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

**Ed Zitron** (0:05)
Hello and welcome to this week's Better Offline monologue. I'm your host Ed Zitron.
It'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.
And 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 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 Annoying, 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 and captured business and tech media, reading between the lines and saying, ooh, AI is 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 assumed because the number was lower, but that doesn't matter to anyone covering earnings. Put the AI hype in the bag. No thinking, only number go up, please. No thinking at all. We cannot think here. It's not like people are gonna buy Microsoft's stock because of this. I'll also add that nobody seems to want to discuss that Microsoft is your 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, with OpenAI's increasing spend on AI compute, a fact mentioned in exactly zero of the stories I read about earnings, and goddamn 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 rather 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 the Xeo 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. And what's actually happening to this company is pretty simple. As OpenAI's largest provider of AI compute, Xeo 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 co-pilot subscribers, and it's not got some secret source. While 365 co-pilot 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.
We'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 super intelligence 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 super intelligence, Mark? You're building fucking large language models. Who cares? Who fucking cares? None of this actually connects to what the models do. I 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 soft bank 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. No 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.