Paul Kedrosky

The Ezra Klein Show · Is There an A.I. Bubble? A Debate.

• Which Books Do Paul Kedrosky and Azeem Azhar Recommend?

  Ezra Klein asks each guest for three books. Paul Kedrosky recommends Middlemarch, about normal people swept along as a technology revolution takes hold. He also recommends Liberty's Dawn by Emma Griffin, a collection of ordinary workers' own accounts from the Industrial Revolution, and Insull: The Rise and Fall of a Billionaire Utility Tycoon by Forrest McDonald, about Samuel Insull. Paul Kedrosky says Insull built an electricity empire on a general purpose technology and still ended in collapse.

  Azeem Azhar recommends The Day the Universe Changed, a book he read as a teenager and has just reread, about how new knowledge unsettles what matters and what a person's role in the world is. His s

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• How Few Jobs Does a Huge Data Center Create?

  Azeem Azhar says a huge data center may cost billions of dollars and still employ a handful of people. Two to six people is a normal staff for a multi-billion dollar facility. In the UK, there is an attempt to get people developing data centers to reinvest annuities into the local community.

  Azeem Azhar says subsidies for one data center in New Mexico come to four million dollars per job created, leaving aside the cost of the center. Tax abatements and the required improvements to local utilities make the numbers insane, and none of that works long term.

  Profits are being made up and down the stack, so there is money in the system and an obvious place for the bill to land. Azeem Azhar says

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• How Likely Is a Backlash Against AI?

  Ezra Klein says discontinuous regulation is quite likely. He pictures a backlash that could pull AI out of classrooms and hospitals after a few bad events, and he asks how to think about one bad artificial intelligence event.

  Paul Kedrosky says the companies have run unlicensed drug trials on the public. A drug company would have the FDA on its back. Technology companies, he says, can run mass trials, promise to transform all of education, and launch systems that can penetrate government websites. Paul Kedrosky says artificial intelligence is headed toward post hoc regulation after a terrible event, imposed only once consequential damage is done.

  Paul Kedrosky stacks the odds. There are pr

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• Why Is AI Repricing Cognitive Work?

  Paul Kedrosky says artificial intelligence is the fastest adopting technology in history, and its fundamental function is to reprice cognitive labor. The article of faith on the West Coast is that technology always creates more jobs than it destroys. People repeat the claim like a mantra and hope the claim becomes true.

  Paul Kedrosky says no general purpose technology has had such broad applicability, been adopted so quickly, and repriced labor at the same time. Repricing labor means work like call centers gets vastly cheaper. As a result, the change is going to be destabilizing long before anyone figures out the equivalent of webmasters. It is happening so much faster than any prior genera

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• How Is Wall Street Loading Debt Onto Big Tech?

  Ezra Klein asks whether broader society is protected because Alphabet, Meta, and the other major companies can absorb huge losses on their own balance sheets. He reads Mark Zuckerberg's line, that it would be sad to misspend hundreds of billions of dollars, as proof the spender can misspend hundreds of billions and still be fine. Ezra Klein then asks Paul Kedrosky, who has followed the private-credit side, whether the debt changes that.

  Paul Kedrosky says broader society is not protected. A year ago, people told him to stop warning about the spending, because the companies are smart and have prodigious cash flows. A year later, the data shows spending moving away from cash flow and toward d

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• How Did Apple Gain by Skipping Frontier Models?

  Ezra Klein says Apple decided not to compete in making a frontier model, unlike Alphabet, Google, and Meta. OpenAI and Anthropic are AI companies. Microsoft, an OpenAI investor, is trying to make a frontier model of its own. Oracle is heavily invested and now sits just above junk bond status. Competitors are spending $100 billion to $300 billion in capital spending every year, while Apple is spending about $15 billion a year. Ezra Klein says Apple stock this year has performed better than any of the other companies' stocks, and he asks Azeem Azhar first.

  Azeem Azhar says Apple's business model means Apple does not need to run a frontier model. People buy the phones and the laptops, and a mo

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• What Did Anthropic's Hiring Leak Reveal About Meta?

  Azeem Azhar says Anthropic accidentally leaked one of its largest customers. Anthropic was trying to hire a mega account executive, and the posting described the customer closely enough that outsiders could triangulate the role as sales to Meta alone. Azeem Azhar says the leak put Meta at something like 10% of Anthropic revenue for 2025, and the exchange on the show confirms it.

  Paul Kedrosky says that 2025 share looks backward, because Anthropic revenue in the first quarter was bigger than the entirety of last calendar year. Companies on Anthropic's scale have never gone public with so few customers. Paul Kedrosky says the list might be eight companies that make up 80% of revenue, calls th

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• Would an OpenAI Collapse Pop the Economy?

  Azeem Azhar says Paul Kedrosky talked about frontier models and tokens, while he talked about capital spending and the GPUs, and that the two deserve separate discussions. OpenAI and Anthropic depend on ever more powerful systems with a smaller and smaller set of users. The other question is the trillion plus dollars of capital that will go into data centers, where American and global businesses will run increasing amounts of AI.

  Ezra Klein says he is confused by the split, because people can mean different things by a bubble popping or deflating. Ezra Klein says a failed business model at OpenAI or Anthropic would pop the economy. If people are happy to use DeepSeek from China for a lot le

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• Is OpenAI and Anthropic's Chip Revenue Share Falling?

  Ezra Klein asks how AI demand looks once token use is separated from the chips that serve it. Azeem Azhar says the asset under investment is data centers, and 65% of the cost is the chip, the GPU or the AI accelerator. The environment is compute constrained because people are making extremely good returns in 18 to 24 months on an asset, since they can charge Uber surge pricing for the GPUs.

  Amazon, Microsoft, and Google, and new labs called NeoClouds, buy billions of the GPUs, put them in data centers that now will start to cost billions of dollars, and rent the GPUs out. About 50% of the revenues go to Anthropic and OpenAI for their spending. The other 50% is a mix of other AI companies an

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