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[00:00]
Podcast Announcer
This is an iHeart podcast.
[00:02]
Ed Zitron
Guaranteed Human Amazon Health AI presents painful
[00:08]
Amazon Health AI Advertiser
thoughts why did I search the Internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic sores in various stages of ooze. I can clear my search history, but I can never unsee that.
[00:27]
Podcast Sponsor Announcer
Don't go down the rabbit hole.
[00:29]
Ed Zitron
Amazon Health AI gets you the right care fast. Healthcare just got less painful.
[00:35]
Jacob Goldstein
This is Jacob Goldstein from what's yous Problem. Running a business is hard enough. Don't make it harder. With a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, accounting, inventory, E Commerce, hr. Fully integrated, easy to use, and built to grow. With your business, thousands have already made the switch. Why not you try Odoo for free at o d o o.com that's odoo.com
[01:11]
Brilliant Tutor Advertiser
a big part of parenting today is figuring out which technology will help your kid and which might hurt them, especially when it comes to learning. Brilliant is the online math tutor that's visual and interactive. Unlike other tools, it never hands your kid the answer. It helps them think for themselves with personalized support when they need it. It's helped millions of students excel in math, from fractions to calculus. Sign up today@brilliant.org tutor and get 20% off for back to school. That's brilliant.org tutor aging is real and
[01:42]
Podcast Announcer
so are the benefits of new vital proteins. Collagen, sparkling water. Because around the age of 30, your body needs backup to keep your collagen. So get your daily glow up now in three fresh flavors. Strawberry blossom, lemon, lime and blood orange. Improved skin health in as little as 30 days thanks to Collagen peptides. Cheers to that. So you can stay vital. Stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.
[02:14]
Ed Zitron
Cool Zone Media hello and welcome to this week's Better Offline Monologue. I'm your host, Ed Zitron. Better Offline. I know some of you are gonna say, Ed, why are we hearing a monologue on a Wednesday? I don't like change. I'm screaming. I'm screaming and crying. And the answer is. We're gonna have a full in studio episode running Friday with mainstays Chloe Radcliffe and Ed Ongueso Jr. They're back, folks. And those of you in the New York Metro should also get tickets to see Chloe's new stage show, Cheat at Joe's Pub. Link will be in the episode notes. It's actually fantastic. It's genuinely one of the best things I've ever seen, and I generally don't like going outside anyway. Let's Talk about this Fucking Nvidia Deal earlier in the week, various media outlets reported that Nvidia was lining up $500 billion in financing for AI infrastructure in partnership with Apollo, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs, KKR, Cobra Command, Gargamel, GRU and the minions Mortimer McMire from Commander Keane, and the ghosts of Margaret Thatcher and Ronald Reagan. Okay, well, technically, partnership and lined up don't really reflect the truth of the matter. And neither does $500 billion, for that matter. What actually happened was Nvidia signed memorandums of understanding, which are not worth the paper they're printed on, with six asset managers to maybe build some data centers at some point using money they might raise. The Wall Street Journal also reports in a paragraph that was since removed from the story, that the financing would involve different vehicles rather than one large collaboration, meaning that they'll probably just raise a bunch of data center deals separately in exactly the same way they've already been doing, and if already funded across the board, they're in coreweave. They're in every goddamn deal. Every single person I've just named, other than obviously the joke ones, is involved with coreweave or an AI data center of some sort. Jesus fucking cr. Not in any of the stories either. In any case, all of this is entirely theoretical because a memorandum of understanding from Nvidia is worthless. In September last year, Nvidia CEO Jensen Huang, along with OpenAI executives Clammy Sam Altman and Greg Brockman, went on CNBC to talk about how it was investing $100 billion in OpenAI to build 10 gigawatts of compute capacity, and that said deal was monumental in size, even though the deal was based on a memorandum of understanding. In the end, Huang would claim to Taiwanese journalists that this was, and I quote, never a commitment, and that Nvidia was invited to invest $100 billion and they were happy and honored as a result. In the end, Nvidia invested $30 billion in OpenAI six months after the announcement of the original deal, and OpenAI built 0 gigawatts of data center capacity as a result. Nobody's nerfect, you know, just these things happen. Things move crazy. $70 billion didn't happen. 10 gigawatts of capacity didn't get built. Not happened. Just completely fucking false. They did an interview on CNBC just like they did with this deal. I feel like I'm going insane. Anyway, on Monday night, Huang went on Twitter and delivered a seemingly AI written screed. Or maybe he's just a shitty writer about this theoretical partnership, adding that Nvidia would, and I quote, provide a residual value support mechanism for up to 25% of an opportunity assessed carefully on a project by project basis. And if you're wondering what that means, that makes two of us. That was very clearly Colette Kress, the cfo, cfo and the legal counsel just being like, Jensen, you will fucking run these. You will run this goddamn sentence. I will. I'll get the club, Jensen. Anyway, if I had to guess that 25% refers to Nvidia guaranteeing a certain amount of compute revenue for the company building the project. As in like, they will guarantee that, say if OpenAI can't afford to pay, they'll cover the costs up to 25%, which would in turn allow this developer to raise billions of dollars to buy Nvidia GPUs. This is actually very common. It's how core waves raised a bunch of debt. They go to the various financiers and they say, hey, look, I got a contract. I got a contract from a customer. Sometimes that customer is Nvidia, by the way. And the bankers go, oh shit, you got a guaranteed contract, huh? I'll give you the money for this. Yeah, you look like you're running out of money and we're going to need to do 9% interest, but fuck me up, grandpa. I should also add that none of this is actually real until actual contracts are signed and actual money is raised. And that Jensen Huang's word is effectively worthless. At this point. In the Twitter post, Huang also added two questions to, I imagine, alleviate concerns. He responded to the question of whether this was circular financing by saying that this initiative was built to address that concern, bringing independent long term institutional capital into the AI infrastructure market, before adding that the demand is real and it comes from Frontier AI Labs, followed by a series of other companies that do not have significant demand for AI compute. Ending by saying that this was the beginning of an open capital market for AI infrastructure, which means nothing. Just to be clear, this is absolutely circular financing. Nvidia is helping companies raise debt, offering a guarantee on that debt to make sure that the debt is issued. Also that Nvidia can be paid using the proceeds from that debt which Nvidia is guaranteeing. Its customers are companies that can quite literally not afford to buy its products, mostly because they lack an effective business model or the cash flows to do so. I'll add that it's also laughable to read someone say that the demand is real as they attempt to raise half a trillion dollars explicitly to create demand. Yet my favorite part was Jensen's last question, where is the return on investment? His answer was, I shit you not that the return is the usefulness of AI. Fuck off, man. Fuck you. Shut the fuck up.
[07:53]
Podcast Sponsor Announcer
Fuck.
[07:53]
Ed Zitron
Fucking motherfucker. That is not what return on investment refers to and you know it. Apparently the usefulness of AI is not significant enough to provide cash for your customers to pay. Outside of financial wizardry, that would make Andy Fastow blush. If there were actual diverse demand for Nvidia's GPUs commensurate with analyst expectations, you wouldn't have to do these bizarre, painfully circular deals that exist only to inflate your fucking revenues and further prop up the existence of unprofitable AI labs. You know this, Jensen, you're full of shit. Anyway, if Jensen Huang actually listens to that, I would be really surprised. If you know Jensen and want to play this for him, I really am just quite excited for it to eat. He's never going to hear it. He has no idea who I am. Who cares though? Anyway, anyway, this deal is about as real as Stargate and will work out much the same way. For those of you who forget, Trump, Altman, Ellison and Masayoshi son announced in January 2025 that they would be building $500 billion worth of AI infrastructure. Even though no actual money was raised, no partnership was created and genuinely no LLC was ever formed. In the end, Stargate was a name that got put on any OpenAI data center, no matter how it was funded, and mostly referred to Oracle's massive buildout for the least viable customer of all time. It was just a chance for Trump to get up there post inauguration and go, we're going to build the biggest buildings. It's my beautiful friend Larry and their nasty friend Sammy is a nasty, clammy little man. And yeah, I could do that for an hour. I'm just going to stop myself. In Jensen's case, I expect further data center deals to get funded by these asset managers that get referred to, in brief, as part of the 500 billion doll billion partnership with Nvidia. And I expect the media to dutifully say that too. They will help ratify this as they did with Stargate, even though not a single data center being built is part of a Stargate initiative of any kind, because one does not exist. Even though I should be clear, Jensen will do these deals and nothing has functionally changed. Nvidia has already been offering preferred pricing and guaranteed compute spend to inference providers. It already discussed backstopping OpenAI data centers. It already backstopped one of Core Weave's leases, and it will continue to do whatever it can to keep growth going and to sell more GPUs. Now, if you're wondering why they're doing all this craziness, it's because consensus analyst estimates for revenue for the next three years are utterly fucking insane. Nvidia made about $216 billion in fiscal year 2026, which ended on January 25, 2026. Frustrating? It's really annoying. And analyst expectations have it at $393.7 billion in fiscal year 2027, a little under doubling its revenue year over year. In fiscal year 2028, expectations are $565.7 billion. And in fiscal year 2029, Nvidia is expected to make $694 billion. Over 90% of its revenues come from selling GPUs and other data center hardware, so nothing else is going to make up the shortfall here. And I realize that's a lot of numbers, so I'll put it real simple. Nvidia is expected to sell over $1.6 trillion worth of GPUs by January 2029, and the V customers, including hyperscalers, are having to take out hundreds of billions of dollars worth of debt to pay for it, if they can even raise it. As I discussed last week, 70% of Microsoft, Google and Amazon's AI revenues come from OpenAI and Anthropic, meaning that the demand does not exist at remotely the scale necessary to justify this AI data center. CapEx Jensen Huang has no choice but to engage in the darkest arts of circular financing to keep up with investor expectations, but honestly, I think everyone's kind of running on empty. Anthropic is apparently having to reassure investors about the dangers of open source competition as it rushes towards a September or October ipo, adding that it's going to do stuff in biology to deal with the negative perspective that people might have on AI. Fucking laughable. OpenAI just lost COO Brad Lightcap a day after completing a $7 billion internal stock buyback, which is peculiar when a company does an employee share sale which is when insiders, like people who've worked there for years, sell their stock, they usually sell to external investors rather than the company's cash buying it. In fact, I looked around and I really struggled to find examples of this. Even SpaceX found dupes to sell it to. And every other OpenAI internal share sale involves selling to Thrive Capital or SoftBank. Is Masayoshi son not quite as horny? Is he not into it anymore? He's not getting his rocks off? Is this not the golden goose anymore? Masayoshi Son what's going on? Masayoshi Son why didn't you invest more? And I realized, by the way, this share sale was at the $852 billion valuation from March, so maybe they didn't want to double down. I don't know if you think this company's actually going to go public. It feels strange for you to sell at this point, unless, of course, you don't. But yeah, things are about to get a little desperate. The $500 billion deal didn't move the markets much, with Nvidia down about half a percent about an hour before market close, which means investors are no longer impressed by Jensen Huang's fantastical promises. And it worked really well last year. End of last year, you could just say, yes, we're going to sell a gazillion GPUs to this guy and the markets would give you 5, 10% on the day. Not so much anymore. The con's not working and I'll be here to shepherd you through wherever the con goes next and however insane it becomes as a result. Thanks as ever for listening.
[13:28]
Podcast Announcer
Aging is real, and so are the benefits of adding vital proteins, collagen, peptides to your daily routine. Because around the age of 30, your body needs backup to keep your collagen up to help support healthy hair, skin, nails, bones and joints. Available in the classic collagen peptides, collagen and protein shakes and new vital proteins collagen sparkling waters so you can stay vital stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.
[13:59]
Podcast Sponsor Announcer
This episode is supported by FX's the Shards, a seductive drama from executive producer Ryan Murphy. Set in 1980s Los Angeles, the series follows a group of glamorous, deeply entangled high school seniors drawn into a life of wealth, beauty, parties and excess. At its center is Brett, whose reality begins to unravel when the arrival of a new student coincides with a series of mysterious murders. FX's the Shards, now streaming on Hulu.
[14:30]
Kalpen (Kal Penn)
Hey everyone, it's Kalpen. I'm inviting you to join the best sounding book club you've ever heard with my podcast, Hearsay, The Audible, and iHeart Audiobook Club. Every episode, I nerd out with amazing guests and dive into the best new audiobooks available on Audible. It's the book club for your ears. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts.
[14:59]
Tony Ayo
This is Tony Ayo from the Real Report with Tony Ayo and Uncle Murder. You ever notice how everything keeps going up? Rent, streaming, even extra Sosa at your favorite burrito spot? But with Boost Mobile, you don't have to play the Willis Go up soon game. Boost Mobile offers an unlimited talk, text and data plan at a price that'll never go up. It's the same price you'll pay for life. Switch now for unlimited wireless at a price that'll never go up. Only at boost mobile. After 30 gigabytes, customers may experience slower speeds. Customers will pay $25 a month as long as they remain active on the Boost Unlimited plan.
[15:29]
Podcast Announcer
This is an iHeart podcast. Guaranteed Human.

Summary5 min read

Better Offline – Monologue: NVIDIA's No IT Loads Refused Cash Dump

Date: August 12, 2026
Host: Ed Zitron
Podcast: Better Offline (Cool Zone Media & iHeart Podcasts)

Episode Overview

In this week’s Wednesday monologue, Ed Zitron deconstructs the recent buzz around NVIDIA's purported $500 billion “AI infrastructure” deal. Amid media hype and a parade of splashy headlines, Ed picks apart the reality behind NVIDIA's announcements, mocking the company's circular financing, theoretical partnerships, and Wall Street alchemy. He connects these maneuvers to the wider frenzy—and desperation—driving the AI and data center sectors, shining a skeptical spotlight on the true state of demand, revenue projections, and industry integrity.

Key Discussion Points & Insights

1. Setting the Scene: “Why a Wednesday Monologue?”

Ed opens by addressing the unusual midweek monologue and announces an upcoming Friday studio episode with guests Chloe Radcliffe and Ed Ongueso Jr. (02:13).
Quick plug for Chloe’s stage show, “Cheat at Joe’s Pub.”

2. The Reality Behind NVIDIA's "$500 Billion Deal" (02:46)

Media Reporting vs. Truth:
- Reports claimed NVIDIA was securing $500 billion in financing for AI infrastructure via asset managers like Apollo, Blackstone, BlackRock, and others—satirically including "Cobra Command, Gargamel... and the ghosts of Margaret Thatcher and Ronald Reagan."
- Ed clarifies: NVIDIA merely signed memorandums of understanding (MOUs), which are non-binding and “not worth the paper they're printed on.”
- “All of this is entirely theoretical because a memorandum of understanding from Nvidia is worthless.” (03:32)
Historical Parallels:
- Points to 2025’s high-profile, but ultimately vacuous, “Stargate” initiative—another billion-dollar-for-nothing scenario.

3. Circular Financing Demystified

How It Works:
- NVIDIA promises to “backstop” up to 25% of select deals, allowing data center builders to borrow/invest more easily, which stimulates sales of NVIDIA GPUs.
  - “Nvidia is helping companies raise debt, offering a guarantee on that debt to make sure that the debt is issued. Also that Nvidia can be paid using the proceeds from that debt which Nvidia is guaranteeing.” (06:36)
Artificial Demand:
- Many AI customers can’t afford NVIDIA’s products without these convoluted financing schemes, since they lack real business models or revenue.
- Ed lampoons how “the demand is real” rhetoric always pops up directly as NVIDIA tries to manufacture the appearance of scale.

4. NVIDIA's “Return on Investment” Rhetoric

Notable Quote:
- “His [Jensen Huang’s] answer was... that the return is the usefulness of AI. Fuck off, man. Fuck you. Shut the fuck up.” (07:52)
Ed ruthlessly mocks the idea that “usefulness” substitutes for fiscal ROI—pointing out that the chief justification for these datacenter deals is financial trickery, not true market demand.

5. Pressure from Analyst Expectations & Investor Hype (09:05)

Enormous Growth Projections:
- NVIDIA's actual FY2026 revenue: ~$216B
- Projected for 2027: $393.7B
- 2028: $565.7B
- 2029: $694B
- “Nvidia is expected to sell over $1.6 trillion worth of GPUs by January 2029, and... customers... are having to take out hundreds of billions worth of debt to pay for it, if they can even raise it.” (09:50)
Lack of Underlying Demand:
- 70% of Microsoft, Google, and Amazon’s AI revenues come from self-dealing with OpenAI and Anthropic.
- The capacities being built are not for “diverse” customers, but for a handful of AI labs—raising sustainability questions.

6. Industry Desperation and Weird Moves

Anthropic:
- Trying to reassure investors about threats from open source; rushing toward IPO; now talking vaguely about biology as a growth area (11:05).
OpenAI:
- Just lost its COO after a $7B internal stock buyback—curiously, employees are selling shares back to the company itself rather than outside investors.
- “Is Masayoshi Son not quite as horny? Is he not into it anymore? Is this not the golden goose anymore?” (11:55)
Investor Skepticism Grows:
- “The $500 billion deal didn't move the markets much, with Nvidia down about half a percent... which means investors are no longer impressed by Jensen Huang's fantastical promises.” (12:40)
- In 2025, similar announcements would jump NVIDIA’s stock 5-10%; today, faith is fading.

Notable Quotes & Memorable Moments

On MOUs and Reality:
“A memorandum of understanding from Nvidia is worthless.” (03:32)
On NVIDIA’s ROI Explanation:
“His answer was, I shit you not, that the return is the usefulness of AI. Fuck off, man. Fuck you. Shut the fuck up.” (07:52)
On Circular Financing:
“Nvidia is helping companies raise debt, offering a guarantee on that debt to make sure that the debt is issued. Also that Nvidia can be paid using the proceeds from that debt which Nvidia is guaranteeing.” (06:36)
On Growth Projections:
“Nvidia is expected to sell over $1.6 trillion worth of GPUs by January 2029, and the V customers, including hyperscalers, are having to take out hundreds of billions of dollars worth of debt to pay for it, if they can even raise it.” (09:50)
On Investor Sentiment:
“The con’s not working and I’ll be here to shepherd you through wherever the con goes next and however insane it becomes as a result.” (12:59)

Timestamps for Important Segments

[02:13-02:46] — Intro, schedule updates, upcoming guests
[02:46-03:32] — Unpacking media reports vs. actual NVIDIA MOUs
[03:32-06:36] — Past precedent (OpenAI), why these MOUs are empty; NVIDIA’s financing mechanics
[06:36-07:52] — How circular financing props up NVIDIA sales; real demand skepticism
[07:52-09:05] — “Return on AI is usefulness” rant; comparison to Stargate
[09:05-10:50] — Revenue projections; sustainability of AI demand
[11:05-12:00] — Anthropic & OpenAI weirdness, buybacks, shifting investor thirst
[12:40-12:59] — Investor sentiment shifts; wrapping up

Ed’s Signature Tone

The monologue is infused with Ed Zitron’s biting, irreverent humor and withering skepticism:

Lots of profanity used for comedic and emphatic effect.
Relentless mockery of tech industry media cycles and executive doublespeak.
Analogies and sidebars that lampoon tech’s “elite” and their PR machinations.

In Summary

This episode pulls back the curtain on the NVIDIA “AI cash dump,” exposing it as financial theater—MOUs masquerading as massive investments, circular financing driving artificial demand, and the broader AI industry increasingly caught between outlandish projections and investor fatigue. Ed Zitron’s colorful commentary and sharp analysis make this not just a takedown of NVIDIA’s latest hype, but a critique of the entire AI/tech growth narrative for 2026 and beyond.

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Transcript16 lines

[00:00]
Podcast Announcer
This is an iHeart podcast.
[00:02]
Ed Zitron
Guaranteed Human Amazon Health AI presents painful
[00:08]
Amazon Health AI Advertiser
thoughts why did I search the Internet for answers to my cold sore problem? Now I'm stuck down a rabbit hole filled with images of alarmingly graphic sores in various stages of ooze. I can clear my search history, but I can never unsee that.
[00:27]
Podcast Sponsor Announcer
Don't go down the rabbit hole.
[00:29]
Ed Zitron
Amazon Health AI gets you the right care fast. Healthcare just got less painful.
[00:35]
Jacob Goldstein
This is Jacob Goldstein from what's yous Problem. Running a business is hard enough. Don't make it harder. With a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, accounting, inventory, E Commerce, hr. Fully integrated, easy to use, and built to grow. With your business, thousands have already made the switch. Why not you try Odoo for free at o d o o.com that's odoo.com
[01:11]
Brilliant Tutor Advertiser
a big part of parenting today is figuring out which technology will help your kid and which might hurt them, especially when it comes to learning. Brilliant is the online math tutor that's visual and interactive. Unlike other tools, it never hands your kid the answer. It helps them think for themselves with personalized support when they need it. It's helped millions of students excel in math, from fractions to calculus. Sign up today@brilliant.org tutor and get 20% off for back to school. That's brilliant.org tutor aging is real and
[01:42]
Podcast Announcer
so are the benefits of new vital proteins. Collagen, sparkling water. Because around the age of 30, your body needs backup to keep your collagen. So get your daily glow up now in three fresh flavors. Strawberry blossom, lemon, lime and blood orange. Improved skin health in as little as 30 days thanks to Collagen peptides. Cheers to that. So you can stay vital. Stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.
[02:14]
Ed Zitron
Cool Zone Media hello and welcome to this week's Better Offline Monologue. I'm your host, Ed Zitron. Better Offline. I know some of you are gonna say, Ed, why are we hearing a monologue on a Wednesday? I don't like change. I'm screaming. I'm screaming and crying. And the answer is. We're gonna have a full in studio episode running Friday with mainstays Chloe Radcliffe and Ed Ongueso Jr. They're back, folks. And those of you in the New York Metro should also get tickets to see Chloe's new stage show, Cheat at Joe's Pub. Link will be in the episode notes. It's actually fantastic. It's genuinely one of the best things I've ever seen, and I generally don't like going outside anyway. Let's Talk about this Fucking Nvidia Deal earlier in the week, various media outlets reported that Nvidia was lining up $500 billion in financing for AI infrastructure in partnership with Apollo, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs, KKR, Cobra Command, Gargamel, GRU and the minions Mortimer McMire from Commander Keane, and the ghosts of Margaret Thatcher and Ronald Reagan. Okay, well, technically, partnership and lined up don't really reflect the truth of the matter. And neither does $500 billion, for that matter. What actually happened was Nvidia signed memorandums of understanding, which are not worth the paper they're printed on, with six asset managers to maybe build some data centers at some point using money they might raise. The Wall Street Journal also reports in a paragraph that was since removed from the story, that the financing would involve different vehicles rather than one large collaboration, meaning that they'll probably just raise a bunch of data center deals separately in exactly the same way they've already been doing, and if already funded across the board, they're in coreweave. They're in every goddamn deal. Every single person I've just named, other than obviously the joke ones, is involved with coreweave or an AI data center of some sort. Jesus fucking cr. Not in any of the stories either. In any case, all of this is entirely theoretical because a memorandum of understanding from Nvidia is worthless. In September last year, Nvidia CEO Jensen Huang, along with OpenAI executives Clammy Sam Altman and Greg Brockman, went on CNBC to talk about how it was investing $100 billion in OpenAI to build 10 gigawatts of compute capacity, and that said deal was monumental in size, even though the deal was based on a memorandum of understanding. In the end, Huang would claim to Taiwanese journalists that this was, and I quote, never a commitment, and that Nvidia was invited to invest $100 billion and they were happy and honored as a result. In the end, Nvidia invested $30 billion in OpenAI six months after the announcement of the original deal, and OpenAI built 0 gigawatts of data center capacity as a result. Nobody's nerfect, you know, just these things happen. Things move crazy. $70 billion didn't happen. 10 gigawatts of capacity didn't get built. Not happened. Just completely fucking false. They did an interview on CNBC just like they did with this deal. I feel like I'm going insane. Anyway, on Monday night, Huang went on Twitter and delivered a seemingly AI written screed. Or maybe he's just a shitty writer about this theoretical partnership, adding that Nvidia would, and I quote, provide a residual value support mechanism for up to 25% of an opportunity assessed carefully on a project by project basis. And if you're wondering what that means, that makes two of us. That was very clearly Colette Kress, the cfo, cfo and the legal counsel just being like, Jensen, you will fucking run these. You will run this goddamn sentence. I will. I'll get the club, Jensen. Anyway, if I had to guess that 25% refers to Nvidia guaranteeing a certain amount of compute revenue for the company building the project. As in like, they will guarantee that, say if OpenAI can't afford to pay, they'll cover the costs up to 25%, which would in turn allow this developer to raise billions of dollars to buy Nvidia GPUs. This is actually very common. It's how core waves raised a bunch of debt. They go to the various financiers and they say, hey, look, I got a contract. I got a contract from a customer. Sometimes that customer is Nvidia, by the way. And the bankers go, oh shit, you got a guaranteed contract, huh? I'll give you the money for this. Yeah, you look like you're running out of money and we're going to need to do 9% interest, but fuck me up, grandpa. I should also add that none of this is actually real until actual contracts are signed and actual money is raised. And that Jensen Huang's word is effectively worthless. At this point. In the Twitter post, Huang also added two questions to, I imagine, alleviate concerns. He responded to the question of whether this was circular financing by saying that this initiative was built to address that concern, bringing independent long term institutional capital into the AI infrastructure market, before adding that the demand is real and it comes from Frontier AI Labs, followed by a series of other companies that do not have significant demand for AI compute. Ending by saying that this was the beginning of an open capital market for AI infrastructure, which means nothing. Just to be clear, this is absolutely circular financing. Nvidia is helping companies raise debt, offering a guarantee on that debt to make sure that the debt is issued. Also that Nvidia can be paid using the proceeds from that debt which Nvidia is guaranteeing. Its customers are companies that can quite literally not afford to buy its products, mostly because they lack an effective business model or the cash flows to do so. I'll add that it's also laughable to read someone say that the demand is real as they attempt to raise half a trillion dollars explicitly to create demand. Yet my favorite part was Jensen's last question, where is the return on investment? His answer was, I shit you not that the return is the usefulness of AI. Fuck off, man. Fuck you. Shut the fuck up.
[07:53]
Podcast Sponsor Announcer
Fuck.
[07:53]
Ed Zitron
Fucking motherfucker. That is not what return on investment refers to and you know it. Apparently the usefulness of AI is not significant enough to provide cash for your customers to pay. Outside of financial wizardry, that would make Andy Fastow blush. If there were actual diverse demand for Nvidia's GPUs commensurate with analyst expectations, you wouldn't have to do these bizarre, painfully circular deals that exist only to inflate your fucking revenues and further prop up the existence of unprofitable AI labs. You know this, Jensen, you're full of shit. Anyway, if Jensen Huang actually listens to that, I would be really surprised. If you know Jensen and want to play this for him, I really am just quite excited for it to eat. He's never going to hear it. He has no idea who I am. Who cares though? Anyway, anyway, this deal is about as real as Stargate and will work out much the same way. For those of you who forget, Trump, Altman, Ellison and Masayoshi son announced in January 2025 that they would be building $500 billion worth of AI infrastructure. Even though no actual money was raised, no partnership was created and genuinely no LLC was ever formed. In the end, Stargate was a name that got put on any OpenAI data center, no matter how it was funded, and mostly referred to Oracle's massive buildout for the least viable customer of all time. It was just a chance for Trump to get up there post inauguration and go, we're going to build the biggest buildings. It's my beautiful friend Larry and their nasty friend Sammy is a nasty, clammy little man. And yeah, I could do that for an hour. I'm just going to stop myself. In Jensen's case, I expect further data center deals to get funded by these asset managers that get referred to, in brief, as part of the 500 billion doll billion partnership with Nvidia. And I expect the media to dutifully say that too. They will help ratify this as they did with Stargate, even though not a single data center being built is part of a Stargate initiative of any kind, because one does not exist. Even though I should be clear, Jensen will do these deals and nothing has functionally changed. Nvidia has already been offering preferred pricing and guaranteed compute spend to inference providers. It already discussed backstopping OpenAI data centers. It already backstopped one of Core Weave's leases, and it will continue to do whatever it can to keep growth going and to sell more GPUs. Now, if you're wondering why they're doing all this craziness, it's because consensus analyst estimates for revenue for the next three years are utterly fucking insane. Nvidia made about $216 billion in fiscal year 2026, which ended on January 25, 2026. Frustrating? It's really annoying. And analyst expectations have it at $393.7 billion in fiscal year 2027, a little under doubling its revenue year over year. In fiscal year 2028, expectations are $565.7 billion. And in fiscal year 2029, Nvidia is expected to make $694 billion. Over 90% of its revenues come from selling GPUs and other data center hardware, so nothing else is going to make up the shortfall here. And I realize that's a lot of numbers, so I'll put it real simple. Nvidia is expected to sell over $1.6 trillion worth of GPUs by January 2029, and the V customers, including hyperscalers, are having to take out hundreds of billions of dollars worth of debt to pay for it, if they can even raise it. As I discussed last week, 70% of Microsoft, Google and Amazon's AI revenues come from OpenAI and Anthropic, meaning that the demand does not exist at remotely the scale necessary to justify this AI data center. CapEx Jensen Huang has no choice but to engage in the darkest arts of circular financing to keep up with investor expectations, but honestly, I think everyone's kind of running on empty. Anthropic is apparently having to reassure investors about the dangers of open source competition as it rushes towards a September or October ipo, adding that it's going to do stuff in biology to deal with the negative perspective that people might have on AI. Fucking laughable. OpenAI just lost COO Brad Lightcap a day after completing a $7 billion internal stock buyback, which is peculiar when a company does an employee share sale which is when insiders, like people who've worked there for years, sell their stock, they usually sell to external investors rather than the company's cash buying it. In fact, I looked around and I really struggled to find examples of this. Even SpaceX found dupes to sell it to. And every other OpenAI internal share sale involves selling to Thrive Capital or SoftBank. Is Masayoshi son not quite as horny? Is he not into it anymore? He's not getting his rocks off? Is this not the golden goose anymore? Masayoshi Son what's going on? Masayoshi Son why didn't you invest more? And I realized, by the way, this share sale was at the $852 billion valuation from March, so maybe they didn't want to double down. I don't know if you think this company's actually going to go public. It feels strange for you to sell at this point, unless, of course, you don't. But yeah, things are about to get a little desperate. The $500 billion deal didn't move the markets much, with Nvidia down about half a percent about an hour before market close, which means investors are no longer impressed by Jensen Huang's fantastical promises. And it worked really well last year. End of last year, you could just say, yes, we're going to sell a gazillion GPUs to this guy and the markets would give you 5, 10% on the day. Not so much anymore. The con's not working and I'll be here to shepherd you through wherever the con goes next and however insane it becomes as a result. Thanks as ever for listening.
[13:28]
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[13:59]
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[14:30]
Kalpen (Kal Penn)
Hey everyone, it's Kalpen. I'm inviting you to join the best sounding book club you've ever heard with my podcast, Hearsay, The Audible, and iHeart Audiobook Club. Every episode, I nerd out with amazing guests and dive into the best new audiobooks available on Audible. It's the book club for your ears. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts.
[14:59]
Tony Ayo
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[15:29]
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