Smash Notes

Back to Bursting the AI Bubble with Ed Zitron, with Ed Zitron.

Who Carries the Debt on AI Data Center Leases?

Ed Zitron says the hyperscalers and the other landlords carry the debt on AI data-center buildouts, while most of the labs' commitments are contracts rather than debt on the AI companies.

Anthropic has four hundred and thirty billion dollars of non-cancelable commitments over the next seven to ten years, and OpenAI is projected to spend seven hundred and fifty billion dollars by 2030. Anthropic does have one hundred and sixty one billion dollars of leases with Broadcom, and those leases carry interest. If OpenAI cannot fulfill its service leases, the builders still have to service the debt.

More demand would not fix the timing. Capacity is being built slowly, and little is known about it. Microsoft spent two hundred and sixty five billion dollars on AI GPUs and data centers since 2022. In each of the last three quarters, Microsoft said it brought on a gigawatt of data center capacity.

Grokipedia·Anthropic·Ed Zitron

Transcript

Bursting the AI Bubble with Ed Zitron ·

The Weekly Show with Jon Stewart

More from this episode

  1. Has AI Produced Any Economic Payoff?Ed Zitron says the economic payoff from AI has not arrived, even as NVIDIA has grown incredibly rich selling the chips behind it.
  2. Why Do AI Data Centers Take So Long to Build?Ed Zitron says an AI data center takes far longer to build than the race for more compute assumes.
  3. Why Is Anthropic's IPO Filing Still Blank?Ed Zitron says Anthropic loses billions of dollars, fewer billions than OpenAI, and the latest quarter of its S-1 is blank.
  4. What Are Circular AI Deals?Ed Zitron says the AI labs, the chipmakers, and the data-center landlords are renting and investing in one another.
  5. How Much Has Anthropic Promised for AI Compute?Ed Zitron says Anthropic has $430 billion in non-cancellable commitments with Amazon, Google, Microsoft, and Broadcom. The lab is not building its own compute.
  6. What Is Exit Liquidity in an AI IPO?Ed Zitron says an Anthropic IPO is exit liquidity. Buyers are sold the idea of investing in the next Google or the next Meta.
  7. What Is CoreWeave?Ed Zitron says CoreWeave is a neocloud, a company that raises debt, buys GPUs, and builds data centers.
  8. Why Is Oracle's Stock Tanking?Ed Zitron says Oracle's stock is tanking because a $300 billion, five-year contract with OpenAI has nobody who can pay for it.
  9. Why Are Phones and Laptops More Expensive?Ed Zitron says NVIDIA chips are pushing up the price of phones, laptops, and every other consumer electronic because they crowd out ordinary computer memory.
  10. Why Won't AI Data Centers Be Reused Like Dot-com Fiber?Ed Zitron says AI data centers will not get the second life that leftover dot-com fiber got, because a half-finished AI site is useful for AI and not for much…
  11. Is an AI Bust as Bad as the Financial Crisis?Ed Zitron says an AI bust is not Great Financial Crisis level bad, but it will still be very bad, and a different kind of bad.
  12. Should Sam Altman Be in Prison?Ed Zitron says Sam Altman should be in prison, or at least at a police station.
  13. Is the OpenAI Boom a Confidence Game?Ed Zitron says the OpenAI boom is a shell game and a powerful confidence game.

People

More answers like this

Related episodes

Plays from this note through the rest of the episode.

Note

Weekly highlights

One letter a week.

The notes worth hearing, with the minute they were said.