They would be less sympathetic witnesses than Michael Cohen, who used to tell people, I would, I'm going to kill you. It's going to be sad what I'm going to do to you when he was working for Donald Trump.
36:51 Ed Elson? Just a final question on meme stocks. I mean, you say this is here to stay. A lot of this feels pretty silly, like Roaring Kitty, GameStop, AMC. It does, it feels like, you know, we're talking about dumb stuff. I mean, the movie was called Dumb Money. Do you think though, that this is the kind of thing that all investors need to start educating themselves on meme stocks? And just to draw this out into a hypothetical, say you are looking for a new wealth manager or a new investment advisor. Would you consider it a basic requirement that he or she understands meme stocks? They understand the dynamics of meme stocks. They can more or less identify the relevant trends in meme stock world.
37:33 Scott Galloway? If you ask your financial advisor, would you ever invest me or anyone else in a meme stock? And he says yes, then you've got the wrong financial advisor. And also. Just keep in mind, if you want to invest in a meme stock, have at it. Just keep in mind, you're gambling. So look at it as how much money would you take down at the casino? And assume you're going to lose most or all of it. And if it's fun, and I do think it's fun, then fine. But be clear, you're not investing. You're not investing. And any financial advisor that would ever invest in a meme stock outside of buying a huge basket of stocks that might include a meme stock because they're investing in mid or small cap companies should not be your financial advisor.
38:13 Ed Elson? We'll be right back after the break with a look at a new deal between Elon Musk's AI startup and Oracle.
38:27 Speaker 07 Here's your report.
38:28 Speaker 08 Oh, thanks, Jane. I wish I could hire someone just like you.
38:31 Speaker 07 Try LinkedIn Hiring Pro. It's more than a job board. It's like the recruiter you always wished you had. Hiring Pro uses real time insights to match your role to LinkedIn's unique network of professionals and delivers a shortlist of best fit candidates. You'll spend less time sorting applicants and more time talking to the right people.
38:47 Speaker 08 Let's do it. You're irreplaceable, Jane, but another you would be great.
38:52 Speaker 07 Hire right the first time. Post your job for free on LinkedIn today at LinkedIn.com/quality.
38:58 Speaker 01 Energy low, lack of concentration, mental fog. You might be dehydrated. Gatorade Zero Powders have been designed scientifically to help you optimize your hydration balance in your body. Made with the number one electrolyte, without colors or artificial flavors. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signs of low hydration and moderate hydration. Consult your doctor if the symptoms persist.
39:27 Scott Galloway? Support for the show comes from Nuchafold, the number one dermatologist recommended hair growth supplement brand used by over one and a half million people. When you get to the stage of life where you start to notice hair loss, you have a few options. You can shave it all off and enjoy your new look, or you can commit to a new team whose logo you wouldn't mind constantly spotting on a hat, or you can actually restore some of your hair's former glory with Nutriful. Nutriful has formulas built for men at different life stages, such as Nutriful Men for guys aged 18 to 49, or the new Nutriful Men 50 and older. It's the first product of its kind specifically made for men over 50. You can address the key root causes of thinning wherever you are in life. Grow visibly thicker, fuller hair in three to six months. Start Nutriful today and make the hat optional.
40:12 Scott Galloway? Visit nutriful.com and enter promo code PROVGE for $10 off your first month's subscription and free shipping. Find out why Nutriful is the best-selling hair growth supplement brand at nutriful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROVGE. That's nutriful.com promo code PROVGE.
40:38 Ed Elson? We're back with Profi Markets. Elon Musk's artificial intelligence startup XAI is negotiating a $10 billion deal to rent cloud servers from Oracle. Oracle shares rose more than 5% after the information reported that potential deal. While negotiations progress, XAI is also finalizing a $6 billion equity funding round. But the company will need even more capital than that if a deal is struck and if XAI becomes one of Oracle's largest customers. Scott, another AI startup partnering up with another big tech company on cloud. You know, we've discussed OpenAI with Microsoft, Anthropic with Amazon, now XAI with Oracle. What are your initial thoughts on this story?
41:21 Scott Galloway? You said this, that everything is becoming, basically every big tech company is converging and becoming the same company offering compute. And what's interesting is that Oracle's trying to squeeze itself, or it desperately wants to be part of the cool kids' club. It wants to be one of the magnificent seven. And Larry Ellison is, he's probably, he's one of the most, I don't want to call him underrated, but he's sort of the quiet billionaire in the background. I know that he is Elon Musk's mentor, but that doesn't in any way diminish the $10 billion deal. I think the big winner here is Oracle, because Oracle is getting a $10 billion deal from XAI. And we're still not entirely sure if XAI is going to be able to carve out a unique positioning.
42:04 Scott Galloway? My understanding is that so far Elon is playing catch up and has basically come out, you know, with GPT-2. He hasn't been able to really do anything here. That's of the, or the quality of his efforts in other categories that he's playing catch up. But the big winner here, hands down, we don't know if XAI is going to work. What we do know is that Oracle with a $10 billion contract, that that's very good for Oracle shareholders, because it doesn't matter if XAI works.
42:30 Ed Elson? The story sort of reminds me of this famous statistic from, I think it was around 2018, which I think you talked about a lot, which is that startups spend roughly 40 cents of every VC dollar on Google, Facebook and Amazon. Specifically, those 40 cents are going towards ads. Now, I don't know if that stat is still true. It's from a long time ago, it probably isn't. But here we have a very similar dynamic, only this one's far more exaggerated, because, you know, XAI is raising $6 billion. It plans to spend $10 billion on Oracle, which means in this case, 100% of the venture funding is going directly to the big tech company, which is Oracle here. But it could be any cloud company, it could be Microsoft, it could be Amazon, it could
43:14 Ed Elson? be Google, and we know all these other AI startups that have very similar deals with those companies. So my question to you, do you think we're about to witness the same thing here with cloud and AI? And perhaps do you think it's going to be on an even larger scale than before?
43:28 Scott Galloway? It's just staggering. I was reading that the amount of money that has been spent in R and D, mostly around cloud-based, AI-driven applications here across the Magnificent Seven is $200 billion, just across the Magnificent Seven, which is equivalent to half of all R and D across all industries in all of Europe. And that just struck me as, oh my God. So one of two things is happening. Either AI is about to be the biggest bubble in history, or a small number of companies are the only ones that are well capitalized enough to pull this off and are going to run away with it. It's funny, I do meet people, a lot of people here in London, I've met several people from Cambridge, who love to come up and say, you realize that AI was invented at Cambridge?
44:13 Scott Galloway? And I'm like, well, smell you, boss. How come you didn't make any money off of it? It's just like, okay, yeah, the unwashed masses in San Francisco have made hundreds of billions, but you can tell people that you invented it? I mean, wow. I mean, it's just, it's just so, and I also had someone in Hamburg who was being said, claimed that AI was invented in Germany. I'm like, really? Well, gutten, well, well, farfalle nügen for you. I'm kind of blown away by it. And I'm starting to believe that an AI bubble is beginning to form. Because what happens if the expectations around what you can do with AI at your Fortune 5000 company that makes cardboard boxes,
44:58 Scott Galloway? or supply materials, or textiles? If the AI dream doesn't live up to your hopes to revolutionize your business, and you begin reducing your spend? The first quarter that comes out that shows that sort of medium and large sized businesses are cutting back their spend on AI? Wow, that could be really ugly around these companies.
45:18 Ed Elson? Yeah, I mean, I wanted to ask you about that because, you know, one read of this news is, wow, AI demand is growing. But another read would be that things are getting super frothy. I mean, $10 billion is so much money. And it feels as though the only reason they're really doing it is to just follow the pack. Anthropic signed a deal with Amazon, OpenAI signed one with Microsoft, oh, we should sign one with Oracle. And when we discussed this earlier this week, you said that this kind of reminded you of Cisco in the late 90s and the early 2000s. Tell us why Cisco comes to mind here.
45:50 Scott Galloway? Well, we got very excited around the internet. There was a Netscape browser, then there was Internet Explorer. And it was clear that the internet was going to be huge. But then somebody realized that Arvark Pet, which was my e-commerce pet supply company that I started, thinking that there needed to be something, a Williams Sonoma of pet stores online. My idea, true story. Half a million dollars built a website, sold it. Nine months later, for $3 million to Petopia, you were, I think, probably, my god, I don't think, were you even born then? Yeah, you were like maybe two or three years old. Anyways, when we all realized that this wasn't happening as quickly as we were hoping, that there are a lot of companies that just weren't selling anything, or if they were selling things,
46:33 Scott Galloway? they were basically buying consumers. They were buying a Furby for $300 for Cybershop and selling it for 99, or they were selling a 70-pound bag of dog food that cost $100 to deliver for $19.99, Pets.com. And everyone said, okay, the internet might work, or e-commerce might work, but it's definitely not going to work anytime soon. The unit economics here are shitty. And all the front-end B2C stuff crashed. But people still thought, okay, but the internet is not going anywhere. So what do we do? Well, we can invest in B2C. Let's find B2B. And they started investing in these ridiculous B2B platforms. ICG was one of them that was gonna figure out a way for people who were purchasing supplies
47:18 Scott Galloway? in the drinks or the chemicals industry to meet online. And that was a total fucking jazz hands ridiculousness. And that thing crashed. Everyone's like, well, okay, B2C's not working. B2B's not working or living up to our expectations. What do we do? And like, well, we still believe in the internet. Let's invest in infrastructure. And everyone piled into Cisco, which became the most valuable company in the world in the late 90s. What people forget is that similar to Amazon, between 1999 and 2001, Cisco and Amazon shed 90% of their market value. Now, they came back. Amazon came ripping back. Cisco never really fully recovered. It came back, but never, never touched those same highs again.
48:02 Scott Galloway? Amazon came back and more, was one of the winners that got through kind of the valley of death, if you will. So the question here is the same thing forming? Do we have the same level of excitement that we had in, say, 97, 98? And then, when it appears that... Every company may not spend tens of millions of dollars to use AI to change the way they do business in any industry. And these companies report for the first time that their fairly scant mediocre revenues to date actually are flatlining or even declining. You could see the mother of all, you could hear a pop that is a sonic boom. AI infrastructure investments, 200 billion, up more than 35% valuations from the AI boom, right?
48:47 Scott Galloway? 120 times the estimated 20 billion in revenue that Gen AI will add in 2024. Now, what's that multiple? The combined market value of Alphabet, Amazon, and Microsoft has increased $2.5 trillion. So you have $2.5 trillion in increased value during the AI boom, but the increase in revenue has only been 20 billion. So the market has valued the $20 billion increase in AI revenues at 2.5 trillion or 120 times revenues. The big three cloud providers traded an average P of 38, which is significantly higher than the broader S and P at 23. In October of 2022, public AI hardware companies were worth about 1.5 trillion.
49:30 Scott Galloway? Today, they're worth about 5 trillion, and Nvidia has accounted for 57% of this increase. So if I had bigger balls, I think I would probably create a basket of AI companies and think about shorting them because Big claim. Well, this is beginning to feel like 1998. And the problem is when guys like me say something is overvalued, that means it usually runs up another 30 or 70%. And then I throw in the towel and then it crashes. It's very hard to time the markets, but I mean, just as we, I do learn a lot on this show, just as we're talking about this and I'm reading these numbers, I've been here before. This is literally 26 years ago. This is 1998, where we know, we know AI is going to endure.
50:15 Scott Galloway? We know AI is going to have a big impact, but has it gotten so far out in front of its skis from a valuation standpoint?
50:23 Ed Elson? Just a vibe question. What were people saying about Cisco back then? Because, you know, what we're saying, oh, potentially AI is a bubble. That's not new. A lot of people have said that. I'm pretty sure we've kind of had that conversation several months ago. For some reason, no one's saying it that much today. I'd seen, it seems like I and everyone else in financial media have been like, oh, no, AI is legit, it's here to stay. But was anyone sort of wondering about Cisco? Oh, maybe this is a bubble, maybe this is getting out over its skis? Or was it just, everyone just bought in unequivocally?
51:00 Scott Galloway? It was the safe bet. I remember my roommate my junior year in college, Mike Vogt, smart guy. And I remember him, talking to him when I was, you know, an entrepreneur. And he's like, I'm not smart enough to figure out which internet company is going to win or lose, so I just put all my money in Cisco, because that's infrastructure. So essentially, everyone just thought it was their default safe bet. Invest in, you know, invest in the steel in the ground, invest in the pipes.
51:24 Ed Elson? Sounds like Nvidia, no? That sounds like that's Nvidia.
51:27 Scott Galloway? You're learning, you're learning. That's exactly right. If this is feeling, that's the correct question. Is Nvidia, is Nvidia the Cisco of 2024? That's the correct question. And the thing that makes me believe that it might be, is no one is saying that. It's the same universal chorus right now. Everyone's barking up the same tree. And that is, the infrastructure plays, the few cloud providers are kind of a can't lose proposition, which means they could get cut in half really easily. Now, the thing about the biggest players is they have very diversified businesses and
52:08 Scott Galloway? incredible business lines to diversify them, or they give them other cash flows and other things. But that, I mean, the number, I just want to repeat it again because it's so staggering. The AI offerings from the big, kind of the, the biggest players, Alphabet, Amazon, and Microsoft, their total revenue from those generative AI applications is 20 billion. And yet their market capitalizations have increased $2.5 trillion. To me, that's just, that just, it does feel like we're headed towards bubble land.
52:45 Ed Elson? All right, let's take a look at the week ahead. We'll see earnings from Target, Lowe's and Nvidia. We'll also see the minutes from the Federal Reserve's May meeting. Do you have any predictions for us?
52:55 Scott Galloway? Yeah, that Nvidia is going to blow away its earnings just based on everything I just said. I just, it just, when a quote unquote, I'm not, I'm not calling myself an expert, but when a talking head like me says it's beginning to look bubbly, that's when the market's about to scream another 30 or 40%. So that's my prediction, that despite the fact I think a bubble is forming, Nvidia is absolutely going to blow away its numbers and-
53:21 Ed Elson? You are advocating for the inverse Galloway as we speak.
53:24 Scott Galloway? I think it's in the money, though. I think, I think the inverse Galloway index is actually, no one tracks it anymore because unfortunately, all the companies I said were going to crash have crashed. But anyways, but here's the thing, it's not what, how many GPUs they sold, it's whether or not those GPUs are going to be able to justify the investment that these companies are making buying the GPUs. There's no doubt about it, that the promise has never been stronger. What we're going to see over the next six, 12, 24 months, is when Nestle gets talked into by their chief strategy officer, buying $38 million in GPUs from Nvidia, claiming that this will help us figure out a way to source the milk that we put in our chocolates
54:05 Scott Galloway? and how to organize our personnel and our supply chain, and come up with better copy and figure out where we need people and where we don't, and the quickest way for our trucks to deliver, you know, powdered concentrated milk. If that shit doesn't pay off, if all of a sudden someone raises their hand and goes, you know what? And I remember this, I remember this in 1998, when we launched, whatever it was, we launched Williams Sonoma.com and we said, this is going to be big one day, but guess what? Our sales are ridiculously low.
54:34 Scott Galloway? On.com and our stocks doubled in the anticipation that Williams Sonoma.com would be bigger than Williams Sonoma and it's not panning out that way. I think we're in for that moment.
54:46 Ed Elson? Yeah. It's like all the sales are B to B, but we haven't tested any of this shit out on the consumer. Like all those AI startups, like who knows what their sales are going to look like, but you know that right now they are buying a shit ton of H100s and renting them out so that they can just bring it to us. But you know, I, I am yet to use AI or pay for AI on a daily basis. I think it's a great point.
55:08 Scott Galloway? Just to give you a sense, the revenue so far garnered from artificial intelligence applications is only slightly greater than the revenue of Subway.
55:21 Ed Elson? That's crazy.
55:25 Ed Elson? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producers are Jennifer Sanchez and Alison Weiss. Our executive producers are Jason Stiles and Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Josh Brown, only on the Prof G Markets feed.
56:28 Scott Galloway? Today's number $396. That's the price for a Ruby Glow pineapple, a luxury designer fruit for high-end consumers. Supposedly, we just learned this, if you have a pineapple turned upside down on your front door, it means that you're a swinger. True story yet. I met my wife at a swingers club. And of course I said, shouldn't you be home watching the kids?
56:52 Ed Elson? Good. I like it.
56:53 Scott Galloway? Is that good?
56:54 Ed Elson? Yeah.
56:54 Scott Galloway? I like the other one more.
56:57 Scott Galloway? All right, we're going with the other one. Sorry, we're going with the other one. Sorry, everybody.
57:00 Speaker 09 Now at Kroger, your points add up to more ways to save every trip. Use them your way to take dollars off groceries at checkout or save at the pump. You can even save up to $35 on your next fill-up. Same points, more choices. And with low prices on fresh, quality food, plus digital and personalized offers tailored to how you shop, your dollar goes further. Redeem your points online or in the app. Kroger, fresh for everyone. Restrictions apply. See site or store for details.
57:31 Speaker 10 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
Previous No Mercy / No Malice: Earners vs Owners Next Is the Alternative Meats Era Over? Why Are Americans So Lonely? and Should I Practice Vulnerability at Work? Page updated October 6, 2026 · transcript and summary are machine-generated