00:53:57 · Ed Elson
[00:53:57] S4: If you were to look at just the, you know, extremely levered AI names, like, you were looking at the NeoClouds, like, the bubbles popped. Those names are crashing. Like, the the... That's what a crash looks like. But the difference is that with this AI build out, it's not just these new names that are participating in this whole thing. It's the big names, which might sound like, oh my god. That's really dangerous. But at the same time, it's like, actually, it's less dangerous because those big names already have extremely strong preexisting businesses. So, you know, we're not seeing this gigantic crash that you might see as people start to get very worried about the bubble because you have this this sort of support mechanism where you've got a giant search business and you got a giant giant ad business. I mean, it's it's an interesting... It's an... The dynamics are very interesting because it's almost as if there is more downside protection on this boom bust cycle than in previous ones, which is less dramatic and exciting and sensational, but ultimately better because it means less pain if things go wrong. I know I'm gonna get a lot of shit for that... For saying that, but it is what I believe.
00:55:16 · Scott Galloway, Ed Elson
[00:55:16] S0: There are two scary things here that the media, I think, is is mostly missing. The first is that... So we didn't even mention it. The most... I thought the most interesting number, and what what would have been the headline number from the Microsoft earnings call, any guesses? It... We're not even talking about it. And it was a staggering number. Any guesses? Compute growth? [00:55:45] S4: Cloud revenue growth? [00:55:46] S0: I'll give you a hint. 60,000. [00:55:48] S4: I don't know. [00:55:48] S0: That's the number of buyouts that people are [00:55:50] S4: offering Yeah. Buyouts [00:55:52] S0: Yeah. I mean, this is Yep. This is the fear. I've never, again, going back to trying to sound more important than I'm on, I've never been on a board where it's like, oh, our revenues are up 20% or 12%, and we just offered buyouts to 60,000 people. You've never heard that before. This is this is the frightening part about AI, is you can massively grow your top line, beats on top and bottom, and the CEO says, oh, and try and reduce our headcount by 60,000 people? I mean, if you have any doubt that we have become shareholder nation, that the only thing that matters is earnings per share and year to date stock performance, thirty or forty years ago, it would have been frontline news. Microsoft to to to offer buyouts to 60,000 people? [00:56:47] S4: Nearly a third of the workforce.
00:56:47 · Ed Elson, Scott Galloway
[00:56:47] S4: Nearly a third of the workforce. [00:56:49] S0: Barely even mentioned. Barely even mentioned. The other really frightening thing is I believe NVIDIA has agreed to purchase or participate in the debt offering of Meta. So these deals [00:57:01] S4: There we go. [00:57:01] S0: That's And by the way [00:57:02] S4: It's not good. [00:57:03] S0: Some of that money will be used to, wait for it, be used to buy NVIDIA chips. So NVIDIA is not only selling the picks and the shovels, they're financing the mine, and they own the bank that's loaning the money to finance the mine to buy those shovels. I mean, it is literally the mother of all circular circular deals here. And I used to do this in the nineties. We all kinda knew each other in the valley, and we were... We would oftentimes buy each other's products or make small investments in each other's companies, you know, to try and prop up the whole ecosystem. And when you think about how many companies... If you did an org chart or a chart depicting where NVIDIA has invested, it feels a lot... It feels eerily reminiscent to FTX in their heyday and how Sam Bankman Fried was investing in everything crypto and propping up the entire ecosystem. It feels like NVIDIA is is, in terms of financing and related party transactions and circular deals, the kind of... I would have thought that that would start scaring people. 60,000?
00:57:03 · Scott Galloway, Ed Elson
[00:57:03] S0: Some of that money will be used to, wait for it, be used to buy NVIDIA chips. So NVIDIA is not only selling the picks and the shovels, they're financing the mine, and they own the bank that's loaning the money to finance the mine to buy those shovels. I mean, it is literally the mother of all circular circular deals here. And I used to do this in the nineties. We all kinda knew each other in the valley, and we were... We would oftentimes buy each other's products or make small investments in each other's companies, you know, to try and prop up the whole ecosystem. And when you think about how many companies... If you did an org chart or a chart depicting where NVIDIA has invested, it feels a lot... It feels eerily reminiscent to FTX in their heyday and how Sam Bankman Fried was investing in everything crypto and propping up the entire ecosystem. It feels like NVIDIA is is, in terms of financing and related party transactions and circular deals, the kind of... I would have thought that that would start scaring people. 60,000? [00:58:14] S4: I think it has, which is why the multiple has contracted. And and and, you know, that... That's why I don't think I can buy NVIDIA is for that reason. Like, even though the multiples come down [00:58:26] S0: Don't tell that to Josh Brown.
00:58:27 · Ed Elson
[00:58:27] S4: Yeah. Exactly. You get mad at me. Words with Josh. That's why I can't do it because of that. I mean, this is just classic bubble behavior. And and the FTX comparison, think, is a good one because what was it that that brought FTX down? It was a change in market sentiment. As soon as you leave yourself that exposed and then suddenly the music stops, that's when the problems start to arise. And so, you know, again, it would be different if you were financing all of these operations independently, but that's not what's happening. They're becoming increasingly dependent on fundraising. As you point, if Meta needs NVIDIA to go out and buy its equity or buy its debt, that tells you something about market sentiment and demand, which leaves you a lot more exposed. So that... Yeah. That's the problem. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com. Support for the show comes from Vanta. When you run security for a company that's scaling fast, the stakes just keep climbing. More compliance frameworks, more vendors, more risk, and a board that wants to see it all in one place. But in actuality, your compliance data is all over the place. Controls in one tool, vendor risk in another, and customer commitments buried in contracts. Your team has to spend more time stitching it together and less time running the program. And every quarter, you're basing decisions on last quarter's data. That's why Vanta connects it all. Its market leading agentic trust platform is built for enterprise scale. With more than 400 integrations and continuous monitoring, Vanta automates evidence collection, surfaces the risks that matter, and organizes your audit around your auditors' requirements. The numbers back it up. Vanta delivers a 526% ROI over three years and pays for itself in three months, and it's trusted by more than 16,000 companies, including Snowflake, Atlassian, and Ramp. Learn more at vanta.com/markets. That's spelled vanta.com/markets.
01:00:42 · Scott Galloway, S5, S6
[01:00:42] S0: Honey, that flu keeping you up? Yeah. I don't got this. You need Nyquil intense flu. [01:00:48] S5: Undo your flu symptoms with Nyquil intense flu, the nighttime sniffling, aching, aching fever, best sleep with the flu medicine. You do got this. Use as directed. Keep out of reach of children. [01:00:56] S6: Are you tired of hearing about business, tech, and finance from the bros? We are the Tiger Sisters, a top business podcast with the Vox Media Podcast Network. Tiger Sisters releases every Monday, and we decode money, power, and love. And who doesn't love all those things? We are the Internet's Wall Street and Silicon Valley big sisters. Tune in every Monday for late night sister talk meets boardroom strategy. Check out Tiger Sisters on YouTube, Spotify, or wherever you get your podcasts. Welcome to the Tiger fam.