SpaceX’s Moonshot & An Iran War Paradox

**Bill Cohan** (0:01)
It really comes down to the absurd valuations that are being placed on these companies, by venture capitalists, LBO firms or private equity firms that are buying in, and of course, the Wall Street underwriters who are paid to hype this stuff out of the stratosphere.

**Peter Hamby** (0:19)
Welcome to The Powers That Be Daily, Puck's podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood, and the players who run it all. I'm Peter Hamby. It's Thursday, July 23rd. Today, I'm joined by Bill Cohan to talk about the AI and SpaceX hype cycles that are fueling a very hot stock market. But with these companies spending so much money on infrastructure, without much revenue, Bill asks the important question, is this the dot-com bubble all over again?
Bill also breaks down a curious energy paradox. The war in Iran has sent gas prices soaring, but not as high as many people initially thought. We dig in to the important factors preventing a global energy crisis. We'll discuss all that and much more on today's episode of The Powers That Be.
Happy Thursday, everybody, and welcome to The Powers That Be. I'm joined today by my colleague Bill Cohan. He doesn't appear to be on island right now, but he might be by the time you're hearing this. He's going to give me some analysis on whether this whole stock market, AI, SpaceX, boom, the Elon economy, is it just the.com bubble all over again with all these companies with huge CapEx racing toward an IPO?
Bill talked to one very big skeptic. We're going to tell you about that. Also, we're going to chit chat about the ongoing economic impacts of the war in Iran, the US war with Iran that continues despite multiple ceasefires, claims of negotiations, et cetera, oil prices are still rocky. But Bill, first, good to see you. You have a piece out this week that I thought was pretty fascinating and scary at the same time. I'm just going to read the lead here. You talk to the legendary investor, George Noble. You like to check in with him every now and then. Somehow, Puck let you get away with an opening paragraph as a quote, which, you know, I feel like our editors frown upon, but I'm glad you got away with it. But here we go. Quote, all these guys are running toward the cliff. You know, my CapEx is bigger than your CapEx. And if I don't keep spending, you're going to keep spending. I don't want to lose out to you, so I have to keep spending. This is the legendary investor George Noble. He told you this this week, describing the madness surrounding this AI moment in the market. As a seasoned investor, it's difficult to know what to do. He conceded, you just sit there and it's like you want to blow your brains out.
We've talked sceptically about the AI IPOs, the SpaceX IPOs recently on this podcast, and you're very smart on this topic. I talked to someone else this week who's pretty literate in this space, and her eyes were just wide when I was talking about OpenAI and Anthropic, like the amount of money that they are spending as they race toward IPOs. We haven't seen the S1s yet, but she was very much a bear about these companies and these companies just going up or the government taking a stake in them. Again, smart person, I don't want to name her. But what did George have to say? Is this the dot-com bubble all over again, or is it like something else, another recent historical analogy?

**Bill Cohan** (3:46)
Yeah, I mean, I think he thinks it's worse than the dot-com bubble.
Maybe a few weeks ago, I had written a piece about how some investors were likening it to sort of the infrastructure build that was done in the creation of the internet back 25 plus years ago, you know, with the CISCOs of the world and all the emerging telecom companies, and how basically CISCO didn't go bankrupt, but all those emerging telecom companies did, like Global Crossing and MacLeod and all the rest of them. But then we ended up with what we needed, which was the infrastructure, the actual pipes in the ground, even though the companies behind them all went pretty much kaput, the pipes in the ground became very useful and valuable.
Whether this AI infrastructure build, the data centers and all that, the companies behind them or the companies that have lent money to them, will end up taking hits on those loans and there might be some bankruptcies. But the infrastructure that is being built will end up being useful. I think there's a similarity between the two there, although it's obviously early days in the AI infrastructure build, although unbelievable amounts of money have been spent and are continuing to be spent. In fact, much more than what was needed to build the pipes for the Internet. By the way, Peter, I know you'll be interested in this now that you're a full-time Puck employee. Actually, I did not write my piece about George Noble starting with that quotation. I don't do that because I know that's against the rules. But one of the editors, and I'm not going to name him or her, moved it from where it was in the piece up to the top, I guess because of the line about you want to blow your brains out. So you don't have to worry that I was getting away with putting a quotation in the lead. That was done by one of your editors. So now you know you can do that too.