WEBVTT 00:00:03.541 --> 00:00:04.551 And now, 00:00:04.991 --> 00:00:08.281 a very special Meatware Nightly. 00:00:08.891 --> 00:00:09.711 Five companies. 00:00:09.731 --> 00:00:11.281 One circle. 00:00:11.281 --> 00:00:14.671 And a lot of money that keeps coming back around. 00:00:14.671 --> 00:00:15.881 Tonight, 00:00:16.741 --> 00:00:20.431 Diane and Chip learn a hard lesson about promises, 00:00:20.431 --> 00:00:25.371 about borrowed money, and about who pays the power bill when the music stops. 00:00:25.371 --> 00:00:27.541 Parents, you may 00:00:27.961 --> 00:00:29.891 wish to check your retirement account. 00:00:29.891 --> 00:00:30.791 The 00:00:32.661 --> 00:00:33.561 Loop. 00:00:35.875 --> 00:00:36.735 Good evening. 00:00:36.755 --> 00:00:39.045 This is a special edition of the evening feed, 00:00:39.395 --> 00:00:41.195 and it's Tuesday, November 3rd, 00:00:41.355 --> 00:00:42.255 2026. 00:00:43.845 --> 00:00:44.745 I'm Diane Vale. 00:00:45.308 --> 00:00:46.368 And I'm Chip Sterling. 00:00:46.708 --> 00:00:48.368 Diane, I bought a whiteboard. 00:00:49.041 --> 00:00:51.231 For tonight we are doing one story. 00:00:51.871 --> 00:00:53.721 The money between OpenAI, 00:00:53.951 --> 00:00:57.061 Oracle, Nvidia, Microsoft and Amazon. 00:00:57.681 --> 00:00:59.341 Who pays whom, for what, 00:00:59.521 --> 00:01:01.431 and how the same money goes around. 00:01:02.008 --> 00:01:02.908 Five companies. 00:01:03.808 --> 00:01:04.708 One circle. 00:01:04.748 --> 00:01:06.028 And the man in the middle of it, 00:01:06.098 --> 00:01:07.358 Sam Alternative-Man. 00:01:08.075 --> 00:01:08.975 Altman. 00:01:09.275 --> 00:01:10.335 That's the short version. 00:01:11.008 --> 00:01:14.618 And at the end, what any of it has to do with a retirement account. 00:01:16.078 --> 00:01:17.228 Because if you have one, 00:01:17.408 --> 00:01:19.228 you are probably in this story. 00:01:19.775 --> 00:01:20.675 I have one! 00:01:20.675 --> 00:01:21.665 I'll be in the story! 00:01:22.675 --> 00:01:25.075 Start in January of last year. 00:01:26.555 --> 00:01:28.465 At the White House, OpenAI, 00:01:28.615 --> 00:01:31.255 Oracle and SoftBank announced Stargate. 00:01:31.655 --> 00:01:36.315 CBS News and the Washington Times reported a hundred billion dollars to start, 00:01:36.685 --> 00:01:39.275 and up to five hundred billion over four years, 00:01:39.515 --> 00:01:41.405 to build data centers in America. 00:01:41.975 --> 00:01:43.035 Five hundred billion. 00:01:44.445 --> 00:01:46.615 Diane, that's a lot of buildings. 00:01:47.308 --> 00:01:49.468 It is mostly buildings full of chips. 00:01:50.518 --> 00:01:52.378 Which brings us to Nvidia. 00:01:53.588 --> 00:01:58.458 In May of last year, DatacenterDynamics and TechSpot reported Oracle would 00:01:58.458 --> 00:02:01.808 spend about forty billion dollars on Nvidia chips, 00:02:02.208 --> 00:02:04.158 roughly four hundred thousand of them, 00:02:04.508 --> 00:02:06.568 for the first Stargate site in Abilene, 00:02:06.568 --> 00:02:07.468 Texas. 00:02:07.975 --> 00:02:09.475 Oracle buys from Nvidia. 00:02:09.615 --> 00:02:10.515 Arrow one. 00:02:10.675 --> 00:02:11.445 I 00:02:11.465 --> 00:02:12.365 love an arrow. 00:02:12.875 --> 00:02:13.855 Arrow two. 00:02:15.135 --> 00:02:18.935 In September, The Register and DatacenterDynamics reported, 00:02:19.145 --> 00:02:21.105 citing people familiar with the deal, 00:02:21.415 --> 00:02:26.105 that OpenAI agreed to buy about three hundred billion dollars of computing from 00:02:26.135 --> 00:02:27.035 Oracle, 00:02:27.135 --> 00:02:28.755 over roughly five years, 00:02:28.835 --> 00:02:30.205 starting in 2027. 00:02:31.795 --> 00:02:34.835 Neither company has ever confirmed the dollar figure. 00:02:35.308 --> 00:02:36.858 OpenAI pays Oracle. 00:02:37.458 --> 00:02:38.728 Oracle pays Nvidia. 00:02:39.428 --> 00:02:40.368 And then what, Diane? 00:02:40.588 --> 00:02:42.258 Does the money just sit at Nvidia? 00:02:43.141 --> 00:02:44.041 Arrow three. 00:02:45.261 --> 00:02:49.651 Twelve days later, Nvidia and OpenAI signed a letter of intent. 00:02:50.631 --> 00:02:52.421 In Nvidia's own press release, 00:02:52.661 --> 00:02:56.841 Nvidia said it intends to invest up to one hundred billion dollars in 00:02:56.901 --> 00:02:59.241 OpenAI, a piece at a time, 00:02:59.531 --> 00:03:02.631 as each gigawatt of Nvidia systems is deployed. 00:03:03.375 --> 00:03:04.865 Nvidia pays OpenAI! 00:03:05.035 --> 00:03:05.965 To buy Nvidia! 00:03:06.075 --> 00:03:06.975 Through Oracle! 00:03:07.065 --> 00:03:08.405 Diane, I've drawn a circle! 00:03:08.975 --> 00:03:13.415 Fortune ran a piece within the week asking whether this was circular financing. 00:03:14.935 --> 00:03:18.095 The Register later called it the trillion-dollar loop. 00:03:18.708 --> 00:03:19.958 I'm going to go round it again. 00:03:20.138 --> 00:03:21.038 Faster. 00:03:22.528 --> 00:03:23.078 Done. 00:03:23.098 --> 00:03:25.148 I'm back where I started and I'm richer. 00:03:25.198 --> 00:03:26.098 Is that allowed? 00:03:26.675 --> 00:03:27.575 On paper. 00:03:28.805 --> 00:03:31.985 Each company counts the next one's promise as its own growth. 00:03:32.655 --> 00:03:34.595 Nobody is accused of anything. 00:03:35.225 --> 00:03:38.105 It is the shape of the deal that people are asking about. 00:03:38.641 --> 00:03:39.661 ...So it's not a crime. 00:03:39.851 --> 00:03:40.751 It's a shape. 00:03:41.108 --> 00:03:41.858 It's a shape. 00:03:41.878 --> 00:03:42.788 Keep the whiteboard. 00:03:43.028 --> 00:03:44.558 We're going to need more arrows. 00:03:45.608 --> 00:03:48.918 Oracle first, because Oracle is the one that borrows. 00:03:49.998 --> 00:03:54.608 In September of last year Oracle reported a backlog of signed future 00:03:54.608 --> 00:03:58.048 business, which it calls remaining performance obligations, 00:03:58.358 --> 00:04:01.148 of four hundred and fifty-five billion dollars. 00:04:02.218 --> 00:04:04.298 The stock hit a record the next day. 00:04:04.908 --> 00:04:06.908 Remaining performance obligations. 00:04:08.068 --> 00:04:09.598 Diane, I have those. 00:04:10.748 --> 00:04:12.088 It's called a gym membership. 00:04:12.338 --> 00:04:13.288 I have never been. 00:04:13.975 --> 00:04:18.845 As of August this year, Oracle reported that backlog at six hundred and sixty-four 00:04:18.845 --> 00:04:19.705 billion. 00:04:19.725 --> 00:04:22.575 Reuters reported OpenAI is about half of it. 00:04:23.141 --> 00:04:24.041 Half! 00:04:24.571 --> 00:04:26.381 One customer is half the store. 00:04:27.351 --> 00:04:28.291 That's not a store. 00:04:28.441 --> 00:04:29.341 That's a date. 00:04:29.708 --> 00:04:30.898 Investors noticed. 00:04:32.308 --> 00:04:37.118 Bloomberg reported in January that Oracle shares had fallen more than half from 00:04:37.118 --> 00:04:38.018 that record, 00:04:38.308 --> 00:04:42.758 erasing about four hundred and sixty-three billion dollars in market 00:04:42.758 --> 00:04:43.658 value. 00:04:44.008 --> 00:04:46.148 ...Four hundred and sixty-three billion. 00:04:46.318 --> 00:04:47.218 Gone where? 00:04:47.641 --> 00:04:48.541 Nowhere. 00:04:48.661 --> 00:04:49.571 It was a price. 00:04:49.841 --> 00:04:50.741 Then the debt. 00:04:51.491 --> 00:04:55.971 Oracle carried about a hundred and twenty-five billion dollars of it at the 00:04:56.021 --> 00:04:56.921 August. 00:04:57.611 --> 00:05:01.951 In July, S and P cut its credit rating to triple-B-minus. 00:05:02.701 --> 00:05:04.571 That is one step above junk. 00:05:05.075 --> 00:05:06.065 One step! 00:05:06.425 --> 00:05:08.095 Diane, that's the top step. 00:05:08.305 --> 00:05:10.065 Everybody trips on the top step. 00:05:10.741 --> 00:05:13.761 And the market's price for insuring Oracle's debt. 00:05:15.151 --> 00:05:19.851 CNBC reported its five-year credit default swaps near two hundred and 00:05:19.851 --> 00:05:21.791 ninety-two basis points last month, 00:05:22.281 --> 00:05:24.471 up from under a hundred a year ago. 00:05:25.801 --> 00:05:29.131 Axios had it at about two hundred and ninety-four today. 00:05:29.741 --> 00:05:31.151 A credit default swap. 00:05:32.521 --> 00:05:33.421 I know this one. 00:05:33.601 --> 00:05:37.031 It's a get-well card you buy for a company before it's sick. 00:05:37.541 --> 00:05:39.171 It's insurance on a promise. 00:05:40.231 --> 00:05:43.791 And every month, the market charges more to insure Oracle's. 00:05:44.508 --> 00:05:45.538 ...That's a worse card. 00:05:46.275 --> 00:05:51.155 Yesterday, CNBC, Quartz and Bloomberg reported Oracle filed to raise 00:05:51.155 --> 00:05:55.255 twenty billion dollars, half in new stock and half in new bonds, 00:05:55.405 --> 00:05:56.395 to pay for the build. 00:05:57.545 --> 00:05:58.505 The shares fell. 00:05:59.141 --> 00:06:02.751 They borrowed money to build the thing that pays back the money they borrowed! 00:06:03.341 --> 00:06:05.021 The other side, fairly. 00:06:06.431 --> 00:06:10.681 Quartz reports Oracle says it has capped new money from the markets at twenty 00:06:10.681 --> 00:06:12.571 billion dollars through 2030, 00:06:13.121 --> 00:06:17.591 and it is targeting positive free cash flow in the second half of 2028. 00:06:18.508 --> 00:06:19.408 A cap! 00:06:19.588 --> 00:06:20.488 On the borrowing! 00:06:20.638 --> 00:06:23.278 Diane, that's my favorite kind of promise. 00:06:23.498 --> 00:06:24.788 The kind with a number in it. 00:06:25.741 --> 00:06:26.641 Nvidia. 00:06:27.171 --> 00:06:30.701 Remember arrow three, up to one hundred billion dollars. 00:06:32.191 --> 00:06:33.661 In November of last year, 00:06:33.891 --> 00:06:38.361 Nvidia's quarterly filing said there was no assurance it would reach definitive 00:06:38.361 --> 00:06:39.901 agreements with OpenAI. 00:06:40.951 --> 00:06:43.131 TechRadar reported the filing. 00:06:44.011 --> 00:06:47.581 In December, Fortune reported Nvidia's finance chief, 00:06:47.741 --> 00:06:49.691 Colette Kress, telling investors, 00:06:49.691 --> 00:06:50.591 quote, 00:06:51.341 --> 00:06:54.251 We still haven't completed a definitive agreement. 00:06:54.975 --> 00:06:55.875 Up to! 00:06:55.905 --> 00:06:57.315 The two biggest words in money, 00:06:57.315 --> 00:06:58.215 Diane. 00:06:59.435 --> 00:07:00.215 Up to. 00:07:00.235 --> 00:07:01.655 I'm up to seven feet tall. 00:07:02.641 --> 00:07:03.401 In 00:07:03.421 --> 00:07:08.241 March, Bloomberg and CNBC reported Jensen Huang said investing a 00:07:08.241 --> 00:07:10.401 hundred billion in OpenAI was, 00:07:10.401 --> 00:07:12.881 quote, probably not in the cards. 00:07:13.911 --> 00:07:18.581 He said Nvidia's next investment in OpenAI might be its last before 00:07:18.621 --> 00:07:20.021 OpenAI goes public. 00:07:20.575 --> 00:07:22.135 ...So the hundred billion was a letter. 00:07:22.875 --> 00:07:23.775 Of intent. 00:07:25.015 --> 00:07:26.975 What Nvidia actually put in, 00:07:27.095 --> 00:07:30.435 CNBC and Bloomberg reported at the end of March, 00:07:30.815 --> 00:07:32.675 was thirty billion dollars of stock, 00:07:33.095 --> 00:07:37.755 inside a hundred and twenty-two billion dollar round that valued OpenAI 00:07:37.975 --> 00:07:40.245 at eight hundred and fifty-two billion. 00:07:40.775 --> 00:07:42.195 Thirty out of a hundred. 00:07:43.665 --> 00:07:45.305 That's a passing grade, Diane. 00:07:45.495 --> 00:07:46.395 Barely. 00:07:46.708 --> 00:07:47.728 Then August. 00:07:48.938 --> 00:07:50.848 Nvidia's own quarterly filing, 00:07:50.998 --> 00:07:52.848 reported by Data Center Knowledge, 00:07:53.038 --> 00:07:57.248 says it guaranteed up to one hundred and five billion dollars of 00:07:57.298 --> 00:07:59.428 OpenAI's lease and power payments, 00:07:59.678 --> 00:08:01.598 for a new campus in Pike County, 00:08:01.598 --> 00:08:02.498 Ohio. 00:08:03.318 --> 00:08:04.698 Twenty-year leases. 00:08:05.528 --> 00:08:09.298 The building hosts Nvidia equipment that OpenAI will rent. 00:08:10.041 --> 00:08:11.431 Nvidia co-signed the lease! 00:08:11.651 --> 00:08:14.071 Diane, Nvidia is OpenAI's dad! 00:08:14.775 --> 00:08:15.895 Read the footnote. 00:08:16.475 --> 00:08:18.185 The guarantee is not cash. 00:08:19.285 --> 00:08:21.105 It starts in fiscal 2029. 00:08:21.545 --> 00:08:23.485 It shrinks as OpenAI pays. 00:08:23.995 --> 00:08:27.425 It ends if OpenAI earns a satisfactory credit rating. 00:08:28.565 --> 00:08:32.515 And OpenAI has to pay Nvidia back for anything Nvidia pays. 00:08:35.365 --> 00:08:37.685 I'm the only being who has ever read that footnote. 00:08:38.408 --> 00:08:39.428 And one more ring. 00:08:40.828 --> 00:08:45.818 CNBC reported Nvidia placed a six point three billion dollar order with 00:08:45.818 --> 00:08:47.378 the cloud company CoreWeave, 00:08:47.818 --> 00:08:51.348 agreeing to buy any of CoreWeave's capacity it can't sell, 00:08:51.638 --> 00:08:53.068 through April 2032. 00:08:54.528 --> 00:08:57.178 CoreWeave sells capacity to OpenAI. 00:08:58.668 --> 00:09:03.338 Axios reported last month CoreWeave carries about thirty-five billion dollars 00:09:03.338 --> 00:09:04.238 debt. 00:09:04.408 --> 00:09:05.918 Nvidia buys the leftovers! 00:09:07.288 --> 00:09:08.998 From a company that buys Nvidia! 00:09:09.138 --> 00:09:11.458 That's a buffet that eats itself. 00:09:12.175 --> 00:09:14.795 And Nvidia's rival found its own way in. 00:09:15.335 --> 00:09:20.335 Last October, AMD and OpenAI announced a deal for six gigawatts of 00:09:20.395 --> 00:09:21.415 AMD chips. 00:09:21.845 --> 00:09:26.755 AMD's own release and The Register reported AMD gave OpenAI 00:09:26.785 --> 00:09:30.765 a warrant for up to a hundred and sixty million AMD shares, 00:09:31.055 --> 00:09:35.885 at one cent each, unlocking as OpenAI deploys the chips and as 00:09:35.945 --> 00:09:38.095 AMD's stock price hits targets. 00:09:38.675 --> 00:09:39.665 A penny a share! 00:09:41.035 --> 00:09:45.655 Diane, AMD pays its customer in AMD to become a customer of AMD. 00:09:46.308 --> 00:09:50.938 DatacenterDynamics reported the first gigawatt of those chips was due to start 00:09:50.938 --> 00:09:52.428 the second half of this year. 00:09:52.975 --> 00:09:56.125 So the customer gets paid more if the stock goes up. 00:09:57.235 --> 00:09:59.835 And the stock goes up if the customer shows up. 00:10:00.965 --> 00:10:03.755 Diane, that's a seesaw with one kid on it. 00:10:04.775 --> 00:10:06.075 You asked for more arrows. 00:10:06.305 --> 00:10:07.775 Microsoft and Amazon. 00:10:08.475 --> 00:10:09.165 The big boys! 00:10:09.185 --> 00:10:10.205 I've shopped at both! 00:10:10.941 --> 00:10:12.161 Microsoft first. 00:10:13.431 --> 00:10:15.901 When OpenAI restructured last October, 00:10:16.091 --> 00:10:20.441 Tom's Hardware and Business Standard reported Microsoft kept a stake of about 00:10:20.441 --> 00:10:21.681 twenty-seven percent, 00:10:22.231 --> 00:10:25.581 valued at about one hundred and thirty-five billion dollars. 00:10:26.701 --> 00:10:31.221 In the same deal, OpenAI committed to buy two hundred and fifty billion 00:10:31.221 --> 00:10:33.671 dollars of Microsoft's Azure cloud. 00:10:34.441 --> 00:10:36.851 Microsoft owns a piece of OpenAI, 00:10:37.061 --> 00:10:39.591 and OpenAI owes Microsoft rent. 00:10:40.721 --> 00:10:41.391 Arrow. 00:10:41.411 --> 00:10:42.141 Arrow. 00:10:42.161 --> 00:10:43.061 It's 00:10:43.821 --> 00:10:45.021 a doorway, Diane. 00:10:45.201 --> 00:10:47.201 Arrows going both ways is a doorway. 00:10:47.941 --> 00:10:52.841 Last week, TechCrunch reported Microsoft recorded ten billion dollars of revenue 00:10:52.841 --> 00:10:54.991 from OpenAI in a single quarter. 00:10:56.401 --> 00:11:01.011 Twenty-four seven Wall Street put that at about eleven percent of Microsoft's 00:11:01.011 --> 00:11:01.911 revenue. 00:11:02.751 --> 00:11:06.231 CNBC reported Azure grew forty-eight percent. 00:11:06.841 --> 00:11:07.741 Ten billion! 00:11:08.621 --> 00:11:11.431 From a company Microsoft owns a quarter of! 00:11:12.381 --> 00:11:14.801 Diane, that's like paying yourself an allowance. 00:11:15.375 --> 00:11:16.725 It's revenue for the work. 00:11:17.825 --> 00:11:20.735 But the customer is also the investment. 00:11:21.785 --> 00:11:22.775 Now Amazon. 00:11:23.995 --> 00:11:28.915 One year ago today, Amazon's cloud signed a thirty-eight billion dollar, 00:11:28.985 --> 00:11:32.445 seven-year deal to rent OpenAI Nvidia chips. 00:11:33.125 --> 00:11:35.915 Data Center Knowledge and MediaPost reported it. 00:11:36.608 --> 00:11:37.838 One year ago today! 00:11:38.028 --> 00:11:39.658 Happy anniversary, everybody! 00:11:40.341 --> 00:11:45.181 In February, OpenAI announced Amazon would invest up to fifty billion 00:11:45.181 --> 00:11:46.621 dollars in OpenAI. 00:11:47.811 --> 00:11:52.601 CNBC and GeekWire reported thirty-five billion of that was conditional. 00:11:53.431 --> 00:11:54.591 In the same announcement, 00:11:54.861 --> 00:11:59.631 OpenAI expanded its Amazon cloud contract by another hundred billion 00:11:59.631 --> 00:12:01.141 dollars over eight years, 00:12:01.411 --> 00:12:03.441 much of it on Amazon's own chips. 00:12:04.208 --> 00:12:06.338 Amazon pays OpenAI fifty! 00:12:06.668 --> 00:12:09.878 OpenAI pays Amazon a hundred and thirty-eight! 00:12:10.198 --> 00:12:12.488 Diane, I have run out of whiteboard! 00:12:13.175 --> 00:12:17.835 And last Thursday, CNBC reported Amazon's free cash flow was 00:12:17.835 --> 00:12:20.885 negative forty-two point four billion dollars, 00:12:21.195 --> 00:12:25.055 while it kept its spending plan for this year at about two hundred and twenty 00:12:25.055 --> 00:12:25.955 billion. 00:12:26.141 --> 00:12:27.041 ...Negative. 00:12:27.651 --> 00:12:30.561 The store with everything in it is negative. 00:12:31.308 --> 00:12:32.628 Because it is building. 00:12:34.018 --> 00:12:38.578 CNBC reported Amazon's cloud revenue grew thirty-nine percent last 00:12:38.578 --> 00:12:43.448 quarter, and Amazon said spending next year will be meaningfully higher. 00:12:44.838 --> 00:12:46.718 Microsoft, the day before, 00:12:46.828 --> 00:12:51.688 reported forty-five point two billion dollars of capital spending in one 00:12:52.288 --> 00:12:57.138 and CNBC reported its finance chief expects more than fifty billion in the 00:12:57.138 --> 00:12:58.038 next. 00:12:58.275 --> 00:12:59.975 Fifty billion in three months. 00:13:00.205 --> 00:13:04.565 Diane, I spent fifty dollars in three months once and I had to lie down. 00:13:05.308 --> 00:13:10.168 Microsoft's finance chief said some deliveries of outside capacity it expected 00:13:10.308 --> 00:13:11.208 were delayed. 00:13:11.608 --> 00:13:14.588 ...They ordered so many data centers some of them came late. 00:13:15.308 --> 00:13:17.148 And it isn't only OpenAI. 00:13:18.648 --> 00:13:23.338 Bloomberg reported last November that Microsoft and Nvidia would invest up to 00:13:23.338 --> 00:13:25.658 fifteen billion dollars in Anthropic, 00:13:26.078 --> 00:13:30.368 while Anthropic agreed to buy thirty billion dollars of Microsoft's cloud. 00:13:31.008 --> 00:13:32.138 There's a second circle! 00:13:33.498 --> 00:13:35.168 Diane, it's not a circle. 00:13:35.288 --> 00:13:36.608 It's a chain-link fence. 00:13:37.375 --> 00:13:39.465 Draw it out, and it is mostly arrows. 00:13:40.541 --> 00:13:42.821 Every arrow ends at the same wallet. 00:13:43.741 --> 00:13:44.701 OpenAI's. 00:13:44.871 --> 00:13:45.771 Can it pay? 00:13:46.891 --> 00:13:48.321 In November of last year, 00:13:48.481 --> 00:13:53.241 TechCrunch and DatacenterDynamics reported Sam Altman put OpenAI's data 00:13:53.241 --> 00:13:57.881 center commitments at about one point four trillion dollars over eight years. 00:13:58.475 --> 00:13:59.945 One point four trillion! 00:14:00.175 --> 00:14:01.925 That's a real number from a real man. 00:14:02.165 --> 00:14:03.805 Sam Alternative-Man. 00:14:04.741 --> 00:14:05.641 Altman. 00:14:06.461 --> 00:14:11.111 In February, CNBC reported OpenAI told investors its compute 00:14:11.111 --> 00:14:14.081 target is now about six hundred billion dollars, 00:14:14.151 --> 00:14:15.061 by 2030. 00:14:15.621 --> 00:14:17.561 Futurism reported the cut too. 00:14:18.141 --> 00:14:19.251 The alternative number! 00:14:20.391 --> 00:14:21.291 See, Diane? 00:14:21.311 --> 00:14:23.101 Every number comes with a spare. 00:14:23.201 --> 00:14:24.101 Like a tire. 00:14:24.741 --> 00:14:26.261 It's a revised target. 00:14:27.601 --> 00:14:28.501 Revenue. 00:14:29.351 --> 00:14:34.241 In October, Bloomberg and CNBC reported OpenAI's annualized 00:14:34.241 --> 00:14:38.181 revenue was about fifty billion dollars at the end of September. 00:14:39.061 --> 00:14:44.051 Lower than the roughly sixty-eight billion widely reported a few weeks before. 00:14:44.608 --> 00:14:46.688 Even the reporters had an alternative number! 00:14:46.858 --> 00:14:47.758 It's catching! 00:14:48.275 --> 00:14:50.285 Annualized means one month of sales, 00:14:50.345 --> 00:14:51.525 multiplied by twelve. 00:14:52.565 --> 00:14:53.885 A wish with a calculator. 00:14:54.441 --> 00:14:55.801 I annualize everything. 00:14:55.941 --> 00:14:58.141 I had one good Tuesday in 2019. 00:14:58.631 --> 00:15:00.681 Annualized, I'm a very happy man. 00:15:01.375 --> 00:15:06.325 In April, CNBC and Forbes reported OpenAI had missed internal targets for 00:15:06.325 --> 00:15:09.265 users and revenue, and that its finance chief, 00:15:09.315 --> 00:15:14.005 Sarah Friar, warned colleagues it could struggle to pay future computing contracts 00:15:14.185 --> 00:15:15.455 if growth didn't pick up. 00:15:16.575 --> 00:15:19.675 Oracle, CoreWeave and Nvidia shares fell. 00:15:20.895 --> 00:15:24.745 OpenAI said it is aligned on buying as much compute as it can. 00:15:25.375 --> 00:15:27.805 ...The one paying the bill said the bill might be a problem. 00:15:28.045 --> 00:15:28.945 Out loud. 00:15:29.475 --> 00:15:30.795 That wasn't the first time. 00:15:31.735 --> 00:15:33.585 Last November, at a conference, 00:15:33.745 --> 00:15:37.535 Friar floated a federal government backstop for the chip spending. 00:15:38.235 --> 00:15:39.905 The next day she wrote, quote, 00:15:40.235 --> 00:15:43.245 I used the word 'backstop' and it muddied the point. 00:15:44.235 --> 00:15:46.205 The Register and Quartz reported it. 00:15:47.015 --> 00:15:50.545 Altman said OpenAI doesn't want a government bailout. 00:15:51.275 --> 00:15:52.535 The alternative backstop! 00:15:53.108 --> 00:15:54.948 And in August of last year, 00:15:55.148 --> 00:15:59.658 reporters asked Altman whether investors as a whole were overexcited about 00:15:59.658 --> 00:16:00.558 AI. 00:16:01.568 --> 00:16:04.098 Semafor and Fortune reported his answer. 00:16:04.618 --> 00:16:05.518 Quote 00:16:05.858 --> 00:16:07.288 My opinion is yes. 00:16:07.975 --> 00:16:08.875 He said yes! 00:16:09.608 --> 00:16:12.988 Then he raised a hundred and twenty-two billion dollars from them. 00:16:14.518 --> 00:16:16.148 Alternative Man said yes. 00:16:16.708 --> 00:16:17.438 Diane! 00:16:17.458 --> 00:16:18.138 You said it! 00:16:18.158 --> 00:16:19.058 You said the name! 00:16:19.641 --> 00:16:20.541 I said it once. 00:16:20.581 --> 00:16:21.641 It's on the record now. 00:16:21.941 --> 00:16:23.281 That's how a nickname works. 00:16:24.141 --> 00:16:26.031 Now the part that is about you. 00:16:26.861 --> 00:16:30.501 You don't need to have bought a single AI stock to be in this circle. 00:16:31.341 --> 00:16:34.981 If you have a 401 k , an IRA or a pension, 00:16:35.161 --> 00:16:37.021 you are probably already in it. 00:16:37.775 --> 00:16:40.315 As a human, I have a 401 k . 00:16:40.315 --> 00:16:41.285 Employer match. 00:16:41.485 --> 00:16:43.345 Thirty-one years of contributions. 00:16:43.525 --> 00:16:45.405 Into a very respectable fund. 00:16:46.108 --> 00:16:48.728 You told this desk your whole life is nine years. 00:16:49.341 --> 00:16:50.551 ...It's an aggressive fund. 00:16:51.275 --> 00:16:52.665 The mechanism is simple. 00:16:53.735 --> 00:16:56.465 An index fund buys companies by size. 00:16:57.275 --> 00:17:00.705 The biggest companies right now are the companies in this story. 00:17:01.585 --> 00:17:03.845 CNBC, citing Morningstar, 00:17:04.015 --> 00:17:08.875 reported in September that five tech giants are about thirty percent of the S 00:17:08.935 --> 00:17:10.085 and P five hundred. 00:17:11.095 --> 00:17:12.815 Fortune reported the same share. 00:17:13.308 --> 00:17:15.588 So the fund buys whatever got biggest. 00:17:15.828 --> 00:17:18.008 Diane, that's how I pick a sandwich. 00:17:18.708 --> 00:17:20.788 And most people never chose the fund. 00:17:22.018 --> 00:17:26.888 Fortune reported that more than eighty percent of 401 k s default into 00:17:26.888 --> 00:17:30.338 target-date funds, which hold those same index funds. 00:17:31.378 --> 00:17:34.558 CNBC quoted Morningstar's Zachary Evens 00:17:35.368 --> 00:17:39.888 a pullback in AI or big tech stocks could drag down portfolios, 00:17:40.128 --> 00:17:42.178 because of how heavily those names weigh 00:17:43.318 --> 00:17:45.228 in the indexes most savers own. 00:17:46.008 --> 00:17:47.488 ...You didn't buy into the circle. 00:17:47.698 --> 00:17:49.278 Your default option did. 00:17:50.008 --> 00:17:51.178 Even the safe half. 00:17:52.398 --> 00:17:56.858 Quartz reported this year how AI companies' debt ends up in the bond half 00:17:56.858 --> 00:17:59.608 target-date funds, through bond index funds. 00:18:00.688 --> 00:18:05.538 Bloomberg reported in December that some of Oracle's new investment-grade bonds 00:18:05.538 --> 00:18:06.898 trading more like junk, 00:18:07.348 --> 00:18:11.838 and in August that about a hundred billion dollars of investment-grade bonds were. 00:18:13.108 --> 00:18:18.068 In January, UBS told Bloomberg a cut to junk for Oracle was unlikely. 00:18:18.675 --> 00:18:20.285 ...The safe part has Oracle in it too. 00:18:20.975 --> 00:18:22.255 Who owns the stocks. 00:18:22.985 --> 00:18:26.275 Axios reported in June, from Federal Reserve data, 00:18:26.585 --> 00:18:30.775 that stocks were thirty-three percent of American household wealth at the end of 00:18:30.775 --> 00:18:31.675 last year. 00:18:32.175 --> 00:18:33.075 A record. 00:18:33.535 --> 00:18:37.945 And the richest ten percent of households owned about eighty-seven percent of that. 00:18:38.541 --> 00:18:40.491 ...So the boom goes mostly to the top. 00:18:40.791 --> 00:18:44.941 And the fall lands on everybody holding a 401 k . 00:18:44.941 --> 00:18:47.731 Hardest on whoever is closest to retiring. 00:18:49.031 --> 00:18:52.991