Monologue: OpenAI Could Kill SoftBank and Oracle

Opening monologue and newsletter sale

0:00This is an iHeart Podcast. Guaranteed Human.

0:05Hey, it's Kelly Rowland. You may not know this, but I have eczema, so I get how it can steal your time. But why let eczema take over when you can talk to your doctor about ebglis? Ebglis, Lubrikizumab LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies, ebglis can be used with or without topical corticosteroids.

0:39Don't use if you are allergic to ebglis. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with ebglis. Before starting ebglis, tell your doctor if you have a parasitic infection. Paid partnership with Lilly. Respect your time. Ask your doctor about ebglis and visit ebglis.com or call 1-800-LILLY-RX or 1-800-545-5979. My name is Jessa. One of the things I love the most about working for UnitedHealthcare is that everybody matters. Every moment matters.

1:14There's a person behind every problem. I care because it's what I was put on this earth to do. I'm Ben, and I work at UnitedHealthcare. I am just one piece of a larger puzzle, but every piece matters. It's more than just work. We want to make the healthcare system better for everyone. I care because I want to make a difference. That's what committed to care means to me. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload.

1:49Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at odoo.com. That's odoo.com. We'll see you next time.

2:40That's odoo.com slash podcast. JPMorgan Chase Bank, N.A., member FDIC, copyright 2026, JPMorgan Chase and Company.

2:53What's up? It's Better Offline, and I'm your host, Ed Zitron. It's your Better Offline monologue for the week. It's Better Offline.

3:12Folks, it's been a long few months, and I've taken the vast majority of this week off to recoverer after writing about 100,000, 200,000 words in the last few months, not even including my upcoming book, The Hater's Guide to Silicon Valley, coming out in 2027. If you want to support my work, I'm currently doing a week-long sale for the premium newsletter, $10 off the annual rate for life. That'll be in the notes. Please do, if you feel like supporting me, do that. Newslet and the podcast are now my principal source of income. It's happened. The era of smiles has begun. Join me and receive the bounties of words every week, except this one as I'm taking the week off.

3:46So let's begin, and I wanted to start by saying how you, the listener, might help me. First of all, my signal is eZitron.76. The things I'm looking for right now that would help me are Anthropics S1, or any and all documentation of its cloud spend and financial condition, especially if you can get me something from Amazon Web Services or Google Cloud that shows me how much this company is spending. That'd be very, very helpful to me. As would any and all information about the AI revenues of any major tech company that aren't public knowledge,

4:16and any and all information about the cloud spend of OpenAI, Anthropic, Perplexity, or any other major AI startup, and, of course, any of the financials of any AI startup, you can get me. The same goes for token spend at any corporation. Please use Signal. Please take photos of any documents. Do not send me PDFs. Do not send me documents for your safety and for mine. And please, please, please, do not send me stuff that's already public. This isn't because I'm chiding you. I'm just saying people get excited and they want to help, and they send me stuff that's already out there. Yeah, I've probably already seen it.

4:46I'm a freak. I'm looking at this stuff all day. All right, folks, let's roll to the actual monologue.

The OpenAI bubble and SoftBank exposure

4:52So earlier in the week, I put out a 15,000-word piece called The OpenAI Bubble, a massive guide to how OpenAI is the cause, enabler, and justification for the entire AI bubble writ large, and how everything kind of collapses when it dies. I wrote it because I've heard a lot of people say it's an OpenAI bubble, not an AI bubble, over the last year as a way of waving off potential detractors, suggesting that OpenAI could collapse and everything else would be left behind and fine. You're living in a bubble yourself if you think this way. That's a crazy way to live one's life.

5:22And please, please, please stop emailing me about the bailout. I've gone over the summiters. Anyway, in truth, OpenAI is the largest consumer of AI compute, accounts for over $800 billion of remaining performance obligations across hyperscalers and neoclouds, the people that rent out AI GPUs and basically just exist to funnel NVIDIA money, and likely over $100 billion of the future revenues of Broadcom and NVIDIA themselves. I go into detail about it in the piece, but I kind of wanted to go over it a little today in today's monologue too. OpenAI is also a material risk to both SoftBank and Oracle.

5:56If OpenAI can't go public, SoftBank is going to face a massive liquidity crisis. It has $45.9 billion in debt that matures within the next 12 months, and they'll either have to refinance it or pay it. Except that's going to be much more difficult, because they've jettisoned most of its valuable stocks in T-Mobile and NVIDIA, all while pushing up against the limits of what it can borrow against its holdings in the chipmaker arm, which it bought, I think, back in 2023 for $32 billion. It went public at $50 billion, but the holdings are worth hundreds of billions of dollars.

6:28Except that's kind of a problem, which I'll get to in a minute. But SoftBank will never truly go bankrupt. That doesn't mean it's not a problem if OpenAI fails, because it would be put in a historic crisis, one worse than the dot-com bubble, where Masayoshi's done a bit everything in, like, geocities, and even the horrors of 2022 and 2023 when the Vision funds had losses of, what, $32 billion. Back then, SoftBank had plenty of other valuable stock and ways to raise debt. They had the Alibaba stock, they had their holdings in Betfair and other things like that.

7:02Except most of that is gone now, and now S&P Global has downgraded its outlook to negative, which means they think they might actually downgrade its credit in the future. And just to be clear, they specified that the reason that S&P did that was OpenAI. They said the words. They literally said it was the case. Except now, what the hell is SoftBank meant to do? It doesn't have anything else to flog, really, other than its ARM stock. And the problem there is that SoftBank is the largest holder of ARM stock in the world, which makes it difficult for it to liquidate too much without spooking the market.

7:35Think of it like this. If the largest holder of a stock says, I'm just going to start selling it off for liquidity, it officially stops being about the stock in question, but the company's selling it. The value of ARM will turn into a bet on whether SoftBank can afford to pay its own bills. It's already taken out a bunch of margin loans on the stock, and further loans will be difficult to raise for the very same reason. While it will be likely rescued by the Bank of Japan and other local financial institutions, there has never been a more dangerous time for Masayoshi's son. Check out my Hater's Guide to SoftBank.

8:07I know it's a premium thing, but there's a deal going on. It's a beautiful deal. I've stopped in the Trump impression now. And get on to one of his friends.

Oracle contracts and data center capacity

8:14It's Oracle. Now, in Oracle's case, its entire future rides on OpenAI's ability to pay it about $70 billion a year in annual revenue, and that rides on Oracle's ability to build about 7.1 gigawatts or so of data center capacity in the next two or three years. I'm not kidding. It's genuinely what they need to do. Oracle and OpenAI have a $300 billion contract that's meant to have started on June 1st, 2026, with said revenue coming from the Stargate data centers that Oracle is building for Clammy Sammy.

8:46That's right, Mr. Altman, Clamuel. We don't like him. The problem, of course, is that 7.1 gigawatts of capacity needs to be built, and barely 400 megawatts of it actually exist. And that's in Stargate Abilene, a project that broke ground in the middle of 2024, and was meant to be done either the end of last year or a couple of weeks ago. And everything I hear from the people inside Oracle is that they keep firing all the people who know how the fucking business works. It's a terrible thing for them.

9:17Oh, and another thing is that Oracle literally warned in its annual report that it may or may not get paid by OpenAI, and that said non-payment would potentially also mean that it couldn't lease the GPU capacity to anyone else. As in, no one else really exists that could buy it, and if they did manage to sell it to them, it would be at a massive loss. Plus, is that good? Also, tell me, is it good that S&P Global also downgraded Oracle just one step above junk grade? They're barely investment grade credit-wise for now.

9:47Fallen Angel status aren't incoming, maybe. I'll explain what that means in another monologue. You don't really care. Let's get to the funny stuff, though. Larry Ellison, CEO of Oracle, well, sorry, Chairman of Oracle. CEO is currently two different Mr. Bean-type characters. He's also used $346 million of his $1.16 billion Oracle shares for an estimated $21 billion of margin loans. Personal ones, just to be clear. Otherwise, he has about $10 billion in cash and $15 billion in Tesla shares. Why do you care about that? Well, this is material, because he also has to conjure up about $20 billion in cash, actual cash,

10:22to push through the Paramount-Warner Brothers deal by September 30th. Otherwise, he gets fined about $500-600 million a quarter. And to do so, regardless of whether it happens, whether it's stopped by then or whether it's meant to go through, he's likely going to have to take out further margin loans on his Oracle stock. And depending on how said stock is doing, getting that loan might be quite problematic. I think I just said problematic, but I'm just going to keep on going. All right, folks, I'm here talking to you again about Quince, one of my favorite clothing brands.

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11:34so you're always paying for high-quality, not brand markup. And I absolutely love their stuff. Upgrade your every day. Download the Quince app for app-exclusive offers or go to quince.com slash better. Get free shipping on your order and 365-day returns. Now available in Canada and the UK, too. That's Q-U-I-N-C-E dot com slash better. My name is Jessa. One of the things I love the most about working for UnitedHealthcare is that everybody matters.

12:07Every moment matters. There's a person behind every problem. I care because it's what I was put on this earth to do. I'm Ben, and I work at UnitedHealthcare. I am just one piece of a larger puzzle, but every piece matters. It's more than just work. We want to make the healthcare system better for everyone. I care because I want to make a difference. That's what committed to care means to me. Hi, it's Kathleen Griffith, co-host of The Unshakeables podcast. Listen in as Ron and Kelly Moore share their story.

12:38I'm Ron Moore. And I'm Kelly Moore. And starting our own business in our 50s was a little scary, but exciting. The biggest advantage was our community. The whole thing about business is relationships. We'll say team a lot. Not just our internal team. It's the team of our vendors, the team of our clients. We help the Veterans Resource Center, and we give scholarships. I'm doing this for my heart, for my children, for you, for your children's family.

13:10I don't want anything back. And I tell a lot of people, don't give back to me. Pay it forward. If you work to give, you just see the world differently. I'm going to help as many people as we can. I can't take it with me. To hear more from Ron and Kelly, listen to The Unshakeables wherever you get your podcasts. Hey, it's Kelly Rowland. You may not know this, but I have eczema. So I get how it can steal your time. But why let eczema take over when you can talk to your doctor about ebglis?

13:41Ebglis Lubrikizumab LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema, also called atopic dermatitis, that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. Ebglis can be used with or without topical corticosteroids. Don't use if you are allergic to ebglis. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems.

14:12You should not receive a live vaccine when treated with ebglis. Before starting ebglis, tell your doctor if you have a parasitic infection. Paid partnership with Lilly. Respect your time. Ask your doctor about ebglis and visit ebglis.com. Or call 1-800-LILLY-RX or 1-800-545-5979.

Margin loans and market risks

14:33So to explain, a margin loan works by offering up a certain amount of shares as collateral, a little like a mortgage. So if you were taking out a 25% loan-to-value loan for $1 billion, you'd offer up about $250 million in stock, maybe a little more depending on how volatile it is. When the value of said stock drops below a certain amount, you get forced to do something called a margin call. Well, a margin call happens to you, I mean. Where you're forced to either proffer up more cash to cover the shortfall, or far more likely in Ellison's case, give up more Oracle stock.

15:04The problem that Ellison faces is the very same one that SoftBank has with Arm. He owns 40% of Oracle's shares, which means that liquidating them would be very difficult. If he started selling them off, the market would say, oh Christ, is he going to sell his 40% holdings in Oracle? Sell, sell it all. The piss index is crashing. And to make matters worse, he's collateralized over $50 billion worth of Oracle shares, the ones I mentioned earlier, which means that if Oracle's stock drops below, say, I don't know, $60 a share,

15:35he'll be put in a vicious cycle, where he'll either have to hand over more and more shares to cover the shortfall, or worse still, have to sell them to keep up. Hey, hey, stop laughing. Stop it. Stop laughing. Mr. Ellison is in real trouble. Larry Ellison could be in a real pickle. Stop it. I'm just kidding. Fuck Larry Ellison. Anyway, the worst part is that OpenAI doesn't even have to collapse for this to happen. The AI bubble isn't based on anyone's actual revenues, productivity, or ROI.

16:05No hyperscaler actually reports their AI revenues. Oracle kind of bundles them within OCI, their infrastructure bucket, and outside of OpenAI and Anthropic, the industry is actually incredibly small revenue-wise. Very loud and annoying, though. The markets have conflated a CapEx bubble, as in buying GPUs and the surrounding gear for data centers, with a thriving AI industry, which is a nice way of saying that the current slate of prices for Microsoft, Google, Amazon, Meta, and Oracle, and their current AI-focused bumps, are based on vibes and mania.

16:36Vibes can break. Mania subsides. All it takes for things to go pear-shaped is for the market to believe, to become convinced, that Oracle won't get paid by OpenAI for them to start dumping the stock. All they have to believe is that all of that CapEx, all of that negative cash flow, is just for nothing. It's for a company that either won't exist or won't be able to actually afford all of that data center capacity. See, every time I say this out loud, I feel crazy.

17:07The biggest myth, though, about Oracle is that it's this healthy, profitable business, and that this AI thing is just yet more good stuff that they've added on top, when in fact every other business segment other than renting out AI GPUs is either plateaued or in active decline, meaning that Oracle's entire future rides on whether it can monetize its FinDOM relationship with NVIDIA and Jensen Wang. And really, Oracle's story is fundamentally insane right now.

17:37It's spending $340 billion or more on AI data center capacity for one client, OpenAI, in the hopes that OpenAI can bring it $70 billion a year in revenue for a contract that began a month ago, except most of the capacity is barely under construction, and because data centers take 18 to 36 months to build, it's unlikely that more than a single gigawatt will be ready before the beginning of 2028, if at all. Building this capacity is costly, and Oracle's cash flow has been negative $20 billion or worse for the last two quarters,

18:09with plans to spend another $90 billion in the next fiscal year, which just begun in June. The 22,000 people that it laid off in the past six months were, based on discussions with many sources, load-bearing parts of its infrastructure, throwing parts of the business into active chaos, and genuinely causing problems with renewals for its Oracle database products that are the cornerstone of how Larry Ellison's heart beats. I don't know what to say. I don't know. I am just a guy.

18:39Why am I the one that found this? It's sitting in broad daylight. Maybe people just don't do mathematics. I don't know. But this is quite bad. And the point I'm making, though, just to simplify, is that for me to be wrong, OpenAI will have to bring in hundreds of billions of dollars a year in revenue for themselves by 2030, which will require it to become either profitable, massively profitable too, like, not just, like, a little bit of EBITDA profitability. I mean, 20, 30, 40 billion dollars a year plus, or just continually raise money.

19:13I'm talking hundreds of billions of dollars a year. And no, no government bailout will cover the shortfall. The government's talking about 5% share. That'd be 42 billion dollars. That won't even cover their fucking inference costs if they last to 2027. It's a joke. Oh, and by the way, even if OpenAI does that, Oracle will have to complete the single most ambitious construction project of all time, building enough power to power multiple cities, erecting giant data centers in multiple states,

19:44make them fully operational with far less people and a shortage of both talent and the core materials like electrical-grade steel, and also do so on a timeline that doesn't put it in breach of contract with OpenAI. Would it shock you if I told you that this is considered radical thinking? Would you be surprised if I told you that many journalists simply shrug when you tell them this? And they go, they'll work it out. They'll work it out. It'll all work out. It'll work out. Don't worry about it, Ed. You're crazy, Ed. Ed, why are you outside my office?

20:16Why are you dressed as a duck? Why do you keep saying, I'm the deterioration duck? Quack, quack, quack. The market's going to hell. And the answer is, that's a bit I'm working on that I'll go to later.

Closing thoughts and industry outlook

20:26In any case, I am kidding. And I do need to say, the future really is one strewn with chaos and carcasses. And I'm not sure the world is actually ready for it, thanks to a captured media industry that refuses to do the messy work of reconciling with the projections that range from unrealistic to fantastical. When the time comes, people are going to be asking why we didn't see this coming. And as I've said before, it's because nobody wanted to fucking look. Anyway, thanks as ever for listening. Things are going to get real interesting over the next few months.

20:58I just got me a Bloomberg terminal, and it's a source of unfathomable power that I believe will take my coverage to the next level. If you're on there, shoot me a message. Shoot me a goot on ploop. That's another social network on man. And I really do genuinely deeply and meaningfully appreciate the many wonderful messages and emails I receive every day. And I'm so grateful to have such incredible fans and followers. You're all amazing. Like, I hear from so many of you, and you're very thoughtful and smart, and you pick this stuff up very quickly. I love you all. And I assume you're bellow, we love you, chef, in response.

21:30See you next week. Hey, it's Kelly Rowland. You may not know this, but I have eczema. So I get how it can steal your time. But why let eczema take over when you can talk to your doctor about ebglis? Ebglis Lubrikizumab LBKZ, a 250 milligram per two milliliter injection, is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema,

22:03also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies. Ebglis can be used with or without topical corticosteroids. Don't use if you are allergic to ebglis. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with ebglis. Before starting ebglis, tell your doctor if you have a parasitic infection. Paid partnership with Lilly. Respect your time. Ask your doctor about ebglis and visit ebglis.com or call 1-800-LILLY-RX or 1-800-545-5979.

22:39Hey everyone, I'm Jamie Lynn Sigler. When I got my diagnosis, I was in my 20s and it turned my whole world upside down. But over time, I decided I wasn't going to let it hold me back from my life. I decided to take charge. And after talking to my doctor about my options, the choice for me was obvious. Boom. That's Kesimpta. Learn more about Kesimpta or fatumumab at kesimpta.com. This is Ashlyn Harris from Wide Open with Ashlyn Harris.

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24:13This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR, fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at O-D-O-O dot com.

24:47That's Odoo dot com. This is an iHeart Podcast. Guaranteed human.