Monologue: We Live Inside A Dream, But Who Is The Dreamer?

Meta and Microsoft earnings

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2:23Hello and welcome to this week's Better Offline monologue. I'm your host, Ed Zitron.

2:41It's been a weird week. I'm recording this on Thursday, the 30th of July, so we've only had Microsoft and Meta report earnings so far. So let's start with Meta, who saw its stock get hammered today after missing on earnings per share, narrowing, by which I mean increasing by another word, its capital expenditures guidance for the year to a range of about $135 billion to $145 billion, and guiding, as in projecting, $61 billion to $64 billion of revenue in Q3, which was below estimates. Cash flow also deteriorated to a little under $800 million.

3:14And I must be clear how strange it is watching these companies do this. Meta used to just print money. They used to have tons of free cash flow. But this dedication to AI is questionable and wasteful. And the market is pissed, mostly because Meta has yet to show any proof that spending over $200 billion in capex did anything for the company. Conversely, Microsoft's stock is ripping because it beat on analyst estimates across the board, with its Azure cloud platform hitting $100 billion in revenue for the fiscal year that just ended. And to be clear, Microsoft's fiscal year, 2026, started on July 1st, 2025.

3:49Annoying. So annoying. I hate it. But that's the ballgame. What's funny is that neither company actually proved that AI is paying off, outside of brainless analysts in a captured business and tech media, reading between the lines and saying, Ooh, AI's paying off big time. Last quarter, Microsoft disclosed its AI run rate, month times 12, which was $37 billion, about $3 billion a month, and then simply chose not to report the figure at all in this quarter. I assume because the number was lower, but that doesn't matter to anyone covering earnings. Put the AI hype in the bag.

4:20No thinking. Only number go up, please. No thinking at all. We cannot think here. It's not like people are going to buy Microsoft's stock because of this. I'll also add that nobody seems to want to discuss that Microsoft Azure's largest customer, and likely the vast majority of its growth, is OpenAI, an unprofitable, unsustainable company that accounted for, per my own reporting, 69% of all year-over-year growth of Microsoft's cloud in calendar year 2025. Microsoft's cloud revenue mysteriously seems to grow every quarter,

4:52with OpenAI's increasing spend on AI compute, a fact mentioned in exactly zero of the stories I read about earnings, and god damn did I look. The inflation of the AI bubble was only made possible by the continued unwillingness of the media to actually explain or even try to understand what's going on. Microsoft's growth was immediately credited to its AI bets paying off, ignoring both OpenAI's compute spend and the massive Microsoft 365 price increases that hit on July 1st, because it's convenient and rewarding to coddle the powerful and celebrate their supposed victories

5:25rather than actually seeking the truth. And what's funny is people are going to say, well, OpenAI is their bet paying off. Is it? Is it when it's a venture capital-backed company, when Microsoft has had to sink over $13 billion into the company, when there were reports in 2025 that that compute was served at cost? How much of their investment is to zero credits? Who knows? Nobody bothers to look. No one bothers to ask. The analysts on these calls should not have jobs. They do not exist to protect investors. They exist to perpetuate hype cycles.

OpenAI compute and Microsoft growth

5:58And what's actually happening to this company is pretty simple. As OpenAI's largest provider of AI compute, Azure revenue growth will continue to spike as long as venture capital continues to funnel cash to clammy Sam Altman. Microsoft has not found some magic AI money cheat. It has not unlocked incredible value for its Microsoft 365 Copilot subscribers. And it's not got some secret sauce. While 365 Copilot subscriptions increased by $10 million in this quarter, keep in mind that Microsoft regularly discounts or simply adds it for free to pump these numbers up.

6:31We're far past the point in the AI bubble where naked deception is necessary because the media is more than willing to keep filling in the blanks at the preference of the companies. Keep in mind that a mere 24 hours before Meta's horror show earnings that the Wall Street Journal and New York Times both ran separate stories about Mark Zuckerberg wanting superintelligence for all, a vacuous statement that exists only to get an irrelevant company attention and to paper over its meaningless and wasteful AI play. What superintelligence, Mark? You're building fucking large language models. Who cares? Who fucking cares? None of this actually connects to what the models do.

7:05I feel like I'm going insane. And just look at the coverage around NVIDIA's potential backstop of $250 billion in compute spend on the still-theoretical 10-gigawatt data center in Ohio that a SoftBank subsidiary wants to build for OpenAI. Not once in any of the stories did I read a single thing about how OpenAI can't afford that spend, that debt markets are becoming exhausted with AI loans, that SP Energy has never built a data center before, and that none of this makes any financial sense.

7:36No need put the AI hype in the bag. No thinking, only growth. Number go up. No need to think at all. Just run story. Numbers are big. We love number. Again and again and again, the media fails investors and the general public through either a misplaced attachment to fictional objectivity or a desperation to appeal to the powerful. It doesn't really matter which one is true because they both have the same effect, creating the appearance that any of this is possible in a way that only benefits the rich and powerful.

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9:13If your bookshelf and your For You page are equally important to your personality, welcome home. This is Prose Society, the weekly podcast that's part book club, part group chat for thought daughters, pop culture obsessives, and anyone who thinks Pride and Prejudice and Love Island deserve the same level of discourse. I'm Eli Rallo, and every week we're connecting the dots between books, the internet, and the conversations everyone can't stop having. I'm going to have to look up this story. I'm obsessed. So obsessed. From best-selling authors and your favorite book talk creators to the latest pop culture moments,

9:47nothing is off the table. It's like if you can hide some real messages inside compelling characters, then that is the Trojan horse. Whether you're looking for literary deep dives, smart pop culture conversations, or a community of readers who love to think a little too much, you're in the right place. Listen to Pro Society on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. See you between the pages. Hey, this is Hayes Davenport. And Sean Clements. We host the podcast Hollywood Handbook on the Big Money Players Network.

10:20Our show is extremely accessible to first-time listeners. Each week, we talk to someone in show business, a.k.a. The Biz, and try to help them with their careers and see what they have to offer us. Everyone has a good time, and no one gets mad at their publicist for letting them do our show. We've had a lot of great guests like Sarah Sherman. Not that great. Actually, can you help me shape this? How about we flip it on his head? How about we flip the script? What if the surprise woman, who actually you think is the straight man, is actually the one who's acting weird?

10:52Adam Scott. This entire time, you've been expecting Adam Sandler to come to visit the show. I would never expect. Let go of that. I have. I would never set expectations for something like that to happen. It seems like you did. If the universe allows for something like that to happen, I'm open to it. I'm always going to accept. You know, Danny McBride, fine. Yeah. It's all this fragile masculinity. Exuding. I could smell it walking down the hallway, to be honest with you.

11:22Mm-hmm. I was like, is that weed? Nope. It's fragile masculinity. Mm-hmm. Yep. Ben Stiller, no. Because a lot of times, out of context, people don't get it or even know what a circle is. You know what I mean? Like, they're like, oh, what's a circle? It's fake. Everyone's so dumb except for you. And fake. Right. Fake and also not interested or just like, oh, I've got my life. I don't care about your life. And a lot of other big shots that wouldn't be where they are without us. Oh, and by the way, Will Ferrell told us personally he loves the show and he wants to be a guest on every episode, but he's just so busy.

11:56Listen to Hollywood Handbook on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. On the new podcast, Solita, we share the messy reality of traveling alone as a woman. I can wait four hours for the next bus or this random dude is offering me a ride on his motorcycle. I chose option B. I'm Julie Pinheiro and I travel by myself because it's a rare space where I can say yes without asking anyone else first. First, I'm on a mission to reclaim the word solita, trading the pity for possibility.

12:29Every time I tried to be alone, I kept meeting people and they were like, you smiled at us. Not a lot of people smile around here. It's when you're alone that you're most receptive to the world as it is and not the lies you're sold about it. It can be a time where you push your limits, change your mind or wake up to a new version of yourself. So whether you're a solo travel veteran or you're too nervous to book your first trip, I hope you listen to Solita on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

Media coverage of the AI bubble

13:03And what's incredibly frustrating is it's now, for the most part, commonly held consensus that we're in a bubble. Yet the media continues to write about this stuff as if that isn't the case, it's glazing every single impossible deal or blatant act of circular financing, salivating over every bizarre new model drop or supposed achievement without ever really explaining why it matters and gooning over every obtuse statement that Sam Altman makes. We're not in the singularity, you fucking arsehole. And this is because we live on some level in an entirely imaginary and manufactured reality,

13:35at least when the media is concerned. Hyperscalers have spent over a trillion dollars in AI capex and have, across the board, refused to give us hard numbers about its return on investment. OpenAI and Anthropik are unprofitable, unsustainable, and will need over a trillion dollars of funding in the next four years because they've made over a trillion dollars of commitments that neither of them can afford without a near infinite sum of venture capital. AI data centers are getting built at a snail's pace, and debt to build them is becoming more and more expensive,

14:06with Corweave hitting GOATSEE-level credit spreads, trading from 8.3% to 9.3% above US Treasuries, which is way higher than the average junk bond, meaning that investors are valuing them like the company is a very real chance of death. And you'll notice that this isn't really something, but you'll notice that the spreads are being covered. People are like, oh, that's strange. Oh, that doesn't look good. Huh, wonder what that's about. What it's about is that the bond market is screaming, Corweave might die. Corweave might die.

14:37And if Corweave dies, every neocloud dies. Iron dies, Nebius dies, N-Scale dies, Lambda dies. All of them die. And even if I might be wrong, which I'm not, I really am quite confident on this, the fact that this is not even a discussed point across the media is a sign that no one really gives a fuck about any investors, the public, anyone who might get tied up in this. It's a sign that no one's thinking about this too hard, either through a dramatic ignorance or just a lack of giving a shit about anything. Yet the irony of all these blaring warning signs

15:09is that it's impossible for most of the media to take them to their logical endpoint, as doing so would mean accepting that we live in an era of outright insanity. To acknowledge OpenAI's financial condition is to acknowledge that the largest customer of Azure might die, and that a large chunk of Microsoft revenue growth is a fiction created by venture capital. To acknowledge CoreWeave's condition is to acknowledge that a company pumped up by most of the media is going to explode. To acknowledge that Anthropic is basically the same company and in the same financial position as OpenAI is to accept that Google Cloud and Amazon Web Services

15:40are as inflated as Microsoft Azure. And to acknowledge these things would require the media to acknowledge that they ignored basically every warning sign, right up until the end. I can imagine that the bubble will burst, and there will be outlets that will attempt to pretend that they were ahead of it. But those people don't realize how detailed my notes are and how unflinching I'll be in publishing them. I will. I will be doing so. I will be publishing everything. I know everyone who pumped this up. I know what everyone did.

16:10I know how many times they ignored the warning signs. And I can see the articles where they helped pump this bubble up. And I'm not going to get too personal. I'm just going to publish the fucking articles. I'm going to point. I'm going to say, it was obvious then. Why didn't you do something? And the answer is they didn't give a shit. Either they didn't give a shit enough to learn, or maybe they... And it's much worse if they understood and they just chose to ignore it. And if the answer is, well, the largest companies in the world wouldn't make such a mistake,

16:41you're just very, very gullible, I guess. I don't know. I hope that someone learns after this. I don't think they will. I'm really going to try. I'm really going to try and explain how people got this wrong. I feel like I've been trying. And the bile you can hear, the poison in my voice, comes from a place of... It's funny. People say, oh, he's just a former PR person. He doesn't know anything about finance. The only thing that it takes to become a financial expert is to become an expert in finance, to sit down and learn. Where's everyone else? You can fuck it.

17:11I'm using the same shit as everyone else. You just learn to read. And I don't know why more people don't do it. But the answer is, it's a lot of work, and you don't really have to do it when your editor's pro AI. You can just do whatever you want. I know some journalists listen, and hopefully I'm not talking about you. Hopefully you made the effort. I really hope you did. And I must be clear, I'll probably mostly be coming after outlets rather than people directly. That would be mean. But at the same time, please God, when this explodes, journalists listening to this, please fucking try harder. Or I don't know, try trying harder beforehand. And if you think you are pushing back,

17:44if you truly think you are pushing back, by all means, reach out and find out if you actually are. By all means, email me, signal me, you have my information, ezitron.76, and ask me directly. Because pretty much if you have to ask, you're probably not. And if you think you are already, I don't know, have you talked about CoreWeave? Have you talked about OpenAI running out of money? Or when you did so, did you talk about it saying, yeah, OpenAI isn't profitable yet, but you know, companies take a while to get profitable. And Uber lost a lot of money, and AWS lost a lot of money. If that's what you're thinking,

18:15you are wrong. You are wrong, you are misleading your readers, you're misleading the general public, and you should be kind of fucking ashamed of yourself. I'm sorry to be so merciless right now, but I am sick and tired of watching these cycles. And I know how many people are going to get washed out.

Real world consequences of financial collapse

18:29For a real preview of that, go and look at the Korean stock market right now, and the many stories of people talking about fucking killing themselves. That is the real consequence of bubbles. That is the real thing that happens. And everyone trying to downplay this is responsible for people like that suffering, and eventually American and British and other investors too. It's sickening. And until something changes, we're all going to live in a paradoxical media environment that simultaneously publishes proof point

18:59after proof point after proof point that this is financially unstable, all while saying that AI is going to be the biggest, most hugest thing in history, right up until the bottom falls out. Open AI collapses, data centers get canceled, Corweave shits its pants, and everything falls apart, at which point they'll throw up their hands and say, wow, how'd that all happen? It happened because we live in an era where responsibility often correlates with cowardice. Those who have the most power to critique the powerful choose instead to jerk their shit from first principles, helping them create fantastical mediated realities

19:30that enrich the already rich and fuck over retail investors at scale. It darkens my heart when I think about it. It really pisses me off because you can already see what's going to happen. You can already see that the people invested in the markets are going to get washed out. And then there's the widespread problems caused by all of these private credit funds sinking money into data centers that will never get built, will never provide the yield, and will fuck over anyone who was unfortunate to have insurance annuities or pension funds involved in this bullshit.

20:04Next week, I'll have Ed Elson back on to talk about tech earnings and continue to fight to give you as clear a picture of reality as possible, even as we battle to leave one created by and for the powerful. Thank you for listening. On the new podcast, Solita, we share the messy reality of traveling alone as a woman. I can wait four hours for the next bus or this random dude is offering me a ride on his motorcycle.

20:35I chose option B. I'm Julie Pinheiro, and I travel by myself because it's a rare space where I can say yes without asking anyone else first. I'm on a mission to reclaim the word Solita, trading the pity for possibility. Listen to Solita on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

21:01Hey, this is Hayes Davenport and Sean Clements. We host the podcast Hollywood Handbook. Each week, we talk to someone in show business and try to help them with their careers and see what they have to offer us. Everyone has a good time and no one gets mad at their publicist for letting them do our show. We've had a lot of great guests like Sarah Sherman, Adam Scott, Danny McBride, Ben Stiller, and a lot of other big shots that wouldn't be where they are without us. Listen to Hollywood Handbook on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. If your bookshelf and your For You page are equally important to your personality,

21:32welcome home. Pro Society is a weekly podcast that's part book club, part group chat for anyone who thinks Pride and Prejudice and Love Island to serve the same level of discourse. Each week, we're connecting the dots between books, the internet, and pop culture with your favorite writers, book talk creators, and plenty of overthought opinions. Yeah, I'm obsessed. I'm obsessed. Listen to Pro Society on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. I'm Nick Turturro. You probably know me from NYPD Blue, The Longest Yard,

22:02or Spike Lee's Black Klansman. And on my new podcast, Delivering Happiness with Nick Turturro, I deliver pizza to a new guest. I've shared a slice with everyone, from Seth Rollins, What are you doing with my belt? to Bill Burr. I don't think I've ever met somebody so exactly out of their mind as I am. And now, we even have more great guests coming up, including the great John Turturro. It's called happiness. Delivering happiness. And many, many more. Open your free iHeartRadio app, search Delivering Happiness with Nick Turturro, and listen now.

22:33This is an iHeart Podcast. Guaranteed human.