Monologue: We Live Inside A Dream, But Who Is The Dreamer?

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hello and welcome to this week's Better Offline Monologue. I'm your host, Ed Zitron. Better Offline it's been a weird week. I'm recording this on Thursday 30th July, so we've only had Microsoft and Meta report earnings so far. So let's start with Meta, who saw its stock get hammered today after missing on earnings per share narrowing, by which I mean increasing by another word, its cattle expenditures guidance for the year to a range of about $135 billion to $145 billion and guiding, as in projecting $61 billion to $64 billion of revenue in Q3, which was below estimates. Cash flow also deteriorated to a little under $800 million and I must be clear how strange it is watching these companies do this. Meta used to just print money. They used to have tons of free cash flow. But this dedication to AI is questionable and wasteful and the market is pissed. Mostly because Meta has yet to show any proof that spending over $200 billion in CapEx did anything for the company. Conversely, Microsoft's stock is ripping because it beat on analyst estimates across the board, with its Azure cloud platform hitting $100 billion in revenue for the F year that just ended. And to be clear, Microsoft's fiscal year 2026 started on July 1, 2025. Annoying. So annoying. I hate it. But that's the ball game. What's funny is that neither company actually proved that AI is paying off outside of brainless analysts and captured business and tech media reading between the lines and saying, ooh, AI is paying off big time. Last quarter Microsoft disclosed its AI run rate month times 12, which was $37 billion, about $3 billion a month, and then simply chose not to report the figure at all in this quarter, I assume because the number was lower. But that doesn't matter to anyone covering earnings put the AI hype in the bag. No thinking, only number go up, please. No thinking at all. We cannot think here. It's not like people are going to buy Microsoft stock because of this. I'll also add that nobody seems to want to discuss that Microsoft Azure's largest customer, and likely the vast majority of its growth, is OpenAI, an unprofitable, unsustainable company that accounted for, per my own reporting, and 69% of all year over year growth of Microsoft's cloud in calendar year 2025. Microsoft's cloud revenue mysteriously seems to grow every quarter with OpenAI's increasing spend on AI compute, a fact mentioned in exactly zero of the stories I read about earnings. And goddamn did I look. The inflation of the AI bubble was only made possible by the continued unwillingness of the media to actually explain or even try to understand what's going on. Microsoft's growth was immediately credited to its AI bets paying off, ignoring both OpenAI's compute spend and the massive Microsoft 365 price increases that hit on July 1 because it's convenient and rewarding to coddle the powerful and celebrate their supposed victories rather than actually seeking the truth. And what's funny is people are going to say, well OpenAI, is their bet paying off? Is it? Is it when it's a venture capital backed company, when Microsoft has had to sink over $13 billion into the company when there were reports in 2025 that that compute IT cost. How much is their investment? Is the Z or credits? Who knows? Nobody bothers to look. No one bothers to ask. The analysts on these calls should not have jobs. They do not exist to protect investors. They exist to perpetuate hype cycles. And what's actually happening to this company is pretty simple. As OpenAI's largest provider of AI compute Azure, revenue growth will continue to spike as long as venture capital continues to funnel cash to clammy Sam Altman. Microsoft has not found some magic AI money cheat. It has not unlocked incredible value for its Microsoft 365 copilot subscribers, and it's not got some secret sauce. While 365 copilot subscriptions increased by 10 million in this quarter. Keep in mind that Microsoft regularly discounts or simply adds it for free to pump these numbers up. We're far past the point in the AI bubble where naked deception is necessary because the media is more than willing to keep filling in the blanks at the preference of the companies. Keep in mind that a mere 24 hours before Meta's horror show earnings that the Wall Street Journal and New York Times both ran separate stories about Mark Zuckerberg wanting superintelligence for all. A vacuous statement that exists only to get an irrelevant company attention and to paper over its meaningless and wasteful AI play. What superintelligence, Mark? You're building fucking large language models. Who cares? Who fucking cares? None of this actually connects to what the models do. I feel like I'm going insane. And just, just look at the coverage around Nvidia's potential backstop of $250 billion in compute spend on the still theoretical 10 gigawatt data center in Ohio that a SoftBank subsidiary wants to build for OpenAI. Not once in any of the stories did I read a single thing about how OpenAI can't afford that spend that debt markets are becoming exhausted with AI loans, that SP Energy has never built a data center before, and that none of this makes any financial sense. No need put the AI hype in the bag. No thinking only growth number go up. No need to think at all. Just run story number so big we love number Again and again and again the media fails investors and the general public through either a misplaced attachment to fictional objectivity or a desperation to appeal to the powerful. It doesn't really matter which one is true because they both have the same effect, creating the appearance that any of this is possible in a way that only benefits the rich and powerful.

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And what's incredibly frustrating is it's now, for the most part, commonly held consensus that we're in a BU bubble. Yet the media continues to write about this stuff as if that isn't the case, glazing every single impossible deal or blatant act of circular financing, salivating over every bizarre new model drop or supposed achievement without ever really explaining why it matters, and gooning over every obtuse statement that Sam Altman makes. We're not in the singularity, you fucking asshole. And this is because we live, on some level in an entirely imaginary and manufactured reality, at least where the media is concerned. Hyperscalers have spent over a trillion dollars in AI capex and have across the board refused to give us hard numbers about its return on investment. OpenAI and Anthropic are unprofitable, unsustainable, and will need over a trillion dollars of funding in the next four years because they've made over a trillion dollars of commitments that neither of them can afford without a near infinite sum of venture capital. AI data centers are getting built at a snail's pace, and debt to build them is becoming more and more expensive, with core weave hitting goat. C level credit spreads 8.3% to 9.3% above U.S. treasuries, which is way higher than the average junk bond, meaning that investors are valuing them like the company is a very real chance of death. And you'll notice that this isn't really something, but you'll notice that the spreads are being covered, people. Oh, that's strange. Oh, that doesn't look good, huh? Wonder what that's about. What it's about is that the bond market is screaming core Weave might die. Coreweave might die. And if core weave dies, every neocloud dies. Iron dies, Nebius dies. N Scale dies. Lambda dies. All of them die. And even if I might be wrong, which I'm not, I really am quite confident on this. The fact that this is not even a discussed point across the media is a sign that no one really gives a fuck about any investors, the public, anyone who might get tied up in this. It's a sign that no one's thinking about this too hard, either through a dramatic ignorance or just a lack of giving a shit about anything. Yet the irony of all these blaring warning signs is that it's impossible for most of the media to take them to their logical endpoint, as doing so would mean accepting that we live in an era of outright insanity. To acknowledge OpenAI's financial condition is to acknowledge that the largest customer of Azure might die and that a large chunk of Microsoft's revenue growth is a fiction created by venture capital. To acknowledge Core Weave's condition is to acknowledge that a company pumped up by most of the media is going to explode. To acknowledge that Anthropic is basically the same company and in the same financial position as OpenAI is to accept that Google Cloud and Amazon Web Services are as inflated as Microsoft Azure. And to acknowledge these things would require the media to acknowledge that they ignored basically every warning sign right up until the end. I can imagine that the bubble will burst and there'll be outlets that will attempt to pretend that they were ahead of it, but those people don't realize how detailed my notes are and how unflinching I'll be in publishing them. I will. I will be doing so. I will be publishing everything. I know everyone who pumped this up. I know what everyone did. I know how many times they ignored the warning signs. And I can see the articles where they helped pump this bubble up. And I'm. I'm not going to get too personal. I'm just going to publish the fucking articles. I'm going to point. I'm going to say it was obvious. Then why didn't you do something? And the answer is they didn't give a shit either. They didn't give a shit enough to learn, or maybe they. And it's much worse if they understood and they just chose to ignore it. If the answer is, well, the largest companies in the world wouldn't make such a mistake. You're just very, very gullible, I guess. I don't know. I hope that someone learns after this. I don't think they will. I'm really going to try. I'm really going to try and explain how people got this wrong. I feel like I've been trying. And the bile you can hear, the poison in my voice comes from a place of I. It's funny, people say, oh, he's just a former PR person, he doesn't know anything about finance. The only thing that it takes to become a financial expert is to become an expert in finance, to sit down and learn. Where's everyone else? You can fuck it. I'm using the same shit as everyone else. You just learn to read. And I don't know why more people don't do it, but the answer is it's a lot of work and you don't really have to do it. When your editors pro AI, you can just do whatever you want. I know some journalists listen and hopefully I'm not talking about you. Hopefully you made the effort. I really hope you did. And I must be clear, I'll probably mostly be coming after outlets rather than people directly. That would be mean. But at the same time, please, God, when this explodes, journalists listening to this, please fucking try harder or, I don't know, try trying harder beforehand. And if you think you are pushing back, if you truly think you are pushing back, by all means reach out and find out. If you actually are, by all means email me, signal me, you have my information, ezitron76 and ask me directly. Because pretty much if you have to ask, you probably not. And if you think you are already, I don't know, have you talked about core weave? Have you talked about OpenAI running out of money? Or when you did so did you talk about it saying, yeah, OpenAI isn't profitable yet, but you know, companies take a while to get profitable and Uber lost a lot of money and AWS lost a lot of money? If that's what you're thinking, you are wrong. You are wrong. You are misleading your readers, you're misleading the general public, and you should be kind of fucking ashamed of yourself. I'm. I'm sorry to be so merciless right now, but I am sick and tired of watching these cycles and I know how many people are going to get washed out. For a real preview of that, go and look at the Korean stock market right now and the many stories of people talking about fucking killing themselves. That is the real consequence of bubbles. That is the real thing that happens. And everyone trying to downplay this is responsible for people like that suffering and eventually American and British and other investors too. It's sickening. And until something changes, we're all going to live in a paradoxical media environment that simultaneously publishes proof point after proof point after proof point that this is financially unstable, all while saying that AI is going to be the biggest, most hugest thing in history. Right up until the bottom falls out, OpenAI collapses, data centers get cancelled, core weave shits its pants and everything falls apart. At which point they'll throw up their hands and say, wow, how'd that all happen? It happened because we live in an era where responsibility often correlates with cowardice. Those who have the most power to critique the powerful choose instead to jerk their shit from first principles, helping them create fantastical, mediated realities that enrich the already rich and fuck over retail investors at scale. It darkens my heart when I think about it. It really pisses me off because you can already see what's going to happen. You can already see that the people invested in the markets are going to get washed out. And then there's the widespread problems caused by all of these private credit funds sinking money into data centers that will never get built, will never provide the yield, and will fuck over anyone who is unfortunate to have insurance, annuities or pension funds involved in this bullshit. Next week I'll have Ed Ellison back on to talk about tech earnings and continue to fight to give you as clear a picture of reality as possible, even as we battle to leave one created by and for the powerful. Thank you for listening.

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