The Enshittifinancial Crisis: Part One

Summary

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Better Offline – "The Enshittifinancial Crisis: Part One"

Host: Ed Zitron
Date: January 20, 2026
Podcast Network: Cool Zone Media & iHeartPodcasts

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Episode Overview

In this inaugural part of a four-part series, tech industry veteran Ed Zitron launches a scathing, deeply researched critique of the "enshittification" of the tech industry – a term coined by Cory Doctorow to describe the inevitable decline of digital platforms as they prioritize growth and shareholder value above all else. Zitron extends this analysis to what he terms the "enshittifinancial crisis," arguing that the rot now permeates the entire financial system, with stock market analysts, investors, and the media complicit in maintaining sky-high valuations even as the underlying products degrade and the numbers become ever more detached from reality.

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Key Discussion Points and Insights

1. What Is Enshittification? The Evolution of Platform Decline

• Three Phases of Enshittification [05:45]
  • Stage 1: Good for users – Platforms lure in users by being free, easy, or uniquely useful.
  • Stage 2: Good for business customers – Platforms shift to prioritize advertisers or business clients over end users, often degrading user experience for profit.
  • Stage 3: Good for shareholders; bad for everyone else – Both users and advertisers are squeezed for every last dollar as companies chase shareholder value at the expense of all other stakeholders.
• Zitron argues we're witnessing a fourth stage, where even investors, analysts, and the financial ecosystem are being "enshittified" as companies turn on them too. [15:41]
• Notable Quote:

  “We're now entering enshittification stage 4 where businesses turn on shareholders, analysts and investors have become trapped in the same kind of loathsome platform play as consumers and businesses...” — Ed Zitron [15:41]

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2. The Rot Economy: How Tech Has Lost Its Way

• Hypergrowth and Its Consequences [03:40]
  • The tech industry's last 15 years have been dominated by a "growth at all costs" ideology.
  • Most tech products and services have gotten worse; real-world needs (housing, healthcare, schools) go unaddressed in favor of financial speculation.
  • “The money does exist. It just exists for those that want to gamble.” [04:51]
• Artificial Scarcity of Investment for Ordinary People
  • Enormous funds flow to risky investment vehicles and corporate ploys, while individuals are told resources 'don't exist' for basic needs.

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3. How Platforms Die: Facebook/Meta as Exhibit A

• Zitron details the decay of Facebook, Instagram, and Meta:
  • Ads, Fraud, and AI Slop:
    • Meta (Facebook) now makes ~10% of its $16B annual revenue from scam ads and banned goods (Reuters, Nov. 2025). [08:25]
    • Meta uses accounting tricks (off-balance sheet loans for data centers) to obfuscate real costs.
    • Analyst reaction? Stock price targets are raised. No one in finance appears to care.
    • “I can find no analyst commentary on Meta making $16 billion on fucking fraud because it doesn't matter to them. Because this is the rot economy and all that matters is number go up.” — Ed Zitron [10:37]

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4. Stock Market Realities: “Number Go Up” and the Absurdity of Analyst Optimism

• The Disconnect Between Stock Price and Business Health
  • Stock valuations are increasingly about the perceived ability to keep growing, not real product value or profitability. [17:36]
  • “The value of a stock is not based on whether the business is healthy or its future even certain, but on its potential price to grow.”
• Sell-Side Analysts’ Complicity
  • Analysts rarely actually analyze; they say what the market wants to hear (“AI will be big!”), prop up hype cycles, and serve two masters: institutional investors behind the scenes and the public-facing “hot takes.”
  • “Any analyst who might hear this, I'm taking a lot of screenshots. I've been taking screenshots for several years.” [18:37]
  • Example: Massive investments in the Metaverse produced nothing, but analysts and media spent years defending Zuck’s vision.
  • “The defense appears to be give Zuck a chance. Now the Metaverse is quite dead. I should be clear…” [21:46]

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5. Accounting Gimmicks and Hidden Risks

• Changing Useful Life of Servers [24:25]
  • Hyperscalers (Microsoft, Meta, Google, Amazon) manipulate depreciation schedules on servers to minimize expenses, inflate reported profits, and avoid impairments.
  • “This is quite literally disconnected from reality and done based on internal accounting that we are not party to...” [26:11]
  • Real consequences: billions in reduced expenses, no analyst concern.
• Historical Example: The Dot-com Bubble [27:30]
  • Zitron cites the WinStar/Lucent deal (“$2B equipment and finance agreement to generate $100M in revenue over five years”).
  • Post-collapse, there was always an excuse: “There were a few bad apples. ... Otherwise, everything was fine.”

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6. Critical Reflection and Direct Call-Outs

• Perverse Incentives and Media Failure
  • Skeptical journalists or analysts are marginalized—herd mentality reigns. [31:56]
  • “A sell side analyst that tells you not to buy something is a problem. A journalist that is skeptical or critical ... is considered a hater… If you're an analyst listening to this, stop being a coward. Go read the numbers man. I've been doing it.”
• Retail Investors as Victims
  • Retail investors who believe the manufactured hype will lose out when the bubble pops.
• The Rotcom Bubble: No More Growth Ideology
  • AI hype is cover for a lack of real innovation or new ideas:
    • “They're only doing AI because they do not appear to have any other viable ideas to continue the economy's eternal growth at all costs.” [34:58]
  • Revenue claims for new “AI” products are minuscule relative to massive expenditures, yet the markets celebrate.
  • “Number go up. I'm an ape. I'm a buffoon. Number higher. Yay.” [35:53]
• Unanswered Questions: Where’s the Money Going?
  • Tech giants’ capital expenditures are in the hundreds of billions, but nobody knows (or asks) what exactly the money is buying or what the payoff will be. [38:55]
  • Zitron goes as far as tracing hardware flows through Taiwanese server manufacturers, questioning why he alone is investigating.

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7. Final Rant and Teaser for Part Two

• The financial world is in an abusive relationship with tech stocks, prioritizing “number go up” even as oversight vanishes and risk balloons.
• Recent hype cycles (AI, Metaverse, OpenAI-Oracle deals) rely on wild speculation, with financial media amplifying, not challenging, company narratives.
  • “Retail and institutional investors ... all acting with the disregard for the truth that comes from years of never facing a single consequence.” [41:51]
• Heavy foreshadowing: More specific case studies and data coming in the next episode.

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Notable Quotes & Memorable Moments

• On Wall Street's Ethical Blindness:

  “The free market is a fucking con... The financial system is not about an exchange of value, but whether or not you can enter into the currently agreed upon convenience by letting neoliberalism and the scourge of the free markets rule...” — Ed Zitron [05:27]

• On Meta’s Accounting Gimmicks:

  “Meta is using deliberate and insidious accounting tricks to act like a data center that it is paying to build and will be the sole tenant of is somehow an off-balance sheet operation. One would be wrong [to think investors care].” [09:41]

• On Analyst Herd Mentality:

  “Analysts, investors and even the media spend far more energy fighting the doubters than they do showing these companies scrutiny. Much like the user of an enshittified platform, investors and analysts are frogs in a pot.” [28:03]

• On Lack of Transparency in Tech:

  “We don't know where the money is going. These companies don't tell us anything. They don't tell us how many GPUs they have, or where those GPUs are, or how many of them are installed, or what their, their IT load capacity is, or how much money they cost to run, or how much money they even make.” [24:41]

• On the Absurd Scale of Expenditures:

  “Microsoft, Meta, Amazon and Google have spent $776 billion in capital expenditures in the space of three years. And even more so that analysts and investors, when faced with such egre numbers, sit back and say, oh yeah baby, oh yeah. They're building the infrastructure of the future, baby. We love this.” [40:11]

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Timestamps for Key Segments

• 00:00–02:29: [Intro, Ad Skips]
• 02:29–07:00: Zitron introduces the theme, “enshittification,” and the current state of tech capitalism
• 07:00–12:42: Illustration of Facebook/Meta’s decline, advertising fraud, and investor apathy
• 15:41–21:46: How companies now prey on investors and analysts, not just users
• 21:46–27:30: Analyst/media complicity, Metaverse boondoggle, and accounting sleight-of-hand
• 27:30–31:56: Historic examples from the dot-com bubble and recurring financial errors
• 31:56–38:55: On the perverse incentives and the Rotcom bubble, AI as smokescreen
• 38:55–41:51: “Where is the money going?” tracing tech’s capital expenditures, analyst failures
• 41:51–43:55: Analysts/retail investors abused by hype, preview for Part Two

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Summary and Takeaway

Zitron’s opening salvo in “The Enshittifinancial Crisis” is both damning and darkly witty—tracing how “enshittification” has metastasized from user experience to the heart of the tech-financial complex itself. The episode positions the tech industry and its enablers (analysts, investors, the business media) as complicit in a fiction where stock price and growth projections matter infinitely more than real product value, profitability, or transparency. As platforms rot and numbers become more surreal, Zitron warns that everyone—particularly the public fostered on endless growth narratives—is at risk as the cycle of hype and financial abuse continues.

Teaser:
Tune in to Part Two for concrete case studies, deeper analysis, and even more “enshittification.”

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Transcript

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[Ed Zitron (Better Offline Host)]

Call zone media. Hello and welcome to Better Offline. I'm your host, Ed Zitron. That's right folks, I am back. It's. Well, we've gone past ces, you've had your Steve Burke episodes as ever. Buy the merchandise subscribe to the Newsletter it's all in the notes and you are here for the first of a multi part series about the final and terminal stage of initiatification when the companies that turned on their individual users then turned on their business customers finally turn on the markets and investors themselves. Now, it's important to start this with a point, and that's A good friend of mine once told me that the more I learned about finance, the more pissed off I'd get. And I cannot think of anyone who has made a more egregious understatement in my life. I've spent the last two years basically teaching myself economics and all of this good stuff that I find genuinely really interesting. It's enriched my life and it's also driven me a little insane. As I'm sure many of you are well aware. The more I learn, the more frustrated I get because I'm not a genius by any extension. I don't even know if I think I'm that smart. But like this stuff is just sitting there. You can see it. There are many other people writing, like Edwin Gray, so Junior, Molly White, of course, Brian Merchant as well. These people have dug into these types of things, but nevertheless the mainstream, they're kind of missing something. And this four parter is about that. And it has of course a companion newsletter where I will have most of the links that you usually see in the link document. I feel like nobody likes that document anyway, so I'm going to find a better way of doing things. But let's get to it because there's this echoing melancholy to this entire era. And we're watching the end of Silicon Valley's hypergrowth epoch. And I'd say it's a horrifying result of 15 plus years of steering the tech industry away from solving actual problems and only really looking for eternal growth. Everything's more expensive and every tech product has gotten worse. Also, that every company can do AI, whatever the that means. We're watching one of the greatest wastes of money in history, all as people are told that there just isn't the money to build things like housing, or provide Americans with universal healthcare or better schools, or create the means for the average person to accumulate wealth in any way, shape or form. The money does exist. It just exists for those that want to gamble. Private equity firms, business development companies that exist to give money to other companies that are risky, yet regular people are too risky. Venture capitalists and banks that are getting desperate and need an overnight shot of capital from the Federal Reserve's overnight repurchase facility or discount window. Two worrying indicators of bank stress I need to get into in the future. No, no, no. The money does not exist for you or me or a person. Even money is for entities that could potentially funnel more money into the economy, even if the ways that these entities use the money are reckless and foolhardy because the system's intent on keeping entities alive incentivizes it. We are in an era where the average person is told to pull up their bootstraps, to work harder, to struggle more. Because as Martin Luther King Jr. Once said, it's socialism for the rich and rugged, free market capitalism for the poor. The free market is a fucking con. When you or I run out of money, our things are taken from us. We receive increasingly panicked letters with bigger fonts. We get phone calls and texts and emails and demands. We are told that all will be lost if we don't work it out somehow, because the financial system is not about an exchange of value, but whether or not you can enter into the currently agreed upon convenience by letting neoliberalism and the scourge of the free markets rule, modern society has created the conditions for what I call the intifinancial crisis. The place at which my friend Cory Doctorow and star of CES 2026 and his theory Enchitification, meets my own rot economy thesis in a fourth stage of inshitification. Now I'm going to quote an explanation of what inshitification is from the New Yorker and shittification unfolds in three phases. First, the company is, and I quote, good to users, drawing people in droves as funnel traps through Japanese Beatles with a promise of connection or convenience. Second, with that mass audience consolidated, the company is, and I quote, good to business customers, compromising some of its features so that the most lucrative clients, usually advertisers, can thrive on the platform. This second phase is the point at which, say, our Facebook feeds fill with ads and posts from brands. Third, the company turns the experience into, and I quote again, a giant pile of shit, making the platform worse for users and businesses alike in order to further enrich the company's owners and executives. Now I'm going to give you a more direct example and kind of bridge on some of the things said there. Facebook was at one point, a huge free platform much like Instagram that offered fast and easy access to basically everybody you knew. It acquired Instagram, of course, in 2012, to kill off a likely competitor and over time would start making both products worse. Clickbait notifications a mandatory algorithmic feed that deliberately, emotionally manipulated hundreds of thousands of people and stoked massive political division, eventually becoming full of AI slop and videos. Also, that Meta could continue to sell billions of dollars of ads a quarter. Per Kyle Checker of the New Yorker, Facebook's feed, now choked with AI generated garbage and short form videos, is well into the third act of initiatification. The third stage is critical in that it's when the company also turns on its business customers. A Marketing Brew story from September of 2024 told the tale of multiple advertisers who found their campaign switching to different audiences, wasting their money and getting questionable results. A New York Times story from 2021 described companies losing upwards of 70% of their revenue during a Facebook ads outage. Another from 2018 described how meta then Facebook deliberately hit issues with its measurement of engagement on videos from advertisers for over a year. That's their pivot to video. And more recently, Meta's ads tool started switching out top performing ads with AI generated ones, in one case targeting men aged 30 to 45 with an AI generated grandma, all without warning. The advertiser Meta doesn't give a shit because investors and analysts don't give a shit either. I could say sell side analysts here too, and those are the ones that are trying to get you to buy a stock, by the way. But based on every analyst report I've read from a major bank or hedge fund about a tech company, I truly think everybody is complicit. In November 2025, Reuters revealed that Meta projected in late 2024 that 10% of its annual revenue, which was $16 billion at the time, would come from advertisements with scams or banned goods. Mere weeks after Meta announced the ridiculous $27 billion data center package, one that used deep accountancy magic to keep it off of its balance sheet despite Meta guaranteeing the entirety of the loan. It's completely insane. And one would think this would horrify investors for two reasons. One, Meta's business is both supporting and profiting from organized crime, and that 10% of its revenue, it's also kind of dependent on it. And also number two, Meta is using deliberate and insidious accounting tricks to act like a data center that it is paying to build and will be the sole tenant of is somehow an off balance sheet operation. One would be wrong. Morgan Stanley said in mid December that is one of the handful of companies that can leverage its leading data distribution and investments in AI and raised Morgan Stanley's target to $750 with a $1,000 a share bull case. Meaning like they think if things go well it will be a thousand dollars a share. Wedbush raised Meta's price to $920 and bank of America staunchly held firm at $810, which is hundreds of dollars more than where we are today. I can find no analyst commentary on meta making $16 billion on fucking fraud because it doesn't matter to them. Because this is the rot economy and all that matters is number go up. This is this is going to be it's going to be a tough four part of folks I'm I'm my blood pressure's going to go through the fucking reality such as whether there's any revenue in AI or whether it's a good idea that Meta's spending $70 billion this year on CapEx, even though the product generates no revenue. And by the way, if you say to me Meta's AI ads play, that whole story is nonsense. And I love 404 but they got it wrong too. They are using bullshit metrics. They're not proving anything. Anyway, none of this matters to analysts because stocks are thoroughly, inextricably inshitified and analysts don't even realize that it's happening. Or if they do, they're just really craven and horrible fucking people that deserve to not have a job, let alone the job they currently have. Now let's go back to the whole initiatification thing. The stages of inshittification usually involve some kind of devil's deal, which I actually think analysts are in on. But let's get going. In stage one, things are good for the users, the platform is free, things are easy to use, and thus it's really simple for you and your friends to adopt and become dependent on it. You don't really trade anything quite yet, other than the fact that you're going to use this easy good platform that people like and all your friends are on. In stage two, things become bad for customers, but good for business customers. The platform begins forcing users to do profitable things like show them advertisements by making search results worse, such as with Google, or while making it difficult to migrate to another one, either through locking in your data or the tacit knowledge that moving platforms is hard and your friends are usually in one place. Take Instagram, for example. No one's leaving Instagram right now because there is no other competitor. Kind of by design, businesses sink tons of money into the platform knowing that users are unlikely to leave and make good money buying ads against the populace that increasingly stays because it has to, as there are no other options. In stage three, things become bad for consumers and businesses, but good for shareholders. The platforms begin to deteriorate to the point that usability is pushed to the brink. And businesses who are now dependent on the platform because monopolies have pushed out every alternative platform to advertise or reach customers on begin to see their product crumble, all in favor of shareholder capital, which only cares about stock value, net income and buybacks. You've probably seen where we're going, folks.

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[Ed Zitron (Better Offline Host)]

We'Re now entering initiatification stage 4 where businesses turn on shareholders, analysts and investors have become trapped in the same kind of loathsome platform players, consumers and businesses and face exactly the same kind of punishments through the devaluation of the stock itself. Where platforms have prioritized profits over the health and happiness of users or business customers, they're now prioritizing stock value over literally anything and have, through the remarkable growth of tech stocks in particular, created a placated and thoroughly whipped investor and analyst SEC that never asked questions and always celebrates whatever the next big thing is meant to be. And I hate to dunk on one guy, but go look up Daniel Newman on Twitter if you want to see what I mean. Someone just oinking at every thing that a company says, like whoa, Nvidia is going up. These people are very popular and people make stock decisions based on what they say. They're a problem. And the value of a stock is not based on whether the business is healthy or its future even certain, but on its potential price to grow. And analysts have, thanks to an incredible bull run of tech stocks going on over a decade, been able to say, I bet software will be big for most of the time going on CNBC or Bloomberg and bladly repeating whatever it is that a tech CEO just said, all without any worries about responsibility or the truth. And I just want to say, any analyst who might hear this, I'm taking a lot of screenshots. I've been taking screenshots for several years. And this is because big tech stocks and many other big stocks, if I'm honest, have made their lives easy as long as they don't ask questions. Number always seems to be going up for software companies, and all you need to do is provide a vociferous defense of the next big thing and come up with a smart sounding model that justifies eternal growth. This is entirely disconnected from the products themselves, which don't matter as long as, like I've said, number go up. If net income is high, meaning profit, and the company estimates it will continue to grow, then the company can do whatever the fuck it wants with the product it sells or the things that it buys. Software has eaten the world in the sense that Andreessen, Marc Andreessen, who wrote it, of course, got his wish with investors now caring more about the intrinsic value of software companies rather than the businesses or the products themselves. And because that's happening, investors aren't bothering to think too hard about the tech itself or the deteriorating products underlying these tech companies, because these guys have always worked it out and these companies have always managed to keep growing. As a result, nobody really looks too deep. Minute changes to accounting and earnings filings are ignored, egregious amounts of debt are waved off, and hundreds of billions of dollars of capital expenditures are seen as the new AI revolution versus a big huge waste of money by incentivizing the rot economy, making stocks disconnected from the value of the company. Beyond net income and future earnings, guidance companies have found ways to initiatify their own stocks, and shareholders will be the ones to suffer, all thanks to the very downstream pressure that they've chosen to ignore for decades. You see, while one might correctly say that the deterioration of products like Facebook and Google Search was a sign of desperation, it's important to also see it as the companies themselves orienting around what they believe analysts and investors want to see. You can also interpret this as a weakness, but I see it another way. Stock manipulation and a deliberate attempt to reshape what value means in the eyes of customers and investors. If the true value of a stock is meant to be based on the value of its business, cash flow and earnings, and of course, future growth, a company deliberately changing its products is an intentional interference with value itself, as are any and all deceptive accounting practices used to boost valuations. But the real problem, well, one of them is that analysts don't. Well, they don't seem to analyze, not at least if it goes against market consensus. That's why Goldman Sachs and JP Morgan and Futurum Group and Gartner and Forrester and McKinsey and Morgan Stanley all said that the Metaverse was inevitable because they do not actually care about the underlying businesses themselves, just their ability to grow on paper. Now I'm just going to click through to the future and groups thing. Let's see. Contemplating market criticism of Zuckerberg's Metaverse focus now. This is a really funny piece because you read it. Analysts take in some parallel universe. Zuckerberg would be credited as an entrepreneurial hero, an executive willing to invest in something big in order to create something bigger. Unfortunately for Zuckerberg, he lives here with us in this universe where $15 billion in investment so far has created a nerdy cyber wasteland that few people seem interested in visiting. The numbers are undeniably ugly. Blah, blah, blah, blah, blah. And of course we would have hoped for more progress. Blah, blah, blah. Meta's most deadly sin in managing the Metaverse initiative has nothing to do with adoption metrics or the money that has been allocated to these efforts. Rather, Meta's failure stems from its inability to communicate its vision properly. It's an ironic twist given the company's heritage in creating social media platforms designed to help billions of people communicate worldwide. This was written to defend the Metaverse. And I just want to be clear. The defense appears to be give Zuck a chance now the Metaverse is quite dead. I should be clear. And many of you have emailed me about this and I'm kind of calling one person out because I see these sell side analysts as genuinely harmful to society. I think people going out there and misleading. Well, in articles, actually. Let me take an aside here. You're gonna love this. This is not in the script. Matt, I apologize, but analysts have two customers, they have investors, and then they have you sell side analysts. They burp and fart on CNBC or Bloomberg and they say, hey, I will be big. Then behind the scenes they have a completely set different set of institutional investors they give the real info to. That should bother you. You ever read an analyst in an article? I'd be a little bit suspicious. I like Gil Luria of DA Davidson. Except even Gil just raised the target for core weave. Nothing has changed. Things have actually got worse with the economics but because the of the markets exist, analysts are tweaking things in public, in private, I don't know what they're saying, because you need to pay, I think, tens of thousands, if not more to get those reports. Anyway, that all aside, regular retail investors are the first to get inside in stage four. And by the way, if you ever need proof that none of these people actually give a fuck about value, it really was the Metaverse and the $77 billion that Mark Zuckerberg burned on it. And they create little revenue or shareholder value and burned all that money without any real explanation as to where it went. No, really, does anyone know where the money went? $77 billion went nowhere. You think it went into fucking glasses? Are you crazy? Even if they made hundreds of thousands of those glasses and they took, I don't know, $5 billion for Orion and the Meta ray bans, that I'm still having trouble working out where this cash went. I think one day we're going to find out. I think we're gonna find out something dodgy happened there. But nevertheless, the street didn't give a shit about the Metaverse because Meta's existent ads business continued to grow. Same as it didn't give a shit that Mark Zuckerberg burned those $70 billion on CapEx, even though we also don't really know where that's going either. In fact, that really is the story of the GPU era. We don't know where the money is going. These companies don't tell us anything. They don't tell us how many GPUs they have, or where those GPUs are, or how many of them are installed, or what their, their IT load capacity is, or how much money they cost to run, or how much money they even make. Why would we, why would we know that analysts don't even look at earnings beyond making sure they be on estimates. They've been whipped, trained for 20 years to take a puddle deep look at the numbers to make sure things vaguely look okay, look around at their peers and make sure nobody else is saying something bad and go on and collect fees and go on cnbc. And the same goes for hedge funds and banks, propping up these stocks rather than asking meaningful questions or demanding even more meaningful answers. In the last two years, every major hyperscaler has extended the useful life of its servers from three years to either five and a half or six years. And in simple terms, this allowed them to incur a smaller depreciation expense each quarter as a result boosting their income to Explain really simply. When you depreciate something you say okay, the useful life of this is six years and I'll spread the cost of that across six years. Or in this case you'd probably say three years for a gpu. But no, they've just said due to the magic of math is 6. So they get to spread it out for longer and claim it's more useful for longer so they don't have to do an impairment. Which is when you admit the real cost of something anytime soon it's wank. Nobody seems to cares. Nobody seems to cares. I'm keeping that. Anyway, those who were meant to be critical analysts and investors sinking money into these stocks had effectively no reaction. Despite the fact that Meta used per the Wall Street Journal, this adjustment to reduce this expense expenses by $2.3 billion in the first three quarters of 2025. This is quite literally disconnected from reality and done based on internal accounting that we are not party to. Every single tech firm buying GPUs did this and benefited to the tune of billions of dollars in decreased expenses which bumped their revenues. And analysts thought it was fine and dandy because number went up and they don't care. Shareholders are now subordinate to the shares themselves, reacting in the way that the shares demand they do, being happy for what the company's behind the shares give them. And analysts, investors and even the media spend far more energy fighting the doubters than they do showing these companies scrutiny. Much like the user of an initiative platform, investors and analysts are frogs in a pot. The experience of owning a stock deteriorating since Jack Welch and General Electric taught corporations that the markets are run with the kind of simplistic mindset built for grifter exploitation. And much like those platforms, corporations have found as many ways as possible to abuse shareholders, seeing what they can get away with, seeing how far they can push things as long as the numbers look right. Because analysts are no longer working in any sort of rational headspace, nor are they looking for sensible ideas. Let me give you an example I've used before. Back in November 1998, Windstar Communication signed and I quote a 2 billion dollar equipment and finance agreement with Lucent Technologies where Windstar would borrow money from Lucent to buy stuff from Lucent, all to create and I you notice $100 million in revenue over five years. Now we're going to go even further back in time now to December 1999 to a piece in Barons called in 1999 Tech Ruled. Allow me to quote a few paragraphs from it. Okay, here we Go. George Gilbert, who manages the Northern Technology Fund, predicts the Web centric worlds of consumer services and software will fare well next year, too. A lot of people are increasing their access to the Internet, says Gilbert. And E commerce and business networking are very high priorities for the Fortune 100. Lawrence York, leading portfolio manager of the WWW Internet Fund, is bullish on semiconductors, telecommunications and business to business or B2B E commerce software. But he's wary of online retailers. That model won't work long term, he asserts. His top B2B picks Ariba and Official Payments in wireless. He likes Windstar, Sienna and Annette Commun, which went public earlier this month. So what do you think Larry's scoreboard is? Do you think Larry did well or did he do badly? Let's find out. Annette bankrupt Windstar, horribly bankrupt. Had to sue Lucent while Sienna survived, it had spent over a billion dollars to acquire other companies, all in stock, of course, only to see its revenue dwindle basically overnight from $1.6 billion to $300 million as the optical cable industry collapsed. Now, one would have been able to work out that WinStar was a dog or that all of these companies were dogs if you were to look at the numbers such as how much they made versus how much they are spending and the demand for their services. I mean, I just put out a piece, a premium piece about the dot com bubble that I'll inevitably turn into a long one like this. But basically the signs were all blatant and obvious. But instead analysts, the media and banks chose to pump up these stocks because the numbers kept getting bigger. And when the collapse happened, rationalizations were immediately created. There were a few bad apples. Enron, Windstar, WorldCom. The fiber was useful and thus laying it was worthwhile and otherwise everything was fine. And just to be clear, some of those statements were true. It doesn't mean that any of these companies should have existed or that this growth should have happened at that speed. The problem in everybody else's mind at the time was that everybody had got a bit distracted and some companies that weren't good would die. All of that lost money was only a problem because it didn't pay off. This was a misplaced gamble. It taught tech executives one powerful lesson. Earnings must be good without fail, by any means necessary. Otherwise nothing else matters to Wall Stream. I mean, companies like Lucent did this, Windstar did this, Global Crossing did this. Outright frauds like Enron did this. They proved it again and again and again.

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It's all about incentives. A sell side analyst that tells you not to buy something is a problem. A journalist that is skeptical or critical of an industry in the midst of a growth or hype cycle is considered a hater. And God done. I know that analysts that do not sing the same tune as everybody else are marginalized, mocked and aggressively pleased. And I don't care. Stop being cowards. If you're an analyst listening to this, stop being a coward. Go read the numbers man. I've been doing it. I'm reading the numbers. I'm reading them to you on this episode. Go read the numbers. There's a reason that people want to talk to me. There's a reason that only the same people want to talk to you. You're useless. You're useless. If you're still saying this, it's a big My frustration, I'm going off topic again is that people are going to get hurt here. Retail investors who believe what they read in CNBC and Bloomberg about the AI bubble are going to get hurt. And the cowardice is what's going to hurt them now. The dot com bubble was actually a great time to start reevaluating how and why we value stocks the way that we do. To say, hey wait, that 2 billion dollar deal will only make $100 million in revenue. That's a pretty big minus Frito. Or this company spends $5 for every dollar it makes. That's not good. But nobody, it appears, remained particularly suspicious of the tech industry or a stock market that was increasingly orienting itself around conning shareholders and because shareholders, analysts and the media alike refused to retain a single shred of suspicion. Leaving the dot com era, the mania never actually subsided. Did financial publications still found themselves dedicated to explaining why the latest hype cycle was real? Journalists still found themselves told by editors that they had to cover the latest fad, even if it was nonsensical or clearly rotten. Analysts still grabbed their swords and rushed to protect the very companies that had spent decades misleading them and would continue to do so for decades more. Much like we spent years saying that Facebook was a good deal because it was free, Analysts and investors say tech stocks are great to hold because they keep growing, even if the reason they keep growing was a series of interlocking monopolies, difficult to leave platforms and impossible to fight traction and pricing, all of which have an eventual sell by date. Now, I get emails over this. I realize I'm pearl clutching over the amoral status of capitalism, the stock market, but hear me out. What if we're actually in a 15 to 20 year long knife catching competition? What if all anybody has done is look at cash flow, net income, future growth guidance and called it a day? A lack of scrutiny has allowed these companies to do effectively anything they want. But after worrisome questions like will this ever make a profit? Or where's that money going? What if we basically don't know what the fuck is going on? What if all of this is utterly senseless? And then we get to AI, which has accelerated the insitification of the stock market. Now, as I wrote back in 2024, the tech industry has run out of hypergrowth ideas facing something I call the Rotcom bubble. In simple terms, they're only doing AI because they do not appear to have any other viable ideas to continue the economy's eternal growth at all costs. Fandango. I think I'm just going to go with fandango there. Yet because growth hasn't slowed yet, analysts, the media and other investors are quick to claim that AI is paying off. Even if nobody has ever said how much AI revenue is being generated. Or in some cases such as Salesforce, they can say nearly $1.4 billion of annualized recurring revenue. Which sounds really big until you realize a company with with $10.9 billion in revenue a quarter is boasting about making less than $116 million in revenue in a month on something that has likely cost them billions to spin up. Nevertheless, because Salesforce set a new revenue target of $60 billion by 2030, which may as well be in a thousand years at this point, the Stock it jumped 4%. It doesn't matter that most agent force customers don't pay for the service or the AI isn't really, really making them any money, let alone profit or really anything but number go up. Look Ed. Number go up. I'm an ape. I'm a buffoon. Number higher. Yay. The era we live in is one of abject desperation to the point that analysts and investors and shareholders by extension will take any abuse from management. They will allow companies to spend as much money as they want in whatever ways they want, as long as it continues the charade of number go up or charade for my British users. Let me spell it out a little more though, using the earnings of various hyperscalers as an example. According to its latest quarterly filings, Microsoft spent $34.9 billion on capital expenditures, the most of any of the big four hyperscalers, followed by Amazon with 34.2 billion, Google with 24 billion, and met with $19.37 billion. The common mantra is that these companies are spending all this money on GPUs, but that doesn't really match up with Nvidia's revenues. Nvidia's last quarterly earnings said that four direct customers made up more than 10% of revenue, 22%, 15%, 13% and 11%, representing no more than $12.54 billion out of $57 billion of revenue. And as you look back through earlier quarters, you see the discrepancies grow. Where exactly is this money going? In Microsoft's latest earnings first quarter fiscal year 2026 is set. That $19.39 billion went to additions to property and equipment, with roughly half of its total capex spend on short lived assets, primarily GPUs and CPUs. A quarter back, additions to property and equipment was $16.74 billion, with roughly half of that spent on long lived assets that will support monetization over the next 15 years and beyond. What does that mean? Who fucking knows? I looked, I went and I looked, I read every fucking analyst report I could about that sorry son of a bitch company Microsoft. And I could not find one person who went in. What, Q3? It was yeah, Q4 FY 2025. Couldn't find a single one of them that even found that. Weird. Like, I don't know, those of you got kids, if they're like I did my homework, you, you probably want to check, right? Yeah. But if they're a company with like a 4 trillion dollar market cap, no problem mate, we're all good. Oh, you're public. I know. I could probably ask more, but I'm not gonna. But. Well, let's assume that Microsoft is Nvidia's biggest customer. Every quarter the pseudonymous customer A from Nvidia's earnings that it mentions in its mandatory SEC filings spent $12.5 billion with Nvidia at $34.9 billion in total CapEx spending from Microsoft. And before that? $10.7 billion out of $21.4 billion. And in the quarter before that, $7 billion out of 22.6 billion. If we guesstimate based on a split of various models of Nvidia's Blackwell GPU systems and in earlier quarters older models, that works to like like 457 megawatts of it load for the first quarter, 391 megawatts for the fourth quarter of 2025 and 263 megawatts for the third quarter of 2025. So has Microsoft built that many data centers? 1.11 gigawatts of data centers apparently. It claims it added 2 gigawatts of data centers in the last year, but Satya Nadella claimed in November that Microsoft had chips and inventory it couldn't install due to a lack of power. In any case, where did those tens of billions of dollars of Where'd they go? We know there are finance leases which are basically just loans. What are they for? More GPUs? What's the actual output of the expenditures? Now, I previously wrote in this script that we have no idea, but I actually found out to an extent. So this will be a future episode because it's a whole separate thing. But the way that these, these big companies, the hyperscalers are doing it is they're actually threading their GPUs through Taiwan. There are companies like Hon Hai Precision Corporation Limited which is better known as Foxconn, Quanta Computing, Wishtrend. We win. There are others too. Nevertheless, these are big Taiwanese server companies that buy the GPS from Nvidia and then, then they ship them to Microsoft or Meta or Google or Oracle. Nevertheless, why am I the person who went and find that out? Why am I the guy? I'm just a fella. I'm just a one dipshit with Google. Why the fuck am I the guy? Well, the answer might be because. Well, I have a theory and it's that analysts and investors are in an abusive relationship with tech stocks. It is fundamentally insane that Microsoft meta, Amazon and Google have spent $776 billion in capital expenditures in the space of three years. And even more so that analysts and investors, when faced with such egre numbers, sit back and say, oh yeah baby, oh yeah. They're building the infrastructure of the future, baby. We love this. Analysts and traders and investors and reporters do not think hard about the underlying numbers because doing so immediately makes you run head first into a number of worrying questions such as where did all the money go? Will this pay off? And how many GPUs do they actually own? Analysts have on some level become the fractional marketing team for the stocks they're investing in him When Oracle announced its 300 billion dollar deal with OpenAI in September, one that Open AI does not have the money to pay and Oracle doesn't have the capacity to fill, analysts heaved and stammered like horny teenagers seeing their first boob. Now I'm going to quote CNBC here and do some artistic, some editorializing. John Defuki sorry, John defuci. I guess I'm not fixing that From Guggenheim Security said he was blown away. TD Cohen's Derrick Wood called it a momentous quarter and Brad Zelnick of Deutsche bank said we're all kind of, oh, we're in shock in a very good way. There's no better evidence of a seismic shift happening in computing than these results that you you just put up, sonic said on the earnings call, adjusting his trousers. That trouser thing was an addition. That's a parody. Anyway, these are the same people that retail and institutional investors rely upon for advice on what stocks to buy, all acting with the disregard for the truth that comes from years of never fac facing a single consequence. Three months later and Oracle has lost basically all of the stock bump it saw from the OpenAI deal, meaning that any regular person, any retail investor that YOLO'd into that trade because, say, I don't know, analysts from major institutions and the media said it was a good idea and news outlets didn't ask questions. Well, they got their asses kicked, they lost everything and please spare me. Oh they shouldn't trade off of analyst. That's the kind of victim blaming that allows these revered to continue fighting out these meaningless calls and making money doing so. In reality, we're in an era of naked, blatant shameless stock manipulation, both privately and publicly, because a stock no longer refers to a unit of ownership in a company so much as it is a chip. At a casino, where the house constantly changes the rules, perhaps you're able to occasionally catch the house showing its hand, and perhaps the house meant for you to see it. Either way, you are always behind because the people responsible for buying and selling stocks at scale under the auspices of knowing what's going on don't seem to know what they're talking about or don't care to find out. You want examples? I'll give you some fucking examples. Tune in tomorrow. I love doing this show. I love doing these episodes. Catch you then. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osowski. You can check out more of his music and audio [e-mail] M A T T O S O W S K I dot com youm can email me at ezeteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat wheresyoured at to visit the Discord and go to r betteroffline to check out our rifle it. Thank you so much for listening.

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