Monologue: Meta Admits It Bought Too Many GPUs

0:03Speaker 1:Media Greetings, greetums, hello, and salutations. I'm ed Zytron and this is your better offline monologue for the week. Earlier this week, Bloomberg reported and I quote, that Meta is developing plans for a cloud infrastructure business that will sell access to its AI computing power and models. A few weeks after, CEO Mark Zuckerberg said its annual shareholders meeting that he thought that Meta had a use for its compute, but it could sell it if it didn't. I genuinely love that he said that. It's like, ah, I think I spent one hundred billion dollars for a good reason.

0:41Speaker 1:Don't know yet though, And there's no other sensible way at least to interpret this news other than that Meta is admitting that it overbuilt its GPU capacity after five different reorganizations of its AI team, a fourteen billion dollar acquisition of Scalai for no imaginable reason, multiple versions of their loath some pervert glasses and celebrity faced AI chatbots that have led an old man with dementia to his death, and I'm not kidding. I'll link you to that great Jeff Howitz piece from Reuters. In reality, Meta never had any reason to get into AI other than the fact that Zuckerberg is a directionless oath that can never be fired from the company surrounded by Loadso yes, men like bos Adam Mursky and Havier Olivan, who cater to his every women, say yes to any idea, no matter how goddamn stupid they are. Every time I hear from somebody at Meta, they vibrate with sadness and despair, lost in a company that exists as a large social experiment to try and conjure up mora ad revenue for a platform designed to engage far more than build any meaningful connections.

1:42Speaker 1:AI balls and the recently can cast argue that this is actually a smart move because now Meta can monetize its AI capex, the kind of ridiculous thing you say when you like big tech are fundamentally out of ideas and horribly desperate. Meta is doing this because Meta has no idea what to do other than to try something anything, to make some money out of these goddamn GPUs. The real question is who Meta will sell to and how much it will sell. Epoch estimates that it has around one point sixty one gigawatts of total capacity, as is the fourth quarter of twenty twenty five. And if that's the case, it's invariable that it gets snapped up by that Anthropic or open AI. And by the way, when that happens, we're at the top. We're done. Wrap this bad boy up. And if it doesn't do that, I'm not sure what the demand looks like outside of those two companies, who I estimate take up anywhere from seventy percent to eighty five percent of all global AI compute. Meanwhile, the information reports that Invidia is offering and I quote, financial backstops to young cloud providers that renteds GPUs in exchange for a share of their revenues, a euphemism for

2:43Speaker 1:literally paying their customers to buy their stuff. This is our direct admission that Innvidia doesn't see there's a divers or rigorous demand for AI compute. Not. The only way that these horrible little neoclouds can ever run a business renting out GPUs is by letting them latch onto the side of Nvidia like a parasite. It's blatantly obvious the demand doesn't exist at scale for AI compute, that the only real customers are two bulbous fail suns Anthropic and open AI that lose tens of billions of dollars a year with no path to profitability. This is not a real industry, but a reflection of the desperation and directionlessness of a tech industry that's run out of hypergrowth ideas after giving up on investing at the seed stage and chasing out those who actually build real things. This industry deserves the punishment that's coming for it. The debt fueled hyperscaler capex, no it loads, refused cash dump has pumped a global stock market and left the world invested in an impossible payoff of trillions of dollars of revenue well that will never exist. Everybody involved in inflating this bubble

3:45Speaker 1:should be ashamed of themselves. Everybody who refused to heed my warnings in favor of the mythologies of Amazon Web services in Uber should know that they are partly to blame for the chaos that will follow. This was blatantly obvious years ago. It was obvious before I started this. Shh, it's been so obvious for so long. I've got better at this, I've got more nuanced in my arguments, but my arguments have stayed the same. There is no business model in generative AI, there is no way of serving inference at scale in a way that is consistently profitable.

4:16Speaker 1:And people will argue about this, and people will have the little gnatterings on their various blogs. I won't read them. I've got stuff to do. Sorry, But the truth is that everything I'm saying has been coming true. I've been trying to warn people, all of you. I know I'm speaking to an audience that kind of gets it already. All of you have been sticking with me, and I love it. I was just on CNBC, did a great hit there or linked to it in the notes. Hate to link to Twitter, but it's one of the only places I can actually upload it with again, dmcaid, but I think you're really gonna like that interview. And the fact that the mainstream is finally opening up to these stories is a sign that we're wrapping this up, and they're trying to kind of layer on the news and layer on the stories that say, hey, we didn't fall behind this, were on this, and good on them for doing again, albeit a little too late. In fact, I think all of the kind of bubble discussion is too little, too late, And now Clammy Scammy, Clamate, Klamatha, Clamuel Clemantha.

5:11Speaker 1:We love Clamia, Weird, don't like Clamantha. He wants to give five percent of Open AI to the US government, I assume in exchange for money. And I know some of you are going to say that's a line up to a bailout. No, it isn't. It will require congressional approval. And this is the time when AI is one of the least popular things in the world with voters. And also no one wants to give forty billion dollars to goddamn sam Altman. All signs to this, All signs point to this. I mean blowing up sometime, I think in the next six months. And I feel like I've been saying that for about six months. But we're seeing the desperation start and we're hearing these conversations happen. I think things are going to get weird. Things are going to get very weird. And next week we've got a great joint episode with the Trash Future crew talking about Massiyoshi's son's Goosebild shareholder speech and the collapse of the AI hype cycle. You're gonna love it, a promise. Thanks for listening.

6:05Speaker 1:Zitron out