Monologue: AI Isn't Getting A Bailout

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0:33call zone media hello and welcome to this week's better offline monologue i'm your host at zitron

0:46a lot of people have emailed messaged and plucked me that the natural end of the ai bubble is some kind of government bailout something resembling the tarp program the bailed out financial institutions over leveraged during the great financial crisis and I want to be clear about something this is different and a bailout is very very very unlikely. As a reminder top stood for troubled asset relief program and existed unsurprisingly to buy the distressed assets that banks had invested in during the great financial crisis primarily the ridiculous bets made on the housing market made up of people who had got mortgages they could not pay for.

1:23Now these bailouts existed to stabilize banks that were going out of business along with consumers' money being set on fire if they did so, as well as auto manufacturers like GM and Chrysler that the contagion had spread to. And while I'm not going to go into massive amounts of detail I haven't got all day, I can make it pretty simple. These bailouts existed to stabilize systemically necessary companies that, had they died, would have tanked the US economy and markets at the same time, and also lost people's money. Unlike the great financial crisis, very few of the major players in AI are either systemically necessary or in danger of dying as a result of the AI bubble bursting.

1:57Furthermore, there really isn't anything to bail out. So let's start with NVIDIA, the largest company on the stock market. While GPU sales make upwards of 88 % of its revenue, NVIDIA will not die if the AI bubble bursts, though it will see a massive contraction as a result of its biggest business line collapsing. It's also important to know that NVIDIA's massive stock price is a direct result of its incredible growth. It isn't enough for NVIDIA to continue selling lots of GPUs, it must continue to increase revenues by at least 60 % year over year every single quarter, which means that for Nvidia to continue being the most beloved boy in stock in history of the stock market, it needs to make$91 billion in revenue in a year's time.

2:40And that's just in one quarter, by the way. This isn't something a bailout can fix, even in the most crony capitalist fantasy you can think of. A bailout would have to continually sink tens of billions of dollars directly into nvidia buying gpus in increasing amounts every three months in perpetuity to continue its valuation and while some of you may say trouble to the man you'd living in a boring doomerous fantasy based on nothing and i'm sick of hearing about it good lord listen to me top was a 700 billion dollar program that only ended up investing around $443.5 billion or so. Or put another way, less than the$500 billion of orders that NVIDIA CEO Jensen Huang claims are on NVIDIA's books through the end of 2026.

3:27Are we meant to do this forever? Is that the plan? Are you saying that Trump is just going to go, no, we're going to buy GPUs for everyone. We're going to buy them every year. Every year we'll buy so many, the most we've ever... No, it's not going to happen. Though I guess he has kind of done that with the Department of Energy. you've probably heard of this deal by the way it's 100 000 gpus that isn't going to do shit jensen hwang needs all your money and he needs it now every quarter forever okay okay it's not going to happen now okay another annoying talking point you've probably heard is that open ai is somehow too big to fail when in fact it's too small to pull apart into enough parts to eat open ai has promised 1.4 trillion dollars in compute deals convincing oracle and others to build massive data centers in its honor yet the reality is that this company isn't even going to hit its 13 billion dollars in projected revenue this year and will burn billions of dollars in inference alone and doesn't really have a path to profitability too big to fail means that something may kill our economy or markets if it dies and as loud and annoying as clammy sam altman might be open ai's death wouldn't kill either of those Let's break it down.

4:36OpenAI dying would be symbolically lethal to the large language model era and create an immediate and permanent chill in AI investments. Don't get me wrong. Its death would also likely be an existential threat to Crusoe, the company building its data center in Abilene, Texas for Oracle. I spoke to someone on the ground there and they say if the money runs out, everyone just stops and goes home. They'll be fine. I don't know the extent of Crusoe's revenues, however, but I do know that Oracle is on the hook for a billion dollars a year for Abilene for 15 goddamn years. And Oracle has also taken on massive amounts of debt to build Abilene and other data centers in Shackleford, Texas, and I think somewhere in Wisconsin.

5:11It's New Mexico, one now. And started this with an$18 billion bond sale and an in-the-works$38 billion debt package to build data centers for OpenAI. While Oracle does run the risk of default and credit default swaps, which is people betting that they might default on their obligations, that's going up the risk is there but there's still a real company that makes real things microsoft owns open ai ip and research which would mean that microsoft would pretty much absorb those 800 million weekly active users directly into copilot and that's if it even chose to retain them and just shut down chat gpt directed it to a very flimsy version of copilot and didn't let people do half the shit they did with them bailing out open ai would not do anything in part because OpenAI burns billions of dollars and doesn't really do much in the large economy itself.

6:04Its revenues, which I estimate to be at most$4.5 billion through the end of September. By the way, if you're listening to this and you think that my revenue numbers for OpenAI, my inference numbers were delayed somehow, it's a cruel accounting. Stop fucking with me. I know what I'm doing. Anyway, those revenues are inconsequential. And the$8.67 billion it spent on inference in that period is, while a large chunk of Vizier revenue from Microsoft, only really accounting for 3.88 % or so of the$223 billion Microsoft has made in that period. Losing Open AI would hurt, but hardly threaten the health of anyone in Redmond.

6:39The same goes for Anthropic or any other generative AI company. These companies aren't really spending that much, nor are they fueling much of any actual real economic activity. There's only around$60 billion of actual AI revenue in 2025 in a tech industry where Amazon made$180 billion and Google$102 billion in their last quarters. The disappearance of LLMs writ large would have a minuscule effect on actual real dollars entering the economy, other than investments in data centers, which is where I think there's, if any, some kind of bailout. As I've mentioned recently, there's been about 50 billion dollars or more even every quarter for the last three quarters going into building data centers and i think that many of these projects end up defaulting there's a chance a chance that these are somehow bailed out if and only if they provide an actual existential risk to a major asset firm a blackstone or an aries or what have you i don't know if aries is in them i'm just naming them at this point nevertheless there is one that i the one company i could see if any bailout happens and I'm really hesitant to say I think there's any chance.

7:50Oracle. Oracle I think is the one chance. Oracle is currently massively leveraged and going into debt to the point it's eating into its free cash flow and it's a close ally of the Trump administration. I could see them getting a lifeline to escape these ridiculous loans. And while you may say there's some sort of grand plan where the administration will agree to pay these companies to keep them alive, I don't see it happening as doing so won't support the economy, the markets, or really do anything other than prolong the inevitable. It's not going to happen. And I don't know, I want to phrase this in a nice way because I don't want it to seem like an attack.

8:24Every time you say something like this, you're doing marketing for the AI industry. Doomerism is marketing at this point with AI. I'm so scared of what they'll create. They're going to get bail out. Open AI is too big to fail. All these are extrapolations of your fear. I get it. They're also marketing. You are helping them. you are helping them market their services by making them seem systemically relevant when they're not by making them seem like they're innovative when they're not honestly i need you to just live in reality and look at what's actually happening which is sweet fuck all in many cases every one of these wanky studies you hear come out so on it's like 10 of jobs can already be automated by ai cnbc should be fucking ashamed of themselves for running a story about it it's a phd congrats to the better offline reddit user who saw this it's a phd paper and also it's referring to random skills rather than jobs and skills and jobs are two different fucking things i'm so goddamn tired of this era good lord but nevertheless the next two weeks are going to be real interesting i'm working on a three or four part about my worries around nvidia and i'm going to tell you all about nvidia and how not similar they are to enron nvidia is nothing like enron or Lucent or Wellcome or Winstar or all these other companies I'm going to go into as well.

9:45And tomorrow I've got a fun interview with Nathan Grayson of Aftermath, your love. I might next week take a knee and just run the Better Offline in-studio thing I just did with Lisa from CNN, or I might do the three or four part. It really comes down to how I'm feeling. It's been a rough few weeks health-wise. I'm doing fine. I was just being sick and I've just been quite stressed. I must again say thank you for all the lovely emails and messages you've been sending you're all so lovely I love you all couldn't be lucky with the listeners I've got tell your friends about the show tell them about the newsletter tell them about me tell them about my strange proclivities but also keep listening I really do appreciate all of you enjoy tomorrow's episode and whatever I put out next week and there will be a monologue regardless unless I do the three or four par in which case that's going to be your monologue for the week and yes by the way I Realize me just talking is always a monologue.

10:39I get it. You're so smart. You are, though, really. Thank you for listening.

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