Big Technology Podcast Summary: "Are AI's Economics Unsustainable? — With Ed Zitron"

Released on July 23, 2025

Introduction

In the latest episode of the Big Technology Podcast, host Alex Kantrowitz engages in a critical discussion with Ed Zitron, a prominent tech critic, about the financial viability of the artificial intelligence (AI) industry. Ed Zitron, known for his ownership of ezpr, hosting Better Offline, and authoring the Where's Your Ed At? newsletter, presents a sobering analysis of the economic underpinnings of major AI players, particularly OpenAI.

Financial Sustainability of AI Companies

Ed Zitron opens the conversation by highlighting the staggering financial losses incurred by OpenAI. He states, “[...] OpenAI will burn probably $12, $13 billion after revenue this year” (01:10). Zitron emphasizes that OpenAI lacks a clear path to profitability, questioning the feasibility of their projections to achieve profitability through Stargate, an enigmatic project he describes as “magical” (02:00). He contrasts this with other tech giants, pointing out that even Microsoft's AI revenue is modest compared to the industry's projected needs.

Zitron draws parallels to companies like Uber, which, despite significant losses, continue to operate based on their unique business models. However, he contends that the AI industry's financial model is fundamentally different and more precarious, citing massive capital expenditures and minimal revenue growth.

AI vs Traditional Search Engines

A significant portion of the discussion revolves around the potential of AI to replace traditional search engines like Google. Zitron argues that while ChatGPT and similar large language models (LLMs) demonstrate superior capabilities in understanding and inferring user intent, they struggle to scale into profitable search businesses. He notes, “[...] What you actually have to do is build a very different company because selling advertisements is fundamentally different from selling consumer ChatGPT subscriptions or enterprise services” (09:27). Zitron criticizes the inefficiency and high costs associated with transforming AI into a robust search platform, highlighting the lack of infrastructure ownership by OpenAI.

Funding and Investment Concerns

The conversation shifts to the complex funding landscape of AI companies. Zitron discusses the precarious relationship between OpenAI and major investors like Microsoft and SoftBank, revealing that OpenAI is heavily reliant on continuous capital infusion to sustain operations. He warns of a potential financial bubble, comparing the situation to the subprime mortgage crisis, where the lack of tangible assets and unsustainable financial practices could lead to widespread economic repercussions.

Zitron raises concerns about OpenAI's inability to generate substantial revenue despite aggressive marketing and high valuations. He states, “[...] That's their conversion rate. That's bad, man. It means that they can't work out and no one else can work out what the hell to sell this on” (58:16). This skepticism extends to the broader AI investment environment, where massive capital is poured into projects with dubious economic returns.

Alternative AI Use Cases

While critiquing the core business models, Zitron acknowledges some value in AI applications like coding assistants. He concedes, “[...] They are valuable in the sense that software engineering loves automating, they love shortcuts” (22:02). However, he remains doubtful about their scalability and reliability, citing issues like hallucinations in code generation that undermine trust and utility.

Furthermore, the episode touches on the controversial use case of AI companionship. Zitron expresses concern over individuals forming emotional attachments to AI, describing it as a symptomatic issue of a “decentralized society” lacking shared physical spaces for human interaction (43:33).

Media and Marketing Criticism

Zitron is openly critical of how media and tech leaders portray AI advancements. He accuses figures like Sam Altman and journalists like Kevin Roose of fostering unrealistic expectations without substantiating the actual technological progress. “[...] The idea that Tech Meme had Sam Altman's gentle singularity. We should be calling 911 and doing a welfare check on that man” (89:55). This, he argues, perpetuates public fear and misunderstanding, akin to previous tech bubbles like the Metaverse and crypto.

Conclusions and Outlook

Ed Zitron concludes with a bleak outlook on the AI industry's financial trajectory. He warns of unsustainable growth models, potential investor losses, and the broader economic impact of an AI bubble bursting. “[...] These numbers are alarming and I am shocked and actually kind of disgusted at some people in the media for not being more alarmed” (63:13). Zitron calls for greater transparency and critical analysis from both the media and tech companies to mitigate the risks posed by current AI economic practices.

Notable Quotes

• “OpenAI will burn probably $12, $13 billion after revenue this year. They also have no path to profitability.” — Ed Zitron (01:10)

• “The current combined revenue of all the generative AI companies is like, and that's including the big tech companies, is about $35, $40 billion dollars. It's insane, man. It's insane. And eventually this has to stop. It has. The growth is not there.” — Ed Zitron (03:45)

• “They've got all the king's horses and all the king's men. You have Google, you have Apple, you have Salesforce, you have ServiceNow. You have all these companies who could not talk about AI more if they tried. Where is the agent?” — Ed Zitron (15:10)

• “No one’s bloody done it. You have all the king's horses and all the king's men. You have Google, you have Apple, you have Salesforce, you have ServiceNow. You have all these companies who could not talk about AI more if they tried. Where is the agent?” — Ed Zitron (37:48)

• “These numbers are alarming and I am shocked and actually kind of disgusted at some people in the media for not being more alarmed.” — Ed Zitron (63:13)

Conclusion

This episode of the Big Technology Podcast provides a critical examination of the AI industry's financial health, highlighting significant concerns about sustainability, profitability, and the broader economic implications of current business models. Ed Zitron's insights serve as a counterbalance to the often unbridled optimism surrounding AI, urging stakeholders to adopt a more measured and financially prudent approach.