The Enshittifinancial Crisis: Part Two

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0:40that's right folks we're here for part two of our multi-part series about the final casualty of the inshittification process the financial markets you see we're in a world where because companies can no longer stimulate growth by just script mining their individual and business users they've now resorted to just lying and lying is an interesting word because they will claim we're not lying we used words to vaguely avoid telling you the truth or we we were technically true in what we say there are various kinds of lies that don't have to just be i told you something that was not categorically yes or no false i mean you've spoken to other people but they will say this for legal purposes so fine.

1:23It's not technically lying. It's just bullshit. But I think it's important to give you some examples and to talk about how analysts and the media simply allowed these lies to propagate unchecked. Let me set the scene. Our story begins on September 10th, 2025. I was for some reason in Los Angeles that I can't remember. Maybe a concert, maybe an interview. Truly don't know. Oracle announced its unfillable, unpayable$300 billion deal with Open AI, which they didn't have the capacity to serve, and OpenAI didn't have the cash to pay them, and this led to a 30 % or more bump in stock price. Analysts, who should ostensibly be able to count, called it momentous and said they were in shock.

2:04On September 22nd, 2025, CEO Safra Katz stepped down. She stepped down from Oracle. Nobody seemed to think that was weird or suspicious or worrying. This was meant to be the beginning of the AI boom too. I mean, we kind of already are in the AI boom, but this was meant to be the even more bigger one, right? Why would you step down? Why would you step down? Why would you step down and then have two guys, like two different, they have co-CEOs. Very sorry to my friend Jim, but co-CEOs don't usually do well. Look at BlackBerry. But anyway, two months after that, Oracle stock was down 40 % with investors worried about Oracle's growing CapEx, which is surprising, I suppose, if you didn't think about how Oracle would build the data centers to serve the$300 billion deal.

2:57Makes me feel insane when I say these things out loud. But just to be clear, anybody who traded on that got burned. Now, another thing happened on September 22nd, 2025. NVIDIA announced what they called a strategic partnership to invest up to$100 billion and build 10 gigawatts of data centers with OpenAI, with the first gigawatt to be deployed in the second half of 2026. Just a few questions from me personally. Where would the data centers go? How would OpenAI afford to build them? How would OpenAI build a gigawatt in data centers in less than a year? Don't ask questions, pig. Back in your cage.

3:39Now, NVIDIA's stock bumped from$175.3 to$181 in the space of a day, said that very normally moving on, and the media wrote about the story as if the deal was done, with CNBC claiming that, and I quote, the initial$10 billion tranche was expected to close within a month or so once the transaction had been finalized. I read at least 10 stories that said NVIDIA had invested$100 billion in OpenAI. Analysts would go on to say that NVIDIA was locking in OpenAI, and I quote again, to remain the backbone of the next-gen AI infrastructure, and that demand for NVIDIA GPUs is effectively baked into the development of Frontier AI models, and that the deal strengthened the partnership between the two companies and validated NVIDIA's long-term growth numbers with so much volume and compute capacity.

4:27Others would say that NVIDIA was enabling OpenAI to meet surging demand. Three analysts, Rasgon at Bernstein, Luria at DA Davidson, and Wagner at Aptos Capital, all raised circular deal concerns, but they were in the minority, and those concerns were still often buried under buoyant optimism around the prospects of the company, and nobody just fucking saying the words, hey, no one can afford any of the Oracle can't afford to build it, they don't have the capacity, They thus couldn't get paid by OpenAI. OpenAI doesn't have the money, but NVIDIA, this deal also doesn't make sense. You know, it feels like OpenAI is just promising everyone stuff they can't afford.

5:03All of these things seemed like very obvious questions, but people just kind of clapped their hands and went, fuck yeah, we're doing AI even more now. But then there was this other thing about the NVIDIA deal. It's this teeny weeny, wincy little problem. One little problem, everyone about the NVIDIA deal, the deal that everyone said was done. It was a letter of intent. It said so in the announcement, and on NVIDIA's November earnings, it said that it had entered into a letter of intent with an opportunity to invest in OpenAI. It turns out the deal didn't exist and everybody fell for it. NVIDIA hasn't sent a dime and likely won't.

5:42A letter of intent is also known as a concept of a plan. A little over two weeks later, on October 1st, 2025, Reuters reported that Samsung and SK Hynix had signed letters of intent to supply memory chips for OpenAI's data centers, with South Korea's presidential office saying that said chip demand was expected to reach 900 ,000 wafers a month, with, and I quote, much of that from Samsung and SK Hynix, which was quickly extrapolated to mean around 40 % of global DRAM output. Stocks in both companies, to quote Reuters, soared, with Samsung climbing 4 % and SK Hynix more than 12 % to an all-time high.

6:22Analyst Jeff Kim of KB Securities said that, and I quote, there have been worries about high bandwidth memory prices falling next year on intensifying competition, but such worries will now be easily resolved by the strategic partnership, adding that since Stargate is a key project led by president trump wrong lie there also is a possibility that partnership will have a positive impact on south korea's trade negotiations with the u.s which is just to be clear total and utter bollocks it's wank it's crap it's nonsense poop from above all the technical terms donald trump is not leading stargate stargate is a name used to refer to data centers built by open ai by which i mean other people building them for open ai kb securities is around $43 billion of assets under management.

7:09This is the level of analysis you get from these analysts. This is how much they know. There are people that study JoJo's Bizarre Adventure that have more economic analysis than any of these fucking people. Most Star Wars fans who have just memorized all the names of the glup shittos of the world have better analysis than this. But nevertheless, you'd think, right, that these companies have made all this noise and they've talked about this stuff, the presidential office all involved, you'd think we'd be able to get a whiff of that on their earnings calls, right? Well, on SK Hynix's October 29th, 2025 earnings call, weeks after the announcement, its CEO, Kim Woo-hyun, was asked a question about high bandwidth memory growth by SK Kim from Daiwa Securities.

7:55And I quote, so this is SK Kim asking the question, thank you very much for taking my question. It is on demand. Now there have been a series of announcements of GPU and ASIC supply cooperation between big techs and AI companies, fueling expectations of further AI market growth. Then against this backdrop, what is the company's outlook on high bandwidth memory demand, as well as a broadening of the customer base? SK Hynix, thank you for the question. Now, with upward adjustment in big techs capex and increasing investment by AI companies, the high bandwidth memory market, even by a conservative estimate, will keep growing at an average of over 30 % for the next five years.

8:34I will point to our recent letter of intent with OpenAI for large-scale DRAM supply as an example of the very strong demand for AI, as well as the need to secure AI memory based on HBM more than anything else when developing AI technology. That is it. That is the only mention of OpenAI. That's it. No other mentions. Otherwise, SK Hynix has not added any guidance that would suggest that its DRAM sales will spike beyond overall growth, where it's already grown because everyone's running out of RAM thanks to fucking AI, other than mentioning that it had, and I quote, completed year 2026 supply discussions with key customers.

9:11There is no mention of OpenAI in any earnings presentation. Now, you may think, Ed, there were two companies, you said two company names, there was Samsung as well, right? Well, on Samsung's October 30th, 2025 earnings score, Samsung mentioned the term DRAM 18 times and neither mentioned OpenAI nor any letters of intent of any kind. In its Q3 2025 earnings presentation, Samsung mentions it will, as I quote, prioritize the expansion of high bandwidth memory for business with differentiated performance to address increasing AI demand. Great place to mention OpenAI, right? Yeah, that would be if the money existed and they were going to do anything.

9:48Now, analysts do not appear to have noticed a lack of revenue from an apparent deal for 40 % of the world's RAM. Oh, well, Pobody's nerf, right? My frustration you hear in my voice is that I'm a guy with a Google Doc. I'm not a financial analyst, but I appear to be able to do what they're doing because I'm able to fucking read. Both Samsung and SK Hynix's stocks have continued to rise since, and you'd be forgiven for thinking this deal was something to do with it, even though it was not. But silly season was not yet over. However, and on October 5th, 2025, AMD announced that it had entered a multi-year, multi-generation agreement with OpenAI to build six goddamn gigawatts of data centers, with the first one gigawatt deployment set to begin in the second half of 2026, calling the agreement definitive with terms that allowed OpenAI to buy up to 10 % of AMD's stock.

10:38Vesting over specific milestones that started with the first gigawatt of data center development, said data centers would use AMD's yet-to-be-released MI450 GPUs, the deal would, per Reuters, bringing tens of billions of dollars of revenue now i know hate to be an asshole right i know i'm always on this shit right yeah where would those data centers go how much um how much would they cost how would open ai pay for them would the chips be ready in time silence worm how dare you ask questions how dare you why are you asking questions number go up number go up look look at number go up amd shares searched by 34 with analyst dan ives of wedbush who appears to dress like the san diego padres city connect jerseys saying that this was a major valuation moment for amd as an aside i've said that nvidia would benefit from the metaverse in 2021 and told cbs news in november on november 22nd 2021 that and i quote the metaverse was real and that wall street was looking for winners.

11:38Were they then? Now, one more thing that AMD's November earnings, a month after that announcement, might be a barn burner full of remaining performance obligations from OpenAI, things that OpenAI would be paying them, those tens of billions of dollars of revenues, right? In fact, CEO Lisa Sulu said that AMD expected this partnership will significantly accelerate its data center AI business and with the potential to generate well over$100 billion in revenue over the next few years in the announcement. And here's how AMD's 10Q filing referred to it, and I quote, As of September 27th, 2025, the aggregate transaction price allocated to remaining performance obligations on the contracts with an original expected duration of more than one year was$279 million, of which$139 million is expected to be recognized in the next 12 months.

12:25The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less. now i don't know about you i did not i didn't do economics in school i didn't do anything like that didn't do well at maths in school but 279 million dollars seems lower than over 100 billion dollars so i guess just just no revenue from open ai no revenue of any kind i guess now amd did raise guidance by 35 % over the next five years, and they're trailing 12-month revenue is$32 billion. Tens of billions of dollars would surely lead to more than a 35 % boost, because that would be like $11 billion.

13:11That's just$11 billion. That's a lot less. That's a lot less than$100 billion. I don't know. Guess all that was for nothing. No follow-up from the media, no questions from analyst just a shrug and we all move on they were at ces greg brockman came on amd's lisa su said something about yotta flops which really just pissed me off to think about um still nothing anyway amd stock is now down from a high of 259 bucks at the end of october to around let's see amd stock type this in about 231 bucks right now everybody who traded in based on an analyst and media comments got fucked

13:58What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, aka Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology. Fans say it's like finally getting a user manual for your brain.

14:34It's about engineering consciousness. Mind Games is the story of NLP, its crazy cast of disciples, and the fake doctor who invented it at a new age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all? NLP might actually work. This is wild. Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined.

15:14So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Let us show you at iHeartAdvertising.com. That's iHeartAdvertising.com. Now, let's go to my favorite, and that's a little company named Broadcom. So, back on September 5th, Broadcom said in its earnings call that it had a$10 billion order from a mysterious customer. which analysts quickly assumed was OpenAI, leading to Broadcom stock popping 9 % and gradually increasing to a high of$369 on September 10th, before declining a little until October 13th, when Broadcom announced a ridiculous 10 gigawatt deal with OpenAI, claiming that it would deploy 10 gigawatts of OpenAI design chips with the first racks to deploy the second half of 2026 and the entire deployment completed by the end of 2029.

16:11So three fucking years with 10 fucking gigawatts. Just to give you an idea, it's about two and a half years a gigawatt right now, and that's for OpenAI slush fund projects, the ones that have all the money and none of the oversight. Now, the same day, President of Semiconductor Solutions, Charlie Cowas, added that said mystery customers actually not OpenAI. And I quote, I would love to take a$10 billion purchase order from my good friend, Greg Brockman, CEO of OpenAI, Cowas said. He has not given me that purchase order yet. nevertheless broadcom stock popped nine percent on the news about the 10 gigawatt deal with cnbc adding that the companies have been working together for 18 months and because it's open ai nobody sat and thought about whether somebody at broadcom was saying well open ai has yet to order these chips yet and whether that was a problem in fact the answer to how does open ai afford this appeared to be they'd afford it when it came to analysts now i'm gonna i'm about to read you a quote that is so funny when you realize that this is someone who makes like a shit ton of money.

17:13The 2026 timeline set out by OpenAI for the build-out is aggressive, but the startup is also best positioned to raise funds required for the project, given the heights of investor confidence, said Gaggio Sevilla, an analyst at eMarketer. Financing such a large chip deal will likely require a combination of funding rounds, pre-orders, strategic investments, and support from Microsoft, as well as leveraging future revenue streams and potential credit facilities. Hogwash. Just complete, complete bollocks. Insane that people pay these analysts. Bullshit. Okay, so let's just break this down. Financing such a large chip deal, so 10 gigawatts you're going to be looking at, so$50 billion a gigawatts, you're looking at half a trillion dollars.

17:55So to do this, for this aggressive build-out, which was 10 gigawatts in three years. Just not possible. They would fund this by pre-orders. Pre-orders for what exactly? Because pre-orders would be them pre-ordering something from Broadcom. Not really sure how that fixed the problem. Strategic investments from whom? Just funding, I guess. Support from Microsoft. Funding, again, I guess. I don't know why Microsoft be paying for that. As well as leveraging future revenue streams and potential credit for sale. What? What does that mean? Saving money? Doing like a revenue trade deal? Like, what are you talking about?

18:38Anyway, you don't need to worry because OpenAI's solution to this was far simpler. It didn't order anything. During Broadcom's November earnings call, where Broadcom revealed that the$10 billion order was actually from Anthropic, another LLM startup that burns billions of dollars, which was actually buying Google's TPUs from Broadcom. He also added that Anthropic had made a second$11 billion deal. Analysts somehow believe that Anthropic is positioned to spend heavily, despite being yet another venture-backed welfare recipient in the same flavor as OpenAI. Oh, right. Right. Sorry. Okay. Broadcom, you may be wondering about the 10 gigawatt deal though, because there was earnings, right?

19:17Well, Broadcom CEO Hock Tan said that he did not expect much in 2026 from the deal and guidance did not change to reflect it. Now, what was great about this as well, I linked to this in the newsletter. I really need you to go and look up how Hocktan had the conversation because someone asked him for more detail and he just straight up said, like, I don't want to talk about it. It rocks. I honestly fucking love that. Anyway, Broadcom climbed to a higher $412 a share leading up to its earnings. And I imagine it did so based on people trading on the believe that OpenAI and Broadcom were doing a deal of some sort together, which does not appear to be happening.

19:52While there is an alleged$73 billion backlog for Broadcom, every dollar from Anthropic is utterly questionable. Now, some of you might say, Ed, we can't just automatically distrust public companies. Actually, yes, we can. I'm doing it right now. Whenever a company says litter of intent, as NVIDIA and SK Hynix and Samsung did, it's important to immediately stop taking the deal seriously until you get to a specific word, contract. Not agreement or deal or announcement, but contract, because contracts are the only thing that actually matters. A great example of this is in NVIDIA's last earnings, they said they would be investing up to$10 billion in Anthropic, right?

20:34You'll notice that that was in the middle of November, it's now January, and we haven't heard boo about it. It's probably because nothing's fucking happening. And also that phrase up to as well means that it will be however much NVIDIA wants to invest, if at all. They only just did their Intel investment. Anyway, whenever they say these terms, you need to just get suspicious. It's time. It's time to stop trusting them because they've played enough hide the sausage for one epoch, I think. It's time for everybody, analysts, the media, members of Congress, the fucking Pope, I don't care, to start treating these companies with actual suspicion and to start demanding timelines.

21:13Like I said, NVIDIA and Microsoft announced that$15 billion investment in Anthropic. Where's the money? Why does the agreement say up to$10 billion for NVIDIA and up to$5 billion for Microsoft? Where's the money? Where is it? We haven't heard shit about it since. What we have heard is that Anthropic is raising either$10 billion or$25 billion at a$350 billion valuation. Where'd the money go? Where'd money go from those fucknuts? Let they go. Sorry, Jensen Huang, for calling you a fucknut. All right. You're acting like one though, mate. Anyway, these deals are announced with the intention of suggesting there is more revenue and money in generative AI that actually exists.

21:56Furthermore, it is irresponsible and actively harmful for analysts in the media to continually act as if these deals will actually get paid when you consider the financial conditions of these companies. As part of its alleged funding announcement with NVIDIA and Microsoft, Anthropic also agreed to purchase$30 billion of Azure Compute, which is, for those of you who don't know, the compute cloud platform that compared to Amazon Web Services and Google Cloud that Microsoft runs. It also agreed to, Anthropic, agreed to spend tens of billions of dollars with Google Cloud. It ordered$10 billion of chips from Broadcom earlier in 2025 and apparently another$11 billion of them in the last fiscal quarter.

22:35How does Anthropic pay for them? How? Anthropic allegedly burned$2.8 billion last year, 2025, though I think they burn much more, and raised$16.5 billion in funding before Microsoft and NVIDIA's imaginary money. How are investors tolerating Broadcom not directly stating the future financial condition of this company is questionable? Has Broadcom created a reserve for this deal? If not, why not? Anthropic will make no more than$5 billion in 2025, I'm sure of it, and raised about$17.5 billion with another$2.5 billion coming in debt. How can it foreseeably afford to pay$10 billion,$11 billion, or$21 billion, considering its already massive losses and all those other obligations I mentioned?

23:19Will Jensen Huang hand over$10 billion so that Anthropic can hand it straight to Broadcom? I don't think so. I realize the counter-argument is that the companies aren't responsible for the counterparty's financial health, but my argument is that it's the responsibility of any public company to give a realistic view of its financial health and revenue sources, which includes noting a chunk of its revenues from a startup that can't afford to pay for its orders. There's no counter for that. Anthropic cannot afford to pay Broadcom$10 billion right now or$11 billion in a few months. Where is the money coming from?

23:50They're allegedly raising$25 billion. Great. So that should leave them with$4 billion to pay for, what, like$30,$40,$50 billion of compute costs? I don't know. Again, I ain't no mathematician, but I can put those numbers together, and I can say that's a pretty big minus again. I'm not even trying to be sarcastic here. The things I'm saying are actually very rational. They're very reasonable. Anthropic, even if they raise$25 billion, cannot pay even like a quarter of the things they've agreed to. Their existing revenue sources, even if they made $20 billion in 2026, which they will not, by the way, they are absolutely...

24:32I just don't believe them about their revenues at all or any of the estimates. But the problem is that in any bubble, being really stupid and ignorant works right up until it doesn't. And however harsh the dot-com bubble might have been, it wasn't harsh enough and those who were responsible were left unpunished and unashamed and that guaranteed that the cycle would happen again and then it would be worse. I want to be really abundantly clear about what's happening. Every single stock you see growing because of AI outside of those selling RAM and GPUs is actually growing because of something else.

25:13Microsoft, Amazon, Google and Meta all have other products that are making the money and are still growing. AI is not growing them, and because analysts and investors and the media do not think about things for two seconds, they have allowed themselves to be beaten down and turned into supplicants for future public stock growth. Investors have allowed themselves to be played, and the results will be worse than the dot-com bubble bursting by several echelons. And perhaps the biggest victims will be venture capital, which is existentially threatened by the AI bubble, but the actual victims will be regular people who made the mistake of trusting analysts or anyone who told them to invest in the markets.

25:53But I'm going to be really simplistic for a second. I am skeptical of AI because everybody loses money. I believe every AI company is unprofitable with margins that are getting increasingly worse as they scale, and as a result, none of them will be able to get acquired or go public. This means that venture capitalists that have sunk money into AI stocks, and private AI stocks I should be clear, are going to be sitting on a bunch of assets under management, AUM, the same assets they collect fees on because that's how venture capitalists make money, that will eventually crater or go to zero because there will be no way for any liquidity event, so taking them public or selling someone, to occur.

26:33This is at a time of historically low liquidity for venture capitalists, with PitchBook estimating that there would be only $100.8 billion in venture capital funds available at the end of last year. Venture capitalists raise money from limited partners who invest in venture capital with the hope of returns that outpace investing in the public markets. Venture capital vastly over-invested in 2021 and 2022 as well, and this was also a problem with private equity. In simple terms, this means that these funds are sitting on tons of stock that they cannot shift, and the longer it takes for a company to either go public or acquired, the more likely it is the VC or the PE firm will have to mark down its value to something more realistic.

27:14This is so bad that according to Carter, as of August 2024, and that's C-A-R-T-A, some of you can't understand how I talk, as of August 2024, less than 10 % of VC funds raised in 2021 have made any distributions to their investors. That's handing any kind of cash out. In a piece from September 2025, Carter also revealed that about 15 % of funds from 2023 have generated any disbursements as of Q2 2025, and the median net internal rate of return was a median 0.1%, meaning that, at best, most investors got their money back and absolutely nothing else. And just to be clear, you don't invest so you can get an exact amount.

27:59You don't give someone a dollar, wait four years, and then get a dollar back. That's not investing, that's just putting money in a box. And in fact, investing in venture capital has kind of fucking sucked for a while. According to Carter, as of the end of Q2, most VC funds across all recent vintages, that's after 2018, had a TVPI somewhere between 0.8x and 2x. TVPI I'll get to in a second. But there are some areas where standout TVPIs are surfacing. TVPI means total value to paid in capital, or the amount of money you made for each dollar invested. So if you invested a dollar, 0.8x would mean you got 80 cents back.