# AI Capital Crunch and NVIDIA Governance Crisis

**Podcast:** Better Offline
**Published:** 2026-11-11

## Transcript

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Hello and welcome to Bear Offline, I'm your host Ed Zitron.
Good lord, is it a slow news week?
And so to bring in someone just for a little bit of entertainment, I have the mighty Ed Elson from the Prof G Markets podcast.
Ed, how are you doing?
I'm doing well, here to bring the entertainment.
How are you doing?
Well, thankfully, 300 stories actually did run.
So we're going to start with Anthropics IPO.
It seems like they're pricing it somewhere between a trillion and 1.4 trillion, but it wasn't even that simple.
They filed something, they retracted something.
It's been kind of a mess.
Yeah, it's been one of the ugliest rollouts of an IPO that we've seen, but not something that you and I didn't expect.
No.
This is a company that wanted to go out at $2 trillion, despite the fact that, as we learned, it was going to spend about $800 billion over the next several years, almost $500 billion over the next three years.
And this is a company that investors were saying, oh, it's about to be profitable, which I understand based on the income statement, which told a very different story of operating losses coming down 70% to 75% over the past year, which I also was initially optimistic about.
To me, that was like an answer to the question of...
does the LLM business actually work?
And my response was, oh, maybe it will.
Maybe it will imminently or next year.
But then, of course, we get this giant caveat, which is like actually what we learned from 2026 in terms of the fundamentals of this business tells us basically zero.
about what the business is actually going to look like next year.
And so that was when I was like, okay, this $2 trillion number seems too high.
My prediction was that Anthropic was either going to delay the IPO or it was going to reduce the price.
It seems like the latter has occurred.
Yeah.
And it was interesting.
The boosters really got hot and heavy over the Q2 numbers because without the Q2 numbers first, everyone was like, where's Ed?
We had a family member in the hospital.
That's something more important.
Yeah, really.
I remember just you were not online and everyone was freaking out.
They thought it was this giant admission of defeat.
Yeah, they did not have all of the facts in front of them.
I saw all the dickheads deleting the posts afterwards, which I really enjoyed.
But what was interesting was they blanked out the Q3 numbers because when the Q3 numbers came out, revenue growth had slowed, costs had exploded, and they'd added that they had 895.
billion dollars worth of commitments in an indeterminate period.
It's just a really, it's just a, I don't know if you agree on this one, but it just feels like kind of a dodgy company.
They obfuscate details.
They are very vague about the actual timelines because even in the updated S1, the IPO doc, the filing, even when they updated it, they said, oh yeah, the minimum cost, the minimum amount we'll have to spend in 2027 is $30 billion.
And it's like, we know you're not spending that little.
And then they're like, actually we expect to spend 70 billion.
in the next 12 months.
But it's unclear if that includes Elon Musk, who's charging him $3.1 billion a month.
It's just, I realize that they're allowed to put whatever they want in these things, as long as they follow GAAP or what have you, or say when it isn't GAAP, but it just feels so wriggly to me.
Yeah, I actually...
On the spectrum of dodginess in AI world, I actually put Anthropic on the side of less dodgy because- Really?
...something I do.
I mean, that's not giving it, I mean, that's not that much praise.
I mean, we're dealing with companies that, as we just learned, are literally smuggling chips into China and then having affairs with Chinese spies.
So, you know, dodginess is rife throughout the industry.
So I'm talking about as far as AI goes.
And the reason I think that is because...
You know, one of the things that I expected and that you might have expected is that they were going to do some ridiculous accounting gymnastics on that non-gap adjustments.
I was expecting that they were going to say, we are profitable when you remove our training costs.
And I think that's something that a lot of people expected.
And I was waiting for that to happen.
With the gross margins in some of that original reporting, but not in the actual income statement itself, not when we look at the operating losses, which did account for the training costs.
So on that front, I was like, okay, credit to you for not bullshitting us too extravagantly.
But the trouble is that they did not bring enough attention.
to that $895 billion.
But again, maybe you'd blame that on investors for just not doing their homework and actually reading the document.
The other thing that I do give Anthropic credit for is, you know, when you read the full thing and you read what they're explaining about what is about to happen to the company, I just want to read you this one quote in the filing where they said, Our increasing efforts to build out our compute and infrastructure require substantial capital expenditures that are changing the cash flow of our business.
That is a businessy way to say the most important thing in the entire document, which is that massive losses are about to come.
So they're saying our cash flow, the cash flow profile of our business, which might look...
okay-ish or that it's about to be pretty good, that's going to change substantially because we have all of these issues where we're basically reliant on our competitors for compute, which means that we're probably going to be locked into some extremely onerous agreements, which, of course, we're beginning to see show up.
in the business profile of this company.
But they're saying, we're going to have to do something about that.
And it probably means ramping up capital expenditures, which is Latin for probably building our own data centers, which is going to completely transform the way this business actually works.
So I actually credit them for at least saying that, though perhaps they could have been a bit more forthcoming about the significance of that element.
Well, I mean, that's the thing.
The way I describe Q2 is that is a company that no longer exists.
Yeah.
Just the Q2 one was discounted SpaceX compute.
It was, I reckon...
I've heard this from a few people, but you can't really report on what your mate told you.
But there is, I've heard people tell me that they ramped down training costs in Q2.
But the problem is Q3 was such an aggressive ramp up of costs.
And it's so obvious that they're cramming this thing out the door at the worst time.
It's so obvious that Q4 is getting worse because Ramp is saying, and I had a word with Ara about this.
our Karazian, it's probably going to kill me for our, just said his second name, from Ramp.
And he was saying that right now, Q4 is trending towards 15% to 25% quarter over quarter growth, down from 47%, I think.
And that may seem like a lot, and indeed it is a lot in a vacuum.
But this is a company whose expenses are going to ramp up, well, they ramped up 77% compute-wise between Q2 and Q3.
That's...
That mathematics stops working very quickly.
And it's funny, you've got Goldman Sachs saying, oh, they'll have $600 billion of revenue in 2030.
It just feels, I actually fundamentally disagree with you about their transparency.
This is a 300-page document that sells a company based on terms that really don't apply to the new company.
Like, in a year's time, Anthropic is not going to be...
profitable or indeed dealing with what, $7 billion worth of compute costs?
Six billion?
In fact, I find the compute costs extremely confusing.
Something does not add up there.
Well, I think this is a problem with S1s is that it's supposed to be like, it's almost presented as if it's this financial audit of a company that's showing you, here are all the things that you need to know.
Here are the risk disclosures.
In reality, it is literally a sales pitch.
It's like, here's why you should buy this thing.
And that's why so many companies end up doing some ridiculous things in there.
I mean, the worst perpetrator would be WeWork with the community- Oh, yeah.
Which is like, basically fraud.
But, I mean, with Anthropic, I mean, I just want to give them at least the courtesy of the credit that they didn't do that and that they said what is going to happen.
But the thing that is a little bit, you know, to not give them too much credit...
It was buried like 160 pages into the document, the most crucial details of this thing.
And then as you point out, I mean, they had to then go back and give the updated numbers on Q3 and also give the updated semblance of a timeline on how those $895 billion in costs are going to be spread out over the next several years.
So just to your point about the 25% revenue growth, you've got a company here that spent around $10 billion on compute in 2026.
And so, you know, let's assume that it's going to be $20 billion.
They're going to spend $895 billion in the near future, and almost $500 billion of that is going to be in the next three years.
So you're looking at compute costs that are going to rise next year to at least...
$100 to $150 billion.
So that is a more than 1,000 percentage increase in your costs.
And so when we're living in this world of, oh, 25% quarter over quarter revenue growth, that might sound okay, but actually it just doesn't cut it anymore.
That's significantly lower than the amount that the spending is going to increase.
So this is the problem.
It's like, we can talk about the income statement.
We can talk about the numbers in Q2.
We can even talk about Q3, but not even that tells us the full picture.
The full picture is happening next year.
and the year after that, where they're going to have to raise hundreds of billions of dollars.
And they were able to do it pretty easily over the last couple of years because it's been the era of AI euphoria and exuberance.
Capital was cheap.
Capital was readily available.
You could go out to Silicon Valley.
You could go out to the Gulf states.
Everyone's willing to just hand you money to go build your AI.
But now we're reaching a different moment where suddenly investors are actually getting a little bit anxious, and we're seeing this reflected.
in the markets today.
We're seeing it reflected in all of the AI names.
We saw this happen after the midterms.
We're seeing what's happened to NVIDIA, which by the way, has lost one and a half trillion dollars in market value in about five weeks.
It has been an absolutely stunning fall for NVIDIA.
And so the question is, do you think that Anthropic can continue to raise billions, hundreds of billions of dollars ad infinitum?
Or is there a point at which investors say, actually, we're going to be a little bit more discerning right now.
We're a little less excited about your AI future.
We're a little bit more concerned about how much you're going to spend.
I think that they are now running up against that obstacle, which is why they've lowered the amount that they're going to raise.
They wanted to do $100 billion.
Now we're down to $65 billion.
And in addition, they have reduced the price.
By nearly 50%.
Yeah.
It's like 1 trillion to 1.4 trillion, depending on what article you're reading.
Yes.
Which is very, again, very frustrating.
The reporting on this has been fucking strange to me because Anthropic put out...
a document on monday night saying oh this many shares and then they retracted it and everyone calculated 1.1 to 1 1 to 1.25 now it's 1 trillion to 1.4 trillion isn't really clear and anthropic is 26 percent sorry 26 billion dollars of that of those shares are being sold to Google, NVIDIA, AMD, Broadcom, Micron, Microsoft, and TSMC.
That's the other thing.
They needed to bring in some help to help support the price.
That's the other problem.
But that immediately makes me think something, which is there's not going to be any money left if OpenAI even tries to go public.
Because OpenAI tried to raise...
This is also somewhat of a diversion for the Anthropic one, but OpenAI last week raised $11 billion at a $1.25 trillion private valuation.
And that was down from raising $30 billion at 1.4.
I mean, it kind of feels like the money has run out or is running out or will run out very soon.
Because, and also just, OpenAI can't go public now.
Just, how?
How?
Well, I think that this is the ultimate question is, is the money beginning to run out?
And by the way, it's not just OpenAI.
that's going to put pressure on the capital markets.
It's all of the big tech companies, which are also going out and raising tens of billions of dollars in equity raises and also debt issuance.
I mean, Meta's got a $60 billion equity raise that it needs to carry out next year.
They've already planned it.
And this is in addition to the tens of billions of dollars that have been raised by Microsoft.
and Amazon and Oracle.
I mean, you look at the debt issuance, we're looking at nearly a trillion dollars in debt issuance by 2028 purely among the hyperscalers.
So the question you have to ask yourself is, is the money there?
Do investors actually have enough money to pay that amount to build this thing that increasingly they're becoming very skeptical of?
So for me, I mean, the way that I, the way that...
I like to think about it and the way that it's often explained on Wall Street is it's called the music.
Is the music playing or is it stopping?
Margin call.
Margin call, where Jeremy Irons says, my only job is to figure out what's happening to the music.
What's going to happen to the music tomorrow and the day after?
So this is the most important thing for the AI trade is how does the music actually sound?
I think that...
If there's one thing that I can say with certainty is that music is still playing.
Because you had Meta, which had this $25 billion stock sale, which was five times oversubscribed.
You had Amazon with a $25 billion bond deal.
It drew more than $60 billion in orders.
You had Microsoft pull off one of the most sought-after debt offerings on record.
But that's because Microsoft's high quality.
Exactly.
So that's the other thing is that investors feel a lot more safe about Microsoft because they haven't obliterated their free cash flow.
But then you have all of these other signals like CoreWeave's bond yields exploding.
into space, and you have OpenAI reducing its funding target by $10 billion.
And now this, to me, this Anthropic IPO is the clearest signal of what's happening to the music.
And the fact that they've reduced the price as much as they have, they've reduced the amount that they want to raise, to me, that is the clearest signal, okay, the music's beginning to get a little bit fainter.
It's beginning to get a little bit quiet.
It's slowing down.
It's slowing down.
And so if you're expecting that investors are going to save you, I mean, a lot of these companies are dangerously dependent on the capital markets at this point to fund their ambitions.
And that's a new dynamic because for years, big tech was funding their ambitions on their own.
Yeah, they were spending $80 billion on the metaverse, but they were at least using their own profits to fund that operation.
We're no longer in that territory now.
So the more that companies say, OK, we need your money to fund what we want to do.
Well, that puts yourself in a very vulnerable position because that means that the people have to be willing to give you the money.
And increasingly, investors seem pretty unwilling.
Well, also, the other thing is, just back to open AI for a second.
Let's think practically here.
Anthropic goes out, best case scenario, let's say 1.4 trillion, maybe pops to 1.5, 1.6.
How in blue blazes?
Does OpenAI actually navigate that?
At a 1.25, also everyone who invested at 1.25 in private's a moron, but putting all that aside, what the fuck does an IPO even look like for that company?
They've got lower revenues, higher costs, more of a drag on their revenues.
I mean, on their costs, like they have $750 billion worth of commitments through 2030.
I mean, I don't, like, I think it's worth discussing what OpenAI does full stop.
How the hell does it navigate out of this?
Because put aside whether the money is available or not, Anthropic's IPO better go absolutely perfectly, because that's the only condition under which OpenAI could go public.
Yeah.
I mean, it seems that as you bring this up, Anthropic has been getting all of the attention because it's the company that's going public.
And so we've been looking at their financials, we've been scrutinizing them, we've been assessing the risk.
But what we know about OpenAI is...
whatever's gone wrong at Anthropic, it's 10 times worse at OpenAI.
Oh, yeah.
Where they lost, I mean, we're talking about the operating losses at Anthropic of, you know, more than a billion dollars through the first three quarters of this year, which is like, okay, like, that's not great, but, you know, maybe they'll figure it out.
I mean, we can have that debate.
Anthrop, I mean, OpenAI lost more than $20 billion on an operating basis last year.
So...
What would happen if OpenAI were trying to go public right now and all of Wall Street in the world were scrutinizing their financial statements?
What would happen then?
I mean, I think it would be probably a crisis.
And so my expectation is that there is a little bit of crisis mode going on within OpenAI because they're realizing, oh no, we are actually...
dependent on these people who are currently selling like crazy on the AI trade.
And so we need to do whatever we can to figure out how to become independent.
We need to get the money from somewhere.
Oh, no, we can't get the money from our own business because our own business is losing tens of billions of dollars a year.
So I would bet that, you know, I'm sure people at Anthropic are quite nervous.
I would bet that people at...
OpenAI are a lot more nervous right now because from my understanding, their spending has been way more irrational than Anthropics.
And, you know, if there is a company that's going to get burned, in my view, it's probably going to be OpenAI.
If there's a million times more digital intelligence than there is biological intelligence, it's hard to imagine humans being in control in that scenario.
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Well, also they have the burden of these hundreds of millions of free subscribers because...
And they're making what?
They were like, oh yeah, we've got a billion dollars of annualized run rate on ads.
Who cares?
I'm sorry.
Be an adult.
Stop using run rates.
But also, that's not enough.
The inference costs those free bastards are really dragging them down.
But then there's just...
the value proposition of what is it an investor would be investing in in OpenAI versus Anthropic.
It's a very similar company with worse economics, with a more, I was about to say more annoying CEO, but I think that Dario and Sam, that's a competitive field.
But on top of all that- The only thing, just to build on that, the only thing- that would be compelling for an investor to invest in OpenAI versus Anthropic is a dramatically lower price.
That's basically it.
Like, yeah, like a $500 billion.
You're the worst version.
I mean, you're the company that is at, you know, significant risk compared to Anthropic.
Okay, I want to see that reflected in the price.
I want to see a dramatic discount, which to me likely means that we're probably going to see the era of down rounds.
We'll look at these.
unbelievable valuations that these companies commanded in the private markets in Silicon Valley, where investors don't really care about profits.
They don't really care about margins.
They care about technology and founder vision and how cracked the engineering team is.
They don't care about the numbers as much.
And then suddenly they're going to enter the coliseum of price discovery, which is the public markets.
And investors are going to say, yeah, this doesn't work for us.
And it'll be a rude awakening for OpenAI, for sure.
And let's be clear that OpenAI raised that $1.25 valuation, $11 billion, from the Souths.
They went to the Middle East.
They love the Souths, yeah.
They went to the Middle East, and they said, we want $30 billion, $1.4 trillion valuation.
And they said, hold your horses.
That's too much.
The Middle East.
The middle, the literal, like the place you go when you have your dumbest ideas and you want the most money.
Because they already shook down poor Masayoshi's son and his geese.
And they had to go and bother the, and now we're in a situation where they weren't able, and now they're saying they're going to go around and they're going to raise from family offices.
Yes.
But they very specifically didn't say venture capital.
So I think venture capital is out as well.
I mean, this is what we mean by the music.
I mean, it's a great point.
You go to the Middle East, the people who will pay any amount of money for literally anything and have done for years at this point, and they say, oh, this is a little bit too much.
We're going to downsize our quantum here.
That, to me, is like a giant note out of tune.
That's a real problem.
It's a real signal of investor sentiment.
And by the way, Usually, I don't really give a crap about investor sentiment.
Because I'm someone who cares more about the fundamentals of the business.
Is the business working?
What does the business look like?
Who cares about what the noise is?
But the trouble when it comes to AI, and specifically these companies, is that they are completely levered to investor sentiment.
I mean, investor sentiment will dictate whether they live or if they die.
And so you actually have to keep an eye on what's happening, investor sentiment.
You have to understand what the music is sounding like.
Because if it starts to go out of tune, then yeah, these companies genuinely go out of business.
Or they have to massively restructure their business models.
And that will be very, very ugly.
And I mean, there was that story that came out, and yeah, just a tip of the hat here to myself, because I called this.
Apparently, Blackstone was telling investors, by which I mean the marks.
in the whole Broadcom deal that Anthropics expected to get a below investment grade rating.
And this is, remember, this company's now raising, what, $65, $69 billion at IPO.
They had a big cash position, like $100 and something billion.
Which they're going to spend in the next year.
Which they're going to send a chunk of that out the door.
But here's the thing.
A junk rating will be very difficult to navigate for this company because Junk rating means most investment funds, pension funds, and so on and so forth can't invest in your debt.
But on top of that, the Fed's talking about multiple rate hikes in the next few months.
Yes.
What the fuck are they?
They're going to be borrowing at 10%.
It may as well go on fucking SoFi.com, not a sponsor.
They'll be borrowing at 15%.
That's what Corweave is borrowing at, 15%.
Well, I mean, Corweave's just not borrowing at the moment.
No, they're just not borrowing.
It's just their multiple store.
But that's the thing, though.
This entire industry.
On investor sentiment, sure, but the problem is, is that they're no longer dealing with equity investors.
They're now dealing with the bond market.
Exactly.
The bond market, which is a lot meaner because you can pump...
Well, the thing, the way I described it to a mate of mine in fixed income, hello, Mike, is that it's the stock market measures how excited you should be and the bond market measures how scared you should be.
And I think that it's, boy, I mean, it's obviously because Yeah, you actually need to pay back the bond market.
You can do all this dodgy shit talking up your stock and your book all you want, but in the bond market, you actually have to pay someone.
Yeah.
And I don't know.
I don't think that...
Well, Anthropic, when they were raising for this Broadcom chip lease deal a few months ago, were refusing to share their financials with some investors.
You can't play this charlatan shit.
in the bond market.
And so it's not impossible for them to raise debt, but if they're looking for 50 billion a year, I just don't think that's going to happen.
This is the other thing that pisses me off about this S1.
And I feel like we need new financial regulations.
They should have to say how much money is going out the door.
They should have to estimate.
exactly how much they're going to have to prepay.
Because their tricksy thing they did was they said, okay, here are our minimum spend commitments.
What are the prepayments?
Because it's obviously going to be higher than they're saying.
Yeah.
It's the most crucial detail in the entire document.
And it's not there.
Exactly.
And it's not there.
Like, it's kind of there, but not really.
But just to your point, like, you know, the stock market measures how excited.
Say that again.
What, what, what, what, stock market measures how excited you should be bomb market.
How scared you should be.
Okay.
So then my next question is what does venture capital measure?
Oh, yeah.
That's, that's, that's, that's beyond that's another level.
I mean, the, the, the, the, the venture capital industry.
The level of euphoria and hysteria around AI and the myopic way that they see the world, where they really do live in a genuine bubble, and they have literally been drinking this AI Kool-Aid through a beer bong for years at this point.
I mean, what on earth are they measuring?
And so this is my problem.
There are different levels of discernment throughout the global markets.
And we're only seeing Anthropic face the music when it enters the public markets as opposed to the private markets.
But your point is an important one, which is like, we haven't even gotten to fixed income land yet.
We haven't gotten to the debt investors, which are even meaner and crueler and more discerning than the rest of them put together.
And so this is only the beginning of the story.
Like you're describing stock market investors who actually, by comparison to private investors and VCs, are seemingly quite difficult.
But yeah, there's more to come where that came from.
And the other thing with that is as well is those...
like that debt they will be raising and this is assuming that things go perfectly because they will need to will be raised in a very different climate than even about six months ago because about six months ago Corweave was issuing debt they were still they were taking 9.25% but they were issuing debt there was still hunger for both high yield debt and also AI related debt I don't know how does anyone loaning money to anyone feel about a negative a bit uh software company i don't even think there's i can't find a comparison for anthropic anywhere in the market anywhere like it's just there is no software companies don't raise this much money software companies don't need this much money the whole point of a software company is that they aren't this they aren't this needy but when you but returning to the venture capital thing at this point as well the other thing is is the word is gullible with venture capital because you could be gullible and still make money but Venture capital has been hopping on about for years.
They've been on a historic losing streak since like 2017.
Like the average venture capital fund makes you about somewhere between 90 cents and $1.30 for each dollar you invest, which is not being the S&P 500.
And so I think the actual answer here is, is that people give way too much credit to venture.
The venture capital is nowhere near, outside of like SpaceX, Anthropic, Rivian, Cerebrus, and Cerebrus is now tanked, what, 50% from its valuation, maybe more?
I mean, for the most part, venture capital has absolutely not, it's kind of absolutely failed right now.
Like it's just, and by the way, Cerebrus is down 70% over the past six months.
That's fucking great.
I knew that company was a joke when I saw their filing and one of the first pages in the document said, we have the biggest chips in the world.
The biggest chips.
We love them.
Yeah, it really is like, no, it's Trumpism.
But the funny thing is, and the point I'm making, is that everyone, for some reason, gives venture capital this insane credit.
When in fact, the average VC is pretty fucking terrible at their job.
So while there'll be VC payoffs in this IPO, those people who invested at the $965 billion valuation, it's not really a great return on investment.
And those people who invested in the $1.25 trillion, Jesus Christ, valuation for OpenAI, They're never seeing that money again.
That money's gone.
It's over.
You wasted that money.
I could see OpenAI never listing.
No one wants to talk about this with me for some reason, but there is a very real chance that OpenAI simply runs out of money.
That OpenAI does not go public because a $500 billion offering is not going to be...
It's still going to be bad.
Like, it's still going to be, like, I don't think people are really thinking any of this through because OpenAI, let's say they go out of 500 billion.
This is assuming they go out at all.
How the fuck do they pay all their obligations?
How do they pay their people?
How do they keep up with all the promises they've made?
What the hell happens?
And the answer is no one wants to think about it.
No one wants to think about all the difficult things because the difficult things make the whole thing less fun.
This is the trouble with needing money, is it just makes you vulnerable.
And the analogy that I have written about recently is like, it's sort of like being a kid.
Like your fate, you have to basically just place your entire fate in someone else's hands.
Now, when you're a kid, the good news for most kids is that parents are willing to help them no matter what happens.
And, you know, they'll try to make sure that you're set up for a good future.
And that's what a lot of the AI companies have been convinced by when it comes to Silicon Valley.
You have all of these VCs who, in my view, are essentially bottle service girls, but for founders.
And their job is to just make the founders feel happy and follow into whoever led the previous round.
And don't worry about the price.
That doesn't matter.
What matters is partnering with an awesome founder.
And that's sort of the story that they've gotten used to over the past few years.
And they've convinced themselves that Sequoia and Andreessen, they're all going to help them no matter what.
But what they forget is that actually investors are not like your parents.
Investors will let you die.
They do not give a shit.
And we saw that play out in 2022.
I don't know if you remember where you saw a correction.
uh in the stock market where a lot of tech tech stocks got hammered meta was one of them they saw that the value come down by around 70 i mean it was a really stunning uh correction in 2022 which then of course trickled down to the private markets we had all of these companies these you know uh buy now pay later companies like Klarna and these one-click payment companies and these ultra-fast delivery companies that had gotten these ridiculous valuations.
And then suddenly the investors in the private markets were absolutely brutal to them.
And they did not give them the valuations that they wanted.
They were barely giving out the money.
And all of these VCs were going on their VC podcast industrial complex shows where they would just talk about how The most important thing for founders is being efficient and being responsible and tightening the belt.
And the reality is that was the same person who was just a year ago talking about how you need to be bold about your spending and you need to be innovative.
The truth is they will simply follow whatever is happening in the public markets.
And so whatever...
Whatever image of Silicon Valley these AI founders have gotten over the past few years, that these guys are awesome and they back us no matter what.
And I love these guys because they have conviction in my company.
They have conviction in me.
You are in for a major slap in the face because these guys do not have conviction.
in anything.
They will follow the price.
They will follow whoever the last investor was.
And if the music starts to get ugly, you can trust me that they will start to become cruel as well.
That's what's going to happen here.
Well, let's talk about other potential convictions.
Incredible segue there.
Let's talk about one Mr.
Jensen Huang, CEO of NVIDIA.
I've already had so many emails wondering about my comment here.
And the answer is, I talked about this shit in March.
March 2026, which was...
three to five months after the original Megaspeed story.
To catch everyone up, this is an incredibly shortened version.
By the way, credit to you, because this is a gigantic story.
And it's something that journalists really, I mean, they should have been all over.
And by the way, I am happy and respect that it was journalists that broke this.
And this, in some ways, is a win for investigative journalism, because it's so important.
But the fact that you are on this is huge.
So I just want to give you a credit card.
So back in October last year, the New York Times reported, and then in December, Bloomberg reported, a company called Megaspeed, which is a, I'm doing air quotes, Singaporean company, bought $4.8 billion worth of NVIDIA GPUs.
But it also turns out that an identical company called Shanghai Hexi, I think it's called, existed in China with the same website as Megaspeed and also an investor deck that showed in Megaspeed's case a bunch of data centers in Southeast Asia and then a few projected projects with no specific location.
Well, it turns out that there is an identical website for Shanghai XC, which shows that those other locations were all in China.
And it turns out that the CEO of Megaspeed, one Alice Huang, or Huang Lei, I think is her Chinese name.
It turns out that she was a knock in boots with the one Jensen Huang, no relation, CEO of NVIDIA, who was pictured in the Bloomberg article, I think also in the New York Times article last year, next to Jensen Huang, and has been photographed many times with him, and has apparently cavorted with the fella to the point that Mr.
Huang has actually admitted to this.
He's actually said he apologized to his family, his wife, Laurie, of 40 years, his employees.
And it turns out that Jensen may or may not have been directly helping the Chinese buy NVIDIA GPUs through Megaspeed.
Now, I am truncating the entire story because Megaspeed is connected to a bunch of other companies.
The information at the story is saying that Megaspeed connected entities bought $7.5 billion worth of GPUs.
The biggest story for me is if you look at all the pictures of Jensen Huang with Alice Wong, again, no relation other than the biblical sense, he looks happy.
And so it turns out the biggest part of the story, though, is that Alice Wong is actually a Chinese spy.
She's a spy for the Chinese who have denied this, of course, because, I mean, of course they would.
But the US Commerce Department was also looking into Megaspeed.
And NVIDIA's general counsel, Tim Titor, called them, called multiple people there, and scuppered the investigation and got it passed to the Department of Justice.
All of this is to say is that it very much looks like the CEO of NVIDIA got targeted and shagged and fell for a Chinese honeypot.
And I just want to say, finally, some, like Gordon Ramsay, finally some good fucking stories.
I'm so bored of these boring assholes with their boring lives.
Chinese sex spies.
We don't have to talk about the singularity anymore.
No more RSI.
We're talking about sex.
But the thing is, this is a remarkable story.
But just to be clear, is the tip of the iceberg.
There's so much more to come.
If there's a million times more digital intelligence than there is biological intelligence, it's hard to imagine humans being in control in that scenario.
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It is unbelievable.
And my initial reaction to this news is just what an incredible, story the AI boom has been.
I mean, there's been so much- Thrilling.
Just thrilling drama.
I mean, we could talk about, remember when Sam Altman got fired from OpenAI?
And then suddenly he was ousted and then he was brought back in.
I mean, that was an incredible story.
We had Deep Seek, we had situational awareness being blown up.
We've had all of it twice now.
I mean, there have just been so many incredible plot points in the AI story.
And now we have Chinese sex spies.
honeypotting the CEO of what was recently the most valuable company in the world.
And of course, no more, because it has, as I said, shed more than a hot one and a half trillion dollars in market value over the past few weeks.
So, I mean, the whole thing is just incredible.
And this company, Megaspeed, is clearly, I mean, clearly they were doing something illegal, specifically smuggling AI chips.
from Singapore to China.
I mean, this woman, Alice Huang, she was a TV reporter for Chinese state media.
And then in 2023, she joins this company, Megaspeed, suddenly becomes CEO, suddenly becomes one of the largest buyers of Nvidia chips in the world, bought nearly $5 billion in chips in just a few years.
And then at the same time, the company sells itself to a Singaporean shell company and then also operates out of all of these empty offices.
Clearly, the implication is they were smuggling to China.
I think one of the large questions is, how much did Jensen Huang know about this?
Because if he was aware of what was going on, then this is, I mean, he's essentially a fugitive.
I mean, this is one of the largest criminal scandals in recent memory.
Because this is a national security issue with trillions and trillions of dollars on the line.
And this is the guy who was influencing export policy in America.
And by the way, this is the problem with Trump and the problem with the crony capitalism that he has made so common in the business world in America over the past few years, which is the way that he operates U.S.
policy is he transacts based on who gave him a call.
lost.
That's basically how it works.
If you ring Donald Trump, you call him on the phone, you say, hey, you butter him up, you say some nice things, you will get what you want.
That's how this works.
And that's exactly what Jensen Huang has been doing over the past several years, which is why Trump eased the chip restrictions to China.
Because Jensen Huang, he's a nice guy.
I like that guy.
And he's rich.
And he's the CEO of NVIDIA.
And he's cool.
And so that's how we're going to run our policy.
And here we are.
It's backfiring.
But the other thing is, is when you look at the timing of all of this, so Jensen Wong donated, or NVIDIA, I forget which one it was, invested $25 million in the Trump borer.
And Trump had been informed sometime in October, like, hey.
Mr.
Trump's a big, beautiful man.
It turns out that Jensen Huang might actually be possibly relating sexually with a Chinese spy.
And Trump was like, oh, it's okay.
We don't need to worry about that.
Yes.
And they just kept, they moved on from it.
The State Department.
or the Commerce Department even, has been monitoring Alice Wong since 2024.
But what's crazy is NVIDIA's general counsel, because Alice Wong was arrested by the Singaporean police sometime in 2024, and she was detained and then let go.
Apparently, Tim, Timmy, the general counsel over there, was hounding.
the State Department, sorry, I keep saying the wrong one, Commerce Department, asking about that detainment and whether they'd had anything on it, and then basically muzzled the investigation.
But the thing is, there is this short- Which is something we've seen multiple times in this administration, by the way.
Exactly.
This is not the first instance of an investigation in criminal behavior being muzzled, and then the officials running those investigations and pursuing them being ousted mysteriously.
I mean, the level of cover-up, I mean- We can also talk about the Epstein files as well, which is in a similar vein, but the amount of corruption and crime that has occurred over the past several years, and that we haven't gotten to see justice or retribution for because they were in bed with the police.
Because the police were either defunded, fired or essentially told you're not allowed to pursue this thing is mind-blowing.
And this is yet another example.
And what do you know?
It applies to the AI boom and the semiconductor trade.
So I just want to just point out, like, this is a thing that's happened multiple times.
But the other thing is, as well, is what this means.
So there was a short report from Culper in May, who's getting a lot of credit, as they should, because they dug into this really deep and found...
For example, the Megaspeed's biggest client is Alibaba.
And also Alibaba gave them an indeterminately large loan to buy GPUs.
And that's how Alice Wong met Jensen Wong.
But the other thing that Culper said is, based on their numbers, that 20% or more of NVIDIA's fiscal year 2026 revenue came from China.
That's over $43 billion.
This is not just Megaspeed.
Like, there is obviously a much bigger thing going on here.
And credit to JustDario, one of my friends of the show, who in 2023 had an incredible thread of the preferred partners of NVIDIA and the elite partners.
One of them was a Russian murder shed.
Just, it was like, when you go and look at the address, it's literally just a, what looks like a place you get murdered in a horror film.
One of them was just an empty, Taiwanese office above a wine shop.
Yep.
It's so obvious that something is going on here and it's really big.
And like 20% of Nvidia's earnings from last year could have come from crime.
Like from actual, and here's the thing, I don't know how- But more than that, by the way, because what we're learning about this is that this money wasn't coming from China, it was coming from Singapore.
but ultimately then being funneled over to China.
This was essentially a workaround during the period where there were chip restrictions in order to sell chips to China.
And so what it basically tells you is that there might actually be a lot more than that 20% that are being sold to China.
It might be that there are shell companies that are operating all over the world and then smuggling those chips.
to China.
So that's part of the problem here too, is like, we actually don't know how reliant NVIDIA truly is on China, because this case shows you that they have been obfuscating and smuggling their business into that region.
And the other thing is, it's...
very clear as because I'm a curious little critter and this episode is going out the day after my blog that talks about this but it turns out do you remember last year when the co-founder of Supermicro along with several other people was arrested he was arrested for for smuggling hundreds of millions of dollars they said 2.5 billion dollars worth but if you looked only a few hundred million dollars got over it over there but apparently Wally Liao, co-founder of Supermicro, who, by the way, had been fired from the company due to a 2018 accounting scandal.
He was working to help sell chips to a company in China that was also a subsidiary of Megaspeed.
So it's all connected.
And I love this.
It's so exciting to be part of a conspiracy that's real.
100%.
Because you can really spiral out.
100%.
This is the thing with conspiracy theories.
People write them off as conspiracy theories, and then they turn out to be maybe not completely correct, but mostly correct.
Yeah.
I mean, this is what I loved about the Epstein files.
Oh, there's a secret cabal of billionaires who are having sex with children in a pizza restaurant.
Okay, the last part's not correct, but yeah, they are having sex with children.
They're just doing it over on an island and not in the basement of a restaurant in DC.
I mean, these conspiracy theories are grounded in generally in some level of truth, and they might not be entirely correct, but in some cases, they are at least directionally correct.
And yeah, this is another example of that playing out.
But that actually, it's good you brought up Epstein because people like, oh, it wouldn't be this obvious.
Jensen wouldn't be this sloppy.
He wouldn't be cavorting with this woman photographed everywhere.
Because he's drunk on power and success.
But also if you look at the Epstein files, they're like, hey, Jeffrey, how's it going?
You want to do the weird pedophile pie?
Absolutely.
I'll be there.
I can't make it this time.
Did you see this drawing I did of all of it?
Exactly.
And no one went to fucking prison.
Not a single fucking one of them.
Hopefully that changes.
No, that should change.
But the thing is, I think Jensen might have to go to prison.
If he doesn't, I don't know why, because he appears to have directly and aggressively shagged his way into a conspiracy himself.
He is clearly involved in this on a material and physical level in a way that...
is clearly bigger than just Megaspeed.
It's clearly Megaspeed plus 100 other little subsidiaries.
And also, I don't know, now I've seen this and now I've seen my murder shed.
Is Russia involved in this?
Are chips getting over to Russia?
That's a question that we need answered to because this might not just be China.
This might be something completely much, much larger.
I don't know.
But at the same time, Nvidia's earnings are, as people are listening to this, today.
And if they are not fucking perfect, and the guidance is not big and sexy and beautiful, I don't know what Nvidia...
I think Nvidia could be the thing that finally flushes the toilet on this.
Now, I think they beat and raised because, I don't know, as we'll be discussing, they found all sorts of creative ways to get in revenue.
But there's a certain degree here of when does...
Not just when does the music stop, but it's when does Kayot...
Wile E.
Coyote looked down.
Because that really is it.
We've got so much different shit going wrong.
So many different things that are poking the bubble with sharp objects.
It feels inevitable that something else topples it.
Yeah.
I think the question in terms of will Jensen Huang go to prison, he certainly could.
The question is, how much did he know?
And what can be proven about what he knew?
It'll be sort of like the Lindsay Clancy of AI.
Like how much agency over this did he have?
Or was he truly honeypotted and he had no idea what was going on?
I kind of like to think that he's a smart guy.
He probably knew something.
I mean, this is a Chinese national who he decided to have a relationship with, who suddenly came into billions of dollars randomly after being a TV journalist for Chinese state media.
Like, you'd think that he would have a few warning signals start to flash.
So I kind of think he probably knew something.
But I don't know.
At the same time, your point about...
you know, the Epstein emails and the fact that these guys were so sloppy and so, I mean, that was what was so fascinating about these emails.
Like, they're literally just texting each other about this stuff.
All of it's out in the open.
And I think the reality is, when you achieve that level of power, and when you are surrounded by as many yes men as these people surround themselves with, you do get very, very sloppy.
And you start to think you're invincible.
You start to think everything's gonna be fine.
I think the same thing about Trump.
I mean, the fact that he goes out the day before the election starts talking about the reflecting pool and thinks that that's going to be enough to change Americans' minds after he completely crippled American workers around the country with Iran and tariffs.
I mean, some of the worst economic policy decisions in the history of America.
And he thinks it's all fine because he's surrounded himself in this bubble of obsequence and acceptance.
And it's the same for a lot of these guys.
So this, to me, is another example of that.
Any regular person would have realized this is probably a bad idea.
I probably shouldn't have a romantic relationship with this person who is clearly some sort of Chinese intelligence asset.
That's probably not the right move.
But when you're surrounded by all these people saying, no, Jensen Huang's the greatest guy ever.
He's created a four trillion dollar company.
He's an excellent human.
He's awesome.
I mean, if that's your life experience, then I start to understand why you could become as delusional as these people have become.
But now reality is catching up to them.
Now we're seeing what happens when people open their eyes.
Well, I think that I am serious.
As is disclosed in my blog, I think Jensen liked her.
I have looked at no less than 50 pictures of Jensen Huang in the last 48 hours.
And I've compared them to the photos of him with Alice Huang.
no relation.
And he is goofy.
He's a good, he is, he looks happy.
He looks relaxed.
In all the other ones, he has this cold sternness, but in this one, he, he looks kind of like.
It's almost surprise.
Yeah, exactly.
He looks like shocked at how things worked out.
And here's the thing.
I found this photo of her though.
The real damning one is she's got this big smile on her face.
And then she has this loose drop of a hand, arm completely around the neck.
As I said in the blog, ladies, You see another woman with her hand like that on your boy's shoulder?
Watch out.
Red flag.
She's working for the Chinese.
No, that's not what I'm saying.
She's working with every woman who does this as a Chinese agent.
Well, I do wonder how many Chinese spies are out there.
I am actually going to make a point, though.
On Twitter, I have seen something fucking vile, which is...
Oh, now I've seen the Jensen thing.
Check this out.
And it's just every tech executive with an Asian wife.
And it's like, fucking racist.
That's what that is.
It's like, oh, an Asian married a white guy.
They're a spy.
It's like, no, go fuck yourself, you fucking racists.
Also, Larry Ellison, just from what I hear, likes Asian woman.
That's a quote from a venture capitalist I know.
So like, you know what Larry would like to do is up to him.
But also it's just, this is not that.
What happened to Jensen is very clearly that he is on the road all the time and also very greedy and wants to pump NVIDIA's earnings and met a woman who could help him do both and also clearly fell for her.
Clearly fell for this sophisticated woman who understands, God, the conversations must have been fucking boring.
Oh, I got to sell so many GPUs.
And she's like, yeah, yeah, you should ship them to Malaysia.
You should ship those GPUs to Malaysia, Jensen.
Or, of course, he fully knew.
Or perhaps he was trying to impress her.
Yeah.
That's also a good one.
Because this is the thing.
He's fucked up in a way that so many guys fuck up.
Well, they blow up their lives on a romance scam in Southeast Asia.
I mean, that's like 50% of Facebook's revenue, isn't it?
I mean, this is sort of his equivalent of some sort of OnlyFans scam.
It's just that now instead of a couple hundred dollars on the line, it's trillions of dollars on the line.
But the question that'll be really interesting is what is the board going to do about this?
Because a lot of people believe that NVIDIA isn't NVIDIA without Jensen Huang.
And by the way, their governance structure is pretty shady because they do not have a board share.
because they've always just assumed that Jensen Huang can handle everything.
What does that mean in practicality though?
It means that you don't have a balance of power between the CEO versus the chairman to set the agenda.
So essentially, Jensen Huang is the de facto chairman.
He has a lot of power over the company.
Now, he doesn't have the level of voting power that you see with people like Mark Zuckerberg, who set up these dual-class shareholder structures so that they could determine.
and essentially never be ousted from the company because they control more than 50% of the votes.
He has around 3.5%.
But still, there is no chair and there is no succession plan either because I think they have operated up until this point under the assumption that Jensen Huang will kind of live forever and he's the greatest and no problems whatsoever.
And now they've run into this problem where obviously he might have...
seriously compromised national security.
But at the same time, he's also just exhibited extremely poor judgment, like just at a very simple level.
He fell into this romantic relationship with a woman who appears to be a spy.
And that really just shakes your confidence in him as a leader, as a manager, as an operator.
And the question I think will be, does the board think that this is disqualifying?
And I think it's a decent chance that they might.
I think there's a decent chance he will be out.
The question is, how much did the rest of NVIDIA know?
Again, the general counsel, Tim Teeter, of NVIDIA was hounding the commerce department.
Got it right on that time, then fucked up the word commerce.
And he was hounding them specifically about stuff about Alice Wong being detained in 2024.
It's obvious that people at the company knew.
And I should also say, the California state bar should have Timmy up before him.
Because Tita was saying, now here's the disclaimer, the FT did not cite where he made these comments.
He was saying that the Alice Wong affair was salacious rumors days ago.
But apparently they weren't rumors, they were fucking true, Tim.
Now, the reason I mention that is California in 2020, sorry, 29...
sorry, 2019, 2018, added a rule about making false statements.
So I don't know if he said that anywhere that can actually be quoted.
I feel like that's a violation of his, his oath.
I don't know what they say.
Someone's going to email me and be like, it's not an oath when you become a lawyer.
But nevertheless, I should be subpoenaed.
He should be brought in front of Congress.
He absolutely should.
I think.
Jensen Wong is going to be brought in front of Congress, but this guy should be brought in front as well.
And they should do it publicly.
Along with a lot of people.
They should do it publicly.
I mean, there is a debate in the Democratic Party right now about whether we should pursue retribution for all of the crimes and all of this stuff.
My answer is, fuck yes.
Of course we should.
We should have, I don't know if you knew around 2021 when Biden was getting sworn in, a lot of the QAnon people were doing that.
There's going to be 24-7 trials.
Now, to be clear, that didn't happen and shouldn't have happened.
It should hit.
Yeah.
There are clearly crimes.
We should have the trial channel and they should let me be the one that interviews Sam Altman.
So I've got some questions, but in all seriousness, they should.
It would generate a lot of ad revenue.
Oh my God.
The US government would make billions of dollars in ad revenue.
My 11th question.
It would generate a lot more money than the tariffs generated.
I can tell you that much.
Here's the thing with that is we do need accountability, but also we need to be able to see what's going on.
We need to be able to, the public not only deserves to know, but the public and the people voted in this way as well.
We need accountability for these people.
We need them to both be embarrassed, but also forced to be honest about what they're doing.
100%.
The idea that you wouldn't pursue justice, that you wouldn't prosecute what clearly amounts to apparent crimes.
Lots of very serious crimes, insider trading, securities fraud, federal bribery, abuse of office.
I mean, I could go on.
The idea that you wouldn't pursue justice out of fear of being seen as political is a fundamental failure of the justice system.
It is both unjust and then also, at the same time, incredibly cowardly.
Because you're not doing the right thing because you're afraid of what people might think.
You're afraid of how people might vote in the next election.
And honestly, I'm just sick of the cowardice.
And we've talked about this on the show before.
I'm sick of the cowardice in the government.
I'm sick of the cowardice in business.
All of these people who don't seem to have any spines whatsoever.
And I want to see them actually stand up and say, hey, this is wrong.
This was a crime.
We're not going to just...
punish you for political reasons.
We're going to punish you if you broke the law.
So now we're going to put the justice system to work.
The whole point is to determine whether someone was guilty or not.
And if you're guilty, then yeah, you're going to go to jail.
You're going to face the penalty.
You're going to pay the price.
And so the idea that we're not going to do that because that's lawfare is just completely ridiculous.
There is a difference between lawfare and the law.
And this is simply the law.
And to wrap things up as well, the same needs to go for these executives.
Because a really great way to make sure this doesn't happen again is to make it really fucking suck.
Yeah.
To make it genuine, to create a social hazard along with any potential crimes you get.
Yes.
Like knocked onto you.
Because here's the thing.
Jensen Wong has...
obviously flagrantly helped Chinese smuggling.
And Wally Liao, the co-founder of Supermicro, has obviously gone to jail for doing this.
And I refuse to believe, by the way, that Charles Lang, the CEO of Supermicro, had no idea that this was happening.
Right.
And this is the magical thing.
This is the magical thing about this.
We now have an opportunity to skewer these fucking people.
To have them, we need a televised trial for them, or even just a Senate panel.
Like, we should have clips like we had with Enron.
We should have that because, and this is not just my bloodlust, which is there.
I want it.
I want to watch this.
I want to clip this.
I want to add music.
I want to add the, remember the, what was it?
What's the soundtrack going to be for this one?
Well, here's the thing.
If it's Jensen Huang admitting something on camera, it's got to be, what was it?
The Nigerian, was it Nigerian funeral music?
I got so much shit ready for Sam Orman.
I got a Jojo's Bizarre Adventure clip or two.
Like I got so much to work with here.
But guess what?
If you, as a would-be criminal in the future, see these videos and interviews and you go, I don't want to get involved in that.
They're really going to make me embarrassed.
That's far more powerful than any sanctions or firings or anything.
It's when you're, because when you are this rich, all you have is your name, really.
Yeah, that's right.
All right.
I'm going to wrap up on that wonderful note.
Ed, thank you so much for joining me.
Thank you.
Always love having you on my show too.
Really appreciate it.
And everyone, you'll have your monologue on Friday.
Of course, you've been listening to Better Offline.
Thank you for listening to Better Offline.
The editor and composer of the Better Offline theme song is Matt Ossowski.
You can check out more of his music and audio projects at mattosowski.com.
M-A-T-T-O-S-O-W-S-K-I.com.
You can email me at ez at betteroffline.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 slash betteroffline to check out our Reddit.
Thank you so much for listening.
Better Offline is a production of Cool Zone Media.
For more from Cool Zone Media, visit our website, coolzonemedia.com or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
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