Monologue: OpenAI and NVIDIA's Deal Is BS

wired open Ai as single goddamn dollar. All right, So the deal is that in VideA is investing ten billion dollars up front, according to CNBC, despite the fact that the date before it said that they would be investing

ten billion dollars with the first gig. But anyway, they're investing ten billion dollars in a month, allegedly, and I quote here once the deal is finalized, which means in simpler terms, that nothing has actually been and Video will then invest ten billion dollars in tranches for each Gigawa have capacity to that open Ai built. That's right, That's right. Everyone.

Most of this funding is gated behind open Ai, a company that burns billions of dollars building huge amounts of data centers, something they have never done, and that also costs billions of dollars. And just as an aside, open ai really has built nothing themselves. Everyone else is building it for them. These fucking silicon value libertarians. They love themselves and welfare, don't they? Anyway? How does open ai afford to build these data centers? I don't know. Nobody

else seems to know. Where are they being built? Who knows? It's unclear. Has the land been purchased? Also unclear. There's some sort of crap announcement about oh stargate, We've got a list of different fucking new places, and I had someone on the reddit suggests I was wrong. I just want to be clear. Of the list of the five new stargate locations, one of them is in Shackleford, Texas, which was already chosen to be one of Oracle's data centers.

This was already an announced. They're re announcing stuff as a pr professional, When you're re announcing shit, it's because you run out of stuff to announce this real. But look, let's let's be explicit about one thing. Data centers take a long long time to build, right, now, Crusoe is building a data center in Abilene, Texas, made up of eight buildings, which will amount to about one point two

gigawats of compute capacity. This is the one for Oracle and open AI, and at the current rate of development, it's taken about two and a half years per giga one. Look, I realize it's easy to get drowned in big numbers and ridiculous promises and media headlines where the writers don't seem to bother to learn even the simplest fucking thinks. But data centers are expensive and take forever, and this

entire plan hinges upon open AI building data centers. In fact, look, I've seen lots of people suggest that the ten billion dollars the open AI is getting from Nvideo will let them build data centers. And again, can somebody please actually

learn the basics here? The Abilene data center venture requires Crusoe, Blue Oul and Primary Digital Infrastructure to raise fifteen billion dollars in debt just for the data center itself, the construction, the people, the water, the power, and all that good stuff, with Oracle footing the bill for the hundreds of thousands of GPUs to go inside. At a price of I

think about twenty four billion dollars. It works out to by my calculations, open ai will need one hundred and twenty five billion dollars just to build the data centers to get the funding from in Video, which will require another two hundred billion dollars in GPUs. By the way, the information also reports that in Video is going to be potentially leasing GPUs to open ai, setting up a special purpose entity to buy the GPUs from themselves that

they would then lease to open AI. I've really hesitated to bring up any Enron comparisons. I've kind of flirted with one with core We even then that's that's straight Enron shit. Like, man, they haven't conferred they're going to do it. It's an information report or put a link in there. You'll complain that you have to pay for it.

I recommend the information. I just every day, every day, these new pieces of news where everyone kind of like trumpets them like Jesus just woke up from behind that big fucking rock, when in fact, I think something far worse is happening. But I really want to break something down for you, and you'll likely hear this again in

a future episode. I want to get into the actual economics here, Cruso's one point two gigawatts of compute for open Ai is a fifteen billion dollar joint venture, which means a gigawa of compute runs about twelve point five billion dollars. Abilene's eight buildings are meant to hold about fifty thousand in video GB two hundred GPUs in their associated networking infrastructure. So let's say a giga what is about three hundred and three thousand, three hundred and thirty

three Blackwell GPUs. Yeah, this math is a little bit funky due to in Video promising to install theirny Reubin GPUs in these theoretical data centers. But I really do think that they'll require about just a little under two

hundred billion dollars worth of GPUs. And this is on top of the four hundred billion dollars the open Ai has promised to spend with Oracle over the next five years, when open ai had already leaked that they'd be burning one hundred and fifteen billion dollars over the next four years. This math does not make any sense. It's complete nonsense. For open ai to survive, they're going to need around

six hundred billion dollars in the next five years. It's ridiculous, astonishing, and insulting to the general public that the media keeps acting as if these deals are signed or promoted in good faith. And I'm shocked that more people aren't doing the very simple maths that And I've seen a disgraceful amount of people talking about Open Aiy's revenue projections, which involve them making one hundred billion dollars in twenty twenty eight and one hundred and forty five billion dollars in

twenty twenty nine, and that's revenue, not profit. They're losing tens of billions of dollars both those years, and they're acting as if these are serious, meaningful statements rather than egregious lies from a gaggle of Charlatan's. It's a fucking joke. It's sickening. Oh, by the way, Open Eyes projected to make thirteen billion this year. From Mike calculs, they made about six point twenty six billion. Is it's wank And that's the technical term they use it. The financial analysts

put it. When you pay JP Morgan to see their private shit, it's or yeah, this is all wank. This is wink. Okay, I'll keep going now for the next three part episode I'm gonna put out next week. I've done a lot of digging into how much actual money exists to invest in general, and we're genuinely running up

against the limits of private and public capital. By my calculations, there's only about four hundred and seventy seven billion dollars of available capital across the top ten private equity funds, and I'm deadly serious. I will be publishing the links and maybe one hundred and sixty four billion dollars of US venture capital left, and maybe let's call that another one hundred and fifty BILLI in other funds sloshing around.

Are we really going to carve out half to two thirds of available global capital for one fucking company that burns a billion fucking dollars every two fucking seconds. I know it's slower than that. Shut up. I'm just I'm a little bit ornery. I'm not going to lie. You can hear it in my voice. And I am even more ornery than ever, more ornery than ornery, as Rob Zombie once sung. I'm just pissed off because when you

look at these numbers, they do not make sense. There's no parallel in history for any company or any industry that's ever spent this much money. There's never been one company that has been the focus like this. And honestly, I've never seen a company less deserving of any investment than open AI. They've burned billions of dollars. Their product is questionably useful, it's incredibly commoditized. They have yet to create anything really exciting or new since And if I'm

being kind reasoning, but let's be honest. GPT four, Oh they are washed. And yet everybody's sitting around them clapping like they're a gifted child and insult to children and startup founders. And that really is something that pisses me off as well, because AI took thirty three percent of US venture capital last year and I think they're probably taking more this year. And what's insane is nothing has been proven. None of these companies are profit generating, none

of these products are popular. Every single day, it feels like a study comes out saying, yeah, no one really likes this stuff, no one wants to pay for it. And by my calculations, I think the whole industry's revenue have include core we even all those shits, maybe fifty five billion dollars in twenty twenty five. That's on four hundred billion plus capex. Is anyone having fun? Does this feel like the future or does this feel like the future of how we're going to blow hundreds of billions

of dollars on nothing? And the longer it takes for people to walk away from open Ai, and the longer it takes for this company to die, the more damage that's going to be caused. Because right now in video is putting everything on open Ai. If we had functioning

regulatory boards, we'd actually have something done about this. But instead, what's going to happen is they're going to inflate this bubble just a little further, and then when it bursts, it's going to fuck retail investors and a ton of venture capitalists too, ton of private equity people as well, which will be kind of funny, but the financial apocalypse will hit everyone and it will be grizzly. But I'll be here to talk about it. I'm having the time

of my life doing this show. Next week's three part Who is Completely Insane? I wrote it in kind of a two day, fifteen thousand word kind of like ejection. I was going to say, I was going to say another word, which wouldn't have sounded quite as good, But nevertheless, that's the fun brandy part of these monologues. But I'm really excited for you to hear it because I pulled together a lot of numbers that show how fascical this

industry has become. And I think as the bubble approaches its eventual burst, a lot of you are going to feel really good about how right you are. Maybe some of you still disagree with me, and I will work to compel you, and even if I don't, I hope you have a good time listening. Got great episodes coming up in the future as well. Going to be going to see Stephen Burke of Gamers next is, do a long interview with him, some fun you a better offline,

and then I'm already working on some big guests. It's going to be a really fun few months. I don't know if anyone else, but I'm definitely enjoying doing this podcast. Thank you, zever for listening.