Z media greetms and salutations. I m ed zatrom and this is better off limee and you're better off line monologue.
It's been a funny week for me, went on.
Bloomberg did an interview cleanly covering the highlights of my AI bubble thesis. Didn't say fuck shit or bugger even once. A bunch of people loved it. And now everybody is, for some reason mysteriously talking about the lack of return of investment on AI.
That's because everything I said has come true.
Back in September twenty twenty four, I talked about the subprime AI crisis and said that when companies adopting LLM based services were forced to pay the actual real cost of tokens, they'd start to freak the fuck out.
Now, clam you all, clemanth clammy.
Sam Ultman himself has added an unfortunate comment in the mix purpose There's insider. Ormond said at a recent event that ROI had now become a meme, quoting so but he's saying, my company spent my entire twenty twenty six budget in Q one, Can you make this more efficient? Adding that the company was an open AI in this case, I mean was exploring other ways to deliver more value for less spend. I love how casual he says this too.
It's like, ah, yeah, you know, just people are blowing their entire yearly budgets in a few months.
But it's fine.
He also said that at the beginning of twenty twenty six, the issue was spend never came up, and people were totally happy with the amount they were spending. But now AI costs were and I quote a huge issue. Well that's probably because open Ai and Anthropic moved their enterprise customers from heavily subsidace monthly subscriptions to token based billing in Q one twenty twenty six.
Hmmm, I wonder if it's that. It could be.
I guess it could be there. But put differently, nobody actually paid what AI actually really cost, and now they're having to and they're screaming like they stepped on a mouse trap. Like Tom and Jerry, They're freaking the fuck out. Journalis are freaking out too. Everyone's writing pieces that discussed the debate around the return on investment on AI as if it's a normal, insane thing that we're four years in and still debating whether there's ROI debating whether this
is all actually worth it? Did anybody fucking check No? And it must be clear that these companies cannot, under any circumstances slow down. Both open Ai and Anthropic have sold investors on a vision that both of them will make around two hundred billion dollars in annual revenue.
Each by the end of the decade.
Those data centers are being built under the belief that they and probably multiple other Anthropic and open Ai sized companies will ab exist and be have the money and see be able to spend that money on compute. And both of them have made a combined one point one trillion dollars in compute commitments across Google, Microsoft, Amazon, Oracle, Core, Weave, Cerebrus, and even fucking SpaceX. Both companies lose billions and billions of dollars. I'd probably sell like tens of billions of
dollars if I really add the guess. Their only hope is to keep growing to such an astoni level that midwit investors in the recently lead poison keep feeding them cash under the auspices of some sort of theoretical profitability. The only way to keep that cong going is to keep on growing, and it's become very obvious that both companies are bonking their heads against the ceiling of their
customer spend to make matters worse. Earlier in the week, Sam Altman talked to CNBC's David Faber on the subject. When asked about these spending problems, he said that he assumed that the industry will figure that out pretty quickly. Samuel Credenza, methusilla, formaldehyde. Altman, you just raised one hundred and twenty billion fucking dollars. You are the AI industry. You are the one that's meant to work this out.
That's your job. You can't be four years into this no, it loads refused cash dump and still shrugging your shoulders like the Kevin James mean and saying, I'm just a little guy. I can't do everything. I'm a birthday boy. I'm a little birthday boy. Give me one hundred billion dollars because it's my birthday. You cannot do that, Sam Altman, you can't do that. That's that's crazy, man. And it's very clear that open AI is the quote drill cooked
on the pit Memphis style. The Q one twenty twenty six non gap operating margin was negative one hundred and twenty two percent. They lose billions and billions and billions of dollars a year, and chat GPT's growth is stalled at around nine hundred and five million weekly active users. We are approaching the end of this farce, and these companies cannot afford to slow down a little, even a little,
not a touch and as Goldman's sacks. As Jim Cavello said in a recent podcast, and I love this quote because it's Jim is very smart and he's been ahead of this.
But it's so simple.
At some point, you've got to make money as you make investments in a business, so you can generate returns. As people are just quoting that, like, damn, brother, shit, why did not think of that?
Hey, you invest money?
And I thought you just invested money in businesses because it felt good, because it made it made you you feel good inside, it made you feel warm and fuzzy. I didn't know, what do you mean a return on investment? What do you mean she's talking about put money in this for a reason you create?
Jim Cabello, you so crazy.
But four years in, companies are spending more than ever on a product without a clear return on investment.
It's obvious at this point.
However, many use cases the mildly mold poisoned people in AI dancing around about. No one can seem to actually like say what it means or why it matters or indeed, even if all of these people claim they're writing all their code with AI, what that actually changes. Doesn't make the software better, doesn't I'm so close to Tucker Carlson voice. Doesn't make the software better, doesn't seem to make anything better.
It just seems to make our apps worse. But folks, we're reaching the end of this era, and I am currently working on a massive story, bigger than both of my huge exclusives from last year, and one you will not want to miss. I am really excited about this. Technically there's too but I know one's going to come in. One's pretty big, one's ginormous. But before then, I'm taking a week off. I'm getting my wisdom teeth out. I do need a break, so I'm going to rest up.
You should rest up too, and keep on laughing at these oaths burning billions of dollars on software that doesn't have a return on investment.
Zechra nowt