OpenAI's Week From Hell — And Why Anthropic Is Winning

26:42Scott Galloway:I don't think OpenAI would settle at this point. I think OpenAI wants it all to come out and they want a clean, clean, crisp decision that exonerates them and shows Altman is the good guy here. And I think that's exactly what's going to happen. And also, if you look at the filings, my understanding is that Musk was putting it off because he wanted that cloud of uncertainty to hover over OpenAI. And so I don't, I think that my prediction is this is going to be a win for OpenAI. We'll be right back after the break. And if you're enjoying the show, come join us on tour and hang out with us live. Get your tickets at ProfitGMarketstour.com.

27:22We will be on tour at the end of May. Link is in the description.

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30:03We're back with Prof G Markets. Big tech delivered across the board last week with Microsoft, Amazon, Meta, Google and Apple all reporting earnings that beat on the top and bottom lines. But the market's reaction was far more mixed. So, Scott, let's take a look at some of these earnings and we'll get into why investors were less than impressed with a few of them. Let me just run through the numbers really quickly here. This was just, I thought, an incredible quarter from everyone. So let's just look at Google first. As we mentioned, DoubleBeat revenue up 22 % to$110 billion for the quarter, I should mention.

30:45Cloud revenue up 63 % to$20 billion. Search revenue grew 19%. And they also raised their CapEx to$180 to$190 billion for the year. So, I mean, we're just seeing more of the same, which is incredible growth on practically every business line. And they are investing more and more into AI. Turning to Amazon, double beat. Revenue up 17 % to$182 billion. Cloud revenue up 28%. CapEx for 2026,$200 billion. Looking to Microsoft, revenue up 18%. Cloud revenue up 29 % to$55 billion. Meta was also a double beat. Revenue up 33%. Ad impressions were up 19%. Prices per ad were up 12%. 2026 CapEx raised to between$125 billion to$145 billion.

31:38And then closing out with Apple, revenue up 17%. iPhone revenue up 22%. I mean, the numbers start to become a little bit meaningless in a lot of ways. But the net net here is unbelievable quarter from all of these companies. And the reactions from the market was a little bit different. Google was majorly rewarded. It's up 9%. The stock is since they reported. Apple's up nearly 5%. Amazon's up 2%. But Microsoft and Meta have been punished. Microsoft is down 3 % since they reported their earnings. And Meta is down nearly 9 % since they reported. Where do you want to start here, Scott?

32:16Scott Galloway:And these are just staggering. um the ability for you know meta was up 33 percent year on year in terms of revenues its ads served us up the price it's getting per ad it's time the way i would describe it is you have this nitro and glycerin upward explosion of incredible usage and expenditures on ai by both enterprises and consumers and demand appears to be actually almost keeping up with expenditures or expectations. But also the thing that's less talked about is I think at the end of the day, these companies monetize attention, specifically attention on a screen, specifically attention on a phone.

32:57Scott Galloway:And I think over the last three months, we're all just fucking glued to our phones. If it's not, if it's not, if it's either Trump saying something incendiary or bombs dropping somewhere. I got to think that just total time on a screen has had a step change upward. And these companies are able to monetize that. The theme around bifurcating the winners and losers from a market's reaction standpoint, I think it's the following. And that is they're all performing, but what the market wants is what they believe that Amazon, Apple, and to a lesser extent, what Alphabet is offering. And that is they want the great taste of AI without the calories of what feels like just extraordinary increases in CapEx.

33:52Scott Galloway:And I think the thing that sort of set the toner depicts the tension here is that I believe open AI and Anthropic illuminate the kind of what investors are looking for. And that is, I think why Anthropic is now above a trillion dollars in the secondary market is that Dario Mode is seen as a more responsible steward of CapEx. And the stat you quoted me that just blew my mind is that Anthropic is anticipating getting to profitability on one twelfth of the cap of the cash requirement. And so it basically, you look at this, they want the growth, but they're a bit intimidated when these companies keep saying, well, we lied last quarter, the extraordinary CapEx is going to be even more extraordinary.

34:40Scott Galloway:It kind of freaks people out. So big tech didn't disappoint on performance. If it disappointed anywhere, it disappointed on timing. And that is the earnings say the businesses are extraordinary, but the reaction says the expectations were you would maintain this growth without the type of step change up and CapEx that you're asking for. And it's not, I mean, the way I would think about it is that expectations are perhaps even greater. If expectations are kind of a combination of what you should be able to do on this amount of CapEx, the expectations possibly aren't being met because they're meeting them on the top line, but unfortunately, it's requiring even more CapEx than initially been anticipated.

35:32Scott Galloway:Does that make any sense, Ed? Yeah, I think that makes a ton of sense. That's the big question. I mean, we're seeing some of the largest investments we've ever seen. As I mentioned, a lot of these companies are approaching$200 billion in CapEx for the year. That's how much they'll spend on building data centers for the year 2026. And the gigantic question for all of these companies is, where is your return going to come from? Now, we've discussed how it'll work for OpenAI, and that is, I mean, they're not going to see a return until they say 2030. That's the time that they will see their first year of positive free cash flow.

36:09But that's a big bet. And also, the spending numbers just keep on bouncing all over the place. And we've talked about that. But I think for some of these bigger companies, we are actually starting to see a return here. And that's, I think, what the market is starting to realize. The only company for which there is a gigantic question mark, and it is explained by both the valuation of the company and also the stock performance of the company since the earnings, is Meta. And that is, Meta is spending, they raised their capex to$125 to$145 billion for the year. it's comparable to the amount that Microsoft is spending, Amazon spending, Google spending.

36:48The only difference is that Meta is the only one that doesn't have a cloud business. I mean, you've got Microsoft, which is selling their compute through Azure, Amazon doing the same thing through AWS, Google doing the same thing through Google Cloud. Meta doesn't have that business. They generate 97 % of their revenue from advertising. It is purely an ad business. And so the question for Meta is, what are you actually going to do with these data centers that you're building? Are you going to monetize these things, or are you just going to own the stack and use it to, I guess, increase the revenues on your existing businesses to get AI to turbocharge your ad business?

37:29But the reality is they haven't really explained what they're going to do here. They've basically just sort of used these kind of vague allusions to how AI is the next transformative technology. It's going to change the world. And, you know, we want to be ahead of the curve. And, you know, OK, fair enough. Like that all generally makes sense. But you look at the other businesses and you're like, well, I can see the ROI right now because they've already built these businesses and we're already seeing a return. and they're monetizing these businesses or these data centers and these assets as we speak.

37:59Meta isn't doing that. And so they need to start getting their messaging straight on this front. And they need to tell us, they need to tell Wall Street what their plan to monetize these data centers actually is. Because right now, they don't really seem to have a plan. And you're basically just praying and hoping that Mark Zuckerberg is going to figure it out. and given what he did with the metaverse, which was a very similar example where he just plowed a bunch of money into this distant dream and said, don't worry about it, trust me, and it didn't work out, you're asking for a lot from investors.

38:35And so if we look at the valuation of Meta right now, the Ford PE is 20. It is the lowest of any of the companies we've just named here. Google's at 34, Amazon 33, Apple 32. Microsoft is down. We've talked about that at 21. But Meta is now the lowest, 20 times forward earnings at the moment.

38:53Scott Galloway:Yeah, I think if you were to have a headline, I'm fascinated with Meta's earnings because it's just hard to imagine a company reports 33 % revenue growth on a base of this larger number. I'm just trying to think of the last time a company with this larger business grew 33%. Right,$56 billion. Yeah, unbelievable. It's just staggering. But I think if you were to have a headline for the market's reaction, it would be, it's not that the headline isn't growth. They were hoping it'd be growth. 33 % should be the headline. Growth should be the headline. But really the headline from the market back was its durability versus doubt and that the revenue's there and the margins are still strong.

39:35Scott Galloway:But the market is asking a different question. Is the AI spend actually going to pay off. And you're right. It's probably less clear with meta than all of the others. And then I'm talking my own book here because Amazon is our stock pick for our big tech stock pick for 2026. But Peter Golder is a colleague of mine at NYU Stern. He taught strategy. Now he's at the Tuck School. And he had one of the great pieces of research and strategy that's sort of one of those things I've just held on to when I first heard him talk about it 15 years ago, and that is innovators aren't the ones that reward shareholders.

40:15Scott Galloway:A true innovator goes first. And if you look at the first in PC computing and smartphones and online platforms, those companies probably don't exist anymore, whether it's CompuServe or AltaVista or the first PC company. the companies that reward shareholders are fast followers. Or put another way, it's usually the second mouse that gets the cheese. And I would argue Amazon is second mousing like no one's business. They're trying to play. They've said there's an opportunity for a number two space connectivity company to SpaceX, and we're going to be the number two with Project Leo. And now I also think they're saying there's a number two to AMD, CoreWeave, and NVIDIA.

41:02Scott Galloway:And now they're saying, Jassy is saying, that Amazon is now one of the top three data center chip businesses in the world. And their chip business is actually now becoming a big business. Yeah, 20 billion ARR, Tranium, Graviton, Nitro, all of their chips really starting to ramp up. And I think what the market wants, the market wants it both ways, right? It wants the great taste of AI growth without the calories of like, oh, guess what? We're increasing CapEx by another. And so I think the narrative, if you will, that the street responds to is no longer, I'm going to raise a trillion dollars and buy$300 billion of compute from Oracle.

41:45This is the Altman narrative to, yeah, I'm going to participate in the AI boom.

41:51Scott Galloway:We're going to be a leader here, but we're adults and we know how to manage CapEx. And I think that is why, even more so than the growth story, I think that's why anthropic is surging and open AI is kind of gone flat to down. And I think that this earnings call was basically an assessment of to what extent are you participating in the AI boom and your core businesses are really strong, while at the same time showing some sort of something resembling some level of discipline around capex that's right the capex is almost the tail that's wagging the dog here it doesn't even matter they're all growing at ridiculous clips so that's a given that's wall street expects that the question is you say is are you responsibly managing the balance sheet and this is something that i was saying at the end of last year that the market sort of rewarded in 2025 the the growthy ridiculous daydreaming stories of these companies like an open AI who just throws out these big numbers and says, we're going to achieve AGI.

42:53It's going to be incredible. But that 2026 would be the year where the responsible AI companies would be rewarded, such as an anthropic, which is exactly what we've seen. And I think what we're starting to see here is that in a lot of ways, the most important executive at each of these companies, these AI companies, it's not the product people, It's not even the CEO, but it's the CFO. It's the guy who's in charge of managing the balance sheet, making sure that there is a responsible rate and plan for spending. And that's essentially what we're seeing in the way these stocks react. It's basically dependent on are you proving that you're building AI and investing in AI in a responsible manner and that you have a plan.

43:39And most of these companies are doing that except for Meta. We should also maybe mention Apple. Notably, there was no change to their CapEx guidance. However, they did announce that they're going to buy another$100 billion worth of shares. I mean, this company just loves buybacks. I think eventually they are going to get punished for this, honestly. I think, I mean, we're seeing the return on AI. We'll see if John Ternus ends up deciding to actually invest more in this. But, you know, what we're seeing with all these tech companies, they want to own the rails. They want to own the infrastructure.

44:17That's what they're doing. They're getting paid for it. I think they will continue to get paid for it. So this was arguably the most important decision for Apple of the last 10, 20 years, probably 10 years, deciding not to invest in data centers, not to participate in the AI race. Jury's out on whether it was the right decision. But the more I see these numbers, these cloud numbers from Amazon, Microsoft, Google, the more I think, you know what, they might have made a mistake here. But the market's rewarding them. I mean, Apple is up there. iPhone revenue was ridiculous, up 22%,$57 billion worth of iPhones.

44:54The business is still firing on all cylinders, but it is a huge question. Why didn't they get into AI?

44:59Scott Galloway:So Apple has what appears to be the greatest asymmetry in terms of trading at what feels like a very rich multiple on the lowest growth. But I think what the market has said is this is your under the mattress stock because Aswata Motoren said companies need to behave their age, right? that it's very difficult for a company that's grown really fast to acknowledge, okay, I'm no longer a teenager. I'm a mature company. I'm a baby boomer. And I need to start returning shares to returning capital to shareholders who share buybacks, be more measured, thoughtfully manage costs, recognizing I'm probably not going to grow 30 or 40 % again, like when I was a teenager.

45:41Scott Galloway:And Apple, I think definitely has taken the other side of the trade and said, similar to how they decided not to engage in the search wars and just own custody of the billion most important consumers in the world and wealthiest, and then trade off all the warriors in the search wars against each other and extract$20 billion a year in a royalty payment of which 97 % flows to the bottom line by being the default search engine on iPhones. I think they have made a similarly conscious move to say, we're not going to go into this out-of-control AI CapEx war. We're just going to be the front end that owns custody of the consumer and at some point play anthropic off against open AI and extract an enormous royalty statement.

46:28Scott Galloway:And to a certain extent, while Apple doesn't offer the upside, they're not going to announce 30%, 33 % revenue growth anytime soon. At the same time, if you said to me or said to us, all right, all of these companies shit the bed in two quarters, but one kind of held on or didn't nearly have the down quarter, I think you'd likely say, oh, it's Apple. The likelihood they continue to sell a lot of phones, their services business continues to grow at a decent clip. And quite frankly, they're just not as vulnerable if this AI Lollapalooza of CapEx that's not responsible for 50 % of GDP growth in the U.S.

47:09Scott Galloway:doesn't live up to its expectations. So I almost see it. But also equally vulnerable to if it does. And that's the thing. I mean, it's a seriously risky bet here. I mean, just think about that decision. Like, would you rather invest$100 billion into building data centers, which are supposedly going to be the picks and shovels of the next generation of computing and technology, or buy$100 billion worth of stock at what is already a decently rich valuation, I think, that's a very bold move to say, no, no, we'd rather buy Apple stock than do what everyone else is doing. And I feel like they almost have a responsibility to explain to investors, by the way, investors don't seem to care, so maybe I'm the odd one out here, but it seems like they have a responsibility to explain, no, no, this is why we don't think this is the right move.

47:59We understand that everyone else in our position would be obviously going into data centers, obviously building out AI infrastructure. But the reason we think that is not the right move is X, Y, Z. But they're not really doing that. They're kind of acting as if it's business as usual. But I guess, again, I guess it doesn't matter because investors are still happy with the stock. The stock rose, unlike, say, Meta or Microsoft.

48:23Scott Galloway:But there's different types of risk. The risk you're outlining for Apple is that they risk missing out on a lot of upside by not making these forward-leaning CapEx investments in AI. But at the same time, they don't face an existential risk from AI. They're the equivalent of the masseuse or the plumber in big tech because no one is talking about vibe coding an iPhone or replacing the App Store or Apple Music with the latest co-work from Claude. So they are to a certain extent saying hardware in your iPhone, that's likely the most durable business in all of this. The most profitable product amongst all of these things is probably the most enduring.

49:09Scott Galloway:I don't see a lot of people saying, well, there's a scenario where AI could replace the iPhone or their services. So the risk is they miss out on the upside, but they're not facing, a company like Microsoft faces an existential risk if they don't go hard at AI, right? If they miss the AI boat, that could literally disrupt the whole company. But I think Apple's saying, no, our job is to create the strongest, most aspirational, strongest signaling ecosystem in history with the premier signaling product in history. Nothing signals that you're part of the 1 billion most attractive mates in the world than having an iPhone and the ecosystem that comes with it.

49:53Scott Galloway:And it's a wildly profitable product. That supply chain, I don't think, can be replaced by AI. Figuring out a way to get 2 ,000 distinct parts from probably 400 different sources to different regions in China and then build a phone for$400, it would cost$3 ,000 anywhere. that AI doesn't seem to be threatening that. Now, does AI threaten PowerPoint? Yeah. Does AI potentially threaten YouTube? Maybe, maybe not, less so. But I think that basically the market is saying it's kind of like P &G. It's unlikely AI is going to disrupt detergent or diapers. And so P &G always trades at what feels like a fairly rich multiple relative to its growth.

50:46Scott Galloway:And I actually think that while Apple always gets arrows from not being as aggressive or as innovative, I think strategically they recognize we're a mature company. We're about managing our cash flow, returning cash to shareholders. And just as people shitposted us and second guessed us about not getting into the search wars and also pulling the plug on a car, which was probably a smart move, we are not going to engage in this CapEx race around AI. And they might be wrong, but if they're wrong, the threat is they miss out on incredible earnings growth, not that they are disrupted. Totally, totally.

51:26There's definitely a lot more downside protection there. But just on Microsoft, I agree that they are sort of in the thick of AI, but they're also leading in AI. And this is why I just think the valuation, I think they've been so overpunished here, trading at 21 times forward earnings. I mean, the revenue is still exploding up 18%. The cloud revenue is up 30%. I mean, AI is not going to disrupt Azure. I mean, they essentially own the rails there. The question is, will they develop the technology to keep up with the likes of an Anthropic? Is Copilot going to continue to disappoint? I would argue they're probably going to get their act together on Copilot.

52:07They're probably going to come out with some incredible new product release. And then suddenly the momentum changes on a dime, just in the same way that we saw the same thing happen with Google a year ago, a year and a half ago, when it was code red over at Google, because everyone just decided, oh, Google's behind because Gemini isn't that hot right now. And then suddenly everyone kind of realized, wait, no, this company is leading on AI. They continue to outperform every single quarter with their earnings. I think Microsoft is in a very similar position. It's still trading. I think it's around$4.00 to$4.10 at the moment.

52:40I still think that's incredibly low for the company. So I'm very bullish on Microsoft still. I think all of these companies are performing incredibly well. But in terms of value, especially compared to Meta, where I think the risks actually arguably are there because they haven't built their cloud business, I do think that Microsoft is really good value right now. Well, you're depicting – you're illuminating something that's really important.

53:05Scott Galloway:And Microsoft, you were very bullish on it a few weeks ago. All of this has to be set against valuation. Bad companies can be good investments if they get cheap enough. Great companies can be shitty investments if they get expensive enough. Amazon year-to-date is up 19%, say above our big tech stock pick for the year. Microsoft is down 12%. So this looks like, to your point, and the reason why you bought stock, that Microsoft, it's a decent entry point right now. because year to date, it's the worst performer. And if you look at the earnings and the performance, you would say, okay, there's some risk here.

53:41Scott Galloway:I don't know if it's overhang around disruption or the bullshit back and forth noise with open AI. And it's in the software basket as well. It's part of the IGV. So it just gets sold off along with the rest of them. Yeah. Apple is, Apple's, you know, 5 % and Amazon, what was the other ones? Oh, meta. Let's look at meta. Meta year to date is down 6%. So, yeah, the entry point, I agree with you. Looking here and now, I think, you know, if Microsoft feels like this is a decent entry point to your thesis, that it might have been overpunished. But the market, I think the market's just getting increasingly nervous with this CapEx and likes that Apple's not engaging in this war and really wants CEOs who look a little bit more measured.

54:39And the good news about Zuckerberg is he is arguably one of the boldest CEOs in history.

54:46Scott Galloway:The bad news about Zuckerberg is that he is arguably one of the boldest CEOs in history. You know, see above, take$70 billion in shareholder cash and go into the middle of the street and burn it such that we could have a legless future. So, fortunately, he has one of the most cash-generated companies in the world. So, he can break a leg and be up the next day and competing for, you know, in the giant slalom again. But the fact that they were up 33 percent, again, the earnings call that dictates how the market feels around this whole thing. is, all right, there's growth here, 33%, but we're really interested in what we think is durability and whether or not anything resembling a return, can we get a return on this type of investment, on this capex that he keeps increasing?

55:42We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com.

56:06Scott Galloway:We'll see you next time.

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57:26We're back with Prof G Markets. Spirit Airlines is shutting down. After two bankruptcies in two years and a spike in fuel costs tied to the war in Iran, the company was facing a fatal crisis. At the end of last week, the Trump administration submitted a final offer to bail out the company. The administration was reportedly offering a$500 million loan in exchange for 90 % of the company, but the deal fell through. This still raises a larger question, however, and that is, should the government have tried to step in and save Spirit Airlines at all? Scott, what do you think?

58:05Scott Galloway:Really just one question here. What the actual fuck? The whole point of capitalism is we have winners and losers. The whole point of the private sector is they engage in full-body contact violence. And if they figure out a way to develop margin power and bring together resources and sell them for more through IP, deaf management, culture, distribution channels, access to capital storytelling, there's no limit. We don't say, oh, it's ridiculous that you're worth$850 billion after being founded just five years ago. Have at it. At the same time, if you can't pay your debts, we let you go out of business.

58:46Scott Galloway:And by the way, as someone who has had companies I've started go bankrupt, who has invested in companies coming out of bankruptcy, bankruptcy is a feature, not a bug. Quick lesson in bankruptcy, Chapter 11. A company cannot meet its obligations. Okay, but it still might be worth something. It declares chapter 11. The equity holders who take bigger risks than bondholders get washed out. Sucks to be a grownup. You are looking for two, three hundred, 10x gains. Occasionally it goes wrong. They get wiped out. The creditor sees control of the company, and under the protection of bankruptcy, they can get out of leases, out of gate obligations, out of union contracts, out of debt obligations, and they can restructure into an airline that actually works.

59:34Scott Galloway:And then other people come in and bid on it. And then with the smaller Spirit Airlines, it opens up opportunities for new airlines that might be better fucking operators than Spirit. and we have a snake of an economy shed its skin and come back stronger and more powerful. The whole point of having successful companies is that you let other companies go out of business. And when you bail out companies and the government starts picking winners and losers, which it is much worse than consumers in the market, you end up with gigantic warehouses in Ireland full of DeLoreans that nobody wants or Air France.

1:00:10Scott Galloway:It's occasionally you bail a company out because it presents existential risk to the economy. It made sense to provide banks and financial institutions with a credit line because if J.P. Morgan or Goldman Sachs or Bank of America went under, that could create literally lines around the corner and food lines. I get it. And by the way, most of those companies didn't need it. They were forced to take it such it wasn't a run on the companies that took it. That's existential risk. That's why Sarbanes-Oxley was put in place such that they wouldn't be back, hat in hand, with too big to fail. This fucking airline means nothing to the economy.

1:00:46Scott Galloway:It has a 3.4 % market share in the U.S. If it goes away, it doesn't mean anything, anything. So the notion that there is any reason to bail this out other than saying to the economy and the world and startups and investors from abroad, we have gone full cronyous, capitalism on the way up, socialism on the way down. that's cronyism, attacks at the core fundamental belief of capitalism, and that is we believe in winners and losers. This company should be allowed to go bankrupt. It'll reemerge stronger. It creates space and opportunity for new companies. And the notion somehow that airlines are some jewel or national pastime that we need to bail out makes no fucking sense.

1:01:27Scott Galloway:And we have been to this movie before. We bailed out United, dealt an American because the CEO said, we're all in this together. Well, guess what? Pre-COVID, they spent all of their free cash flow on share buybacks so they could artificially juice the stock and the three CEOs could take$150 million in compensation. And then when COVID comes along and airline traffic absolutely goes to zero, all of a sudden they're fucking socialists and decide we're all in this together and go hat in hand to the government. Burn, baby, burn. There's absolutely no justification other any whatsoever to putting a single government dollar into Spirit Airlines, just as there was no justification for bailing out Delta, American, and United.

1:02:10Scott Galloway:This company is meaningless to the economy. What is meaningful to our economy is that we believe in winners and losers and full-body contact violence of competition that creates better companies, stronger companies that create more tax revenue, more jobs, more startups, better new airlines, better management incentives. What incentive does this give to other airline CEOs if they get bailed out by the government? Oh, fuck it. I'll just make bad decisions and maybe I'll get bailed out. I don't like bailout of student loans or medical debt either just so I can piss off my friends on the left. You can't have moral hazard.

1:02:46Scott Galloway:There has to be a downside in business to making really bad decisions or, quite frankly, just getting really unlucky. and Spirit Airlines, if you want Spirit to be around in five years, let it go bankrupt. Because traditionally across all Western economies, when you bail out a company once, all you're doing is planning the next bailout. Because they never get the opportunity to right size and they never have the incentives to actually do what's required to make the hard decisions to turn into a more robust, survivable company. Anyways, thank you for my TED Talk. I mean, just some of the data here, I mean, how badly this company has been managed.

1:03:23They've been losing money every year since 2020. They lost$2.7 billion in 2025. This year is going to be even worse because of fuel prices. And according to J.D. Morgan, if fuel prices remain elevated where they are, then Spirit's operating margin is going to go from negative 7 % to negative 20 % this year. And then you compare it to like the other airlines who are basically just figuring it out. Like Delta is dealing with the fuel costs by cutting 4 % of their flights this quarter. They're also already raising prices and also planning to raise prices even higher to offset the fuel costs. We're seeing that with some of the other airlines as well.

1:04:01Like, I mean, there's a way to prevent going into bankruptcy. And that basically means like managing your business correctly. And so what I don't really understand, I mean, you've made the point. They're a very, very small airline. three and a half percent of domestic U.S. airline market share, like extremely tiny as a business, really doesn't matter. No systemic risk, no issue for consumers. Why is he doing this? The only answer I can come up with is that he kind of likes this practice of investing in companies as the government. Like he enjoyed doing it with U.S. Steel. It feels macho. You take a stake.

1:04:42He enjoyed doing it with Intel, which we should mention is absolutely ripping right now. And now he gets to brag about it because the stock's up. I think it's doubled within a month. And so now he gets to say, oh, I made I made a huge return on this investment. It seems like that's probably the reason that he just finds it fun. But all the while, I mean, he's using taxpayer money to fund this stuff. You might as well just burn the money itself.

1:05:07Scott Galloway:He's a rich kid with terrible business judgment that leaves a trail of bankruptcies and unpaid subcontractors that cosplay as a business person. He thinks it's fun to play business. And by the way, he's conscripting you into owning Spirit Airlines. If you're a taxpayer, you're becoming an unwilling, unwitting equity holder at fucking Spirit Airlines. And also, true story, I was a bartender outside of college, and the CEO of Spirit Airlines came in and said, I want a draft beer. And I said, that'll be 50 cents. And he said, that's really cheap. And I said, well, look, it's also$3 for the glass,$4 for you to stand,$8 if you want to sit down, and$3 every time you want to use the bathroom.

1:05:44Scott Galloway:Get it? It's sort of a Spirit Airlines joke. That wasn't easy to stitch in a Spirit Airlines joke. That wasn't easy, Ed. Look, I mean, granted, he's doing worse shit than this. A lot of people are thinking, OK, I didn't sign up for spending between 25 and 80 billion dollars to bomb Iran. But capitalism, the whole point is I get to choose what I invest in and I have no desire to be an equity holder in Spirit Airlines. So this notion somehow that there's. This makes no sense. And I hope what's so striking to me or what's what's really actually encouraging to me is a lot of Republicans are saying this makes no sense.

1:06:23It's the least Republican. It's the least conservative thing you could do. It's like the most out there. I mean, it's practically communist in a lot of ways.

1:06:31Scott Galloway:There are a bunch of great companies on the verge. Saks is a great company. We let Saks go bankrupt. It's a great brand. Honestly, that's a good target for Trump. He'd love to take over Saks with Av. Oh, my God. I loved taking my mom to lunch at Saks, and I love the beauty and cosmetics counter there. And God, we can't let Saks go out of business. No, we can. And then it repackages and it reemerges as an online thing. I mean, oh, my God, we can't. Ed, we can't let all birds go out of business. For God's sakes, have you seen those plush velvet shoes? It's an innovator, Ed. We can't let all birds go out of business.

1:07:08Scott Galloway:Sure we can. Anyway, this is totally head up your ass. I don't understand capitalism. I don't understand economics. And the CEO here is happy to pay himself on the way up and then go hat in hand and ask for a bailout. It reminds me when that dipshit from Shake Shack figured out a way to get around the loopholes with the PPP Act and get a bunch of money for all the Shake Shacks that were making a shit ton of money and claimed that we were all in this together. Yeah, fuck you. You're in it for you. And you're taking money from you're taking money from taxpayers. This is insane that they would accept and or ask and or receive a bailout from the federal government.

1:07:53Scott Galloway:And all you are doing, if you are at Spirit right now and you're an employee there, yeah, a lot of you are going to lose your job under the auspices of bankruptcy. I bet most of you are going to keep your jobs. And in five years, more of you will have jobs if you're granted Chapter 11 bankruptcy. The only people that get hurt here and they get hurt hard are the equity holders who take risks. That's the point. And people will be afraid to invest in debt if all of a sudden equity holders are consistently bailed out. There are some people, some bondholders who went into this thing. And I'm beside myself, Ed.

1:08:35Scott Galloway:I'm beside myself. Yeah, it's also going to create real incentives to continue to sort of suck up to Trump. We are increasingly seeing this sort of kingmaker economy dynamic where he'll basically just bail out and give handouts to anyone who sucks up to him. So honestly, you mentioned Saks Vithav there. Honestly, a great strategy for Saks right now is to just go up to Trump and just start becoming friends with him. because there is a genuine possibility that if he likes you enough, he'll bail you out and he'll give you free money. Because that's exactly what we've seen with Spirit here. And it's exactly what we've seen with plenty of other companies, including the people that he has pardoned, the crypto fraudsters who were set to go to jail for ripping people off billions of dollars.

1:09:20And then they suck up to him and then he gives them a pardon and then he gives them free money. That's essentially what we're seeing here. I just want to go back to Intel for a moment because, as I mentioned Trump and the U.S. government did take a stake in Intel. That, I think, was you could sort of make more of an argument for, like that there's more of an argument to be made that Intel is systemic in some way, although it's honestly quite hard to make that argument. But it's certainly easier to make it about Intel than it is about spirit. But just on the topic, Intel is going crazy right now.

1:09:55They're up, the stock's up 115 % in the past month. it's up 366 percent in the past year and actually it is one of the companies that you pointed out as a fallen angel is what you called it uh you picked a few companies in your um in your no mercy no malice post in in the fall of 2024 companies that you thought were undervalued that had some opportunity you said quote intel just needs to show a pulse to substantially increase its valuation. Indeed, I mean, it's been one of the best performing stocks of the year, perhaps the best. I'd need to check that. Any reactions to Intel? Absolutely skyrocketing right now.

1:10:35We got this right.

1:10:36Scott Galloway:It's up fivefold since we said that. And here's what we're doing, Ed. We're going the other way. This company's off 50 % plus in the next six months. It now has the highest forward PE multiple of any large cap chip stock. It trades at 118 times forward earnings versus AMD at 50, Amazon at 32, and NVIDIA at 26. And at the same time, its business is expected to grow slower than all the peers that are trading at a lower PE. This thing was a buy 80 % ago. It is a short at 5x right now. It is a short at 118 times forward earnings. This company is way out over its keys. Good for the people who bought in when the thing was almost left for dead.

1:11:24Scott Galloway:It is not at 118 times earnings. Look out below. We are reversing our prediction here. After seeing a 400 % increase, we are going the other way. Our prediction, Intel cut in half in the next six months. All right. Let's take a look at the week ahead. We'll see earnings from Palantir, AMD, Arm, Pfizer, Novo Nordisk, Walt Disney, Uber, CVS, McDonald's, Airbnb, and CoreWeave. And we'll also see the employment report for April. Scott, do you have a prediction? I just made one, Ed. You just made it? Intel cut in half over what time frame? 118 times earnings growing slower than all of its competitors.

1:12:07Scott Galloway:Look out below. I get the timing wrong. Let's say 12 months. 12 months. I think this is an easy one, unless it becomes a meme stock, or Trump weighs in and tries to merge it with Spirit Airlines. I like that. It could happen. It's not that crazy. It's not out of the question. I still think the SACs takeover is the best idea we've come up with on the pod. I like it. My prediction is that Elon is going to get his$40 million back. OpenAi is going to win the larger case, but ultimately they say, okay, if you're so upset about being ripped off, here's your money. He'll get the$40 million. He'll complain about it because it's not exactly what he wanted.

1:12:47He wants the whole company to come falling apart. This isn't going to be the reason that happens.

1:12:52Scott Galloway:So by the way, what you just described is a 99.99 % win for OpenAI. You're predicting a near total win for OpenAI. A near total win for OpenAI. But I think he gets his money back. I think he's not going to be happy about it. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is Dan Jelan, Isabella Kinsel, Chris Nodonoghue, and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to ProfitU Markets from ProfitU Media.

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