Monologue: Meta Admits It Bought Too Many GPUs
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Greetings, greetums, hello, and salutations. I'm Ed Zitron, 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 at 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, I think I spent $100 billion for a good reason. 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 $14 billion acquisition of Scale AI for no imaginable reason, multiple versions of their loathsome pervert glasses, and celebrity-faced AI chatbots that have led an old man with dementia to his death.
I'm not kidding, I'll link you to that great Jeff Horwitz piece from Reuters. In reality, Meta never had any reason to get into AI, other than the fact that Zuckerberg is a directionless oaf that can never be fired from the company, surrounded by loathsome yes-men like Boz, Adam Murski, and Javier Oliván, who cater to his every whim and 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 more ad revenue for a platform designed to engage far more than build any meaningful connections. AI bulls and the recently concussed 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 1.61 gigawatts of total capacity as of the fourth quarter of 2025, 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 70% to 85% of all global AI compute. Meanwhile, the information reports that NVIDIA is offering, and I quote, financial backstops to young cloud providers that rent its GPUs in exchange for a share of their revenues, a euphemism for literally paying their customers to buy their stuff.
This is a direct admission that NVIDIA doesn't see there's a diverse or rigorous demand for AI compute, and that the only way that these horrible little Neo clouds 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 that demand doesn't exist at scale for AI compute, and that the only real customers are two bulbous fail-sons, Anthropic and OpenAI, 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 hyper-growth 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.
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