Summary

Zitron presents detailed analyst estimates showing that 70-75% of Amazon, Google, and Microsoft's AI revenues come from just two companies: Anthropic and OpenAI. The hyperscalers are engaged in circular financing — directly investing tens of billions into these labs, then booking their compute spending back as cloud revenue growth. Outside of these two companies, non-AI-lab compute demand across all three hyperscalers amounts to less than $30 billion, dwarfed by hundreds of billions in annual capex. Zitron argues this makes the celebrated 'AI is paying off' earnings narrative an active deception of investors, since the hyperscalers refuse to break out their AI revenues or disclose customer concentration. He concludes that if either Anthropic or OpenAI fails, 40-73% of AI compute demand evaporates and the entire data center buildout — over a trillion dollars in capex — becomes unrecoverable waste.

Key Insight

Hyperscaler AI revenue growth is a circular financing scheme: Amazon, Google, and Microsoft fund Anthropic and OpenAI, then book their compute spend as AI revenue, creating the illusion of broad market demand where almost none exists.

Spicy Quotes (click to share)

• 9

  I want to spell this out: when you remove Anthropic and OpenAI's compute spend, I am not confident that Google, Microsoft and Amazon have much of an AI business.

• 9

  This is the single-worst capital misallocation in the history of business.

• 7

  This is an absolute fucking scandal.

• 9

  Without OpenAI and Anthropic, Amazon Web Services and Google Cloud go from exciting growth-engines to chernobyls of capital expenditure.

• 7

  Every major cloud compute provider is solely standing on OpenAI and Anthropic.

• 8

  OpenAI and Anthropic are time bombs, and when either of them explodes, everybody will ask why we didn't see the brutality that follows coming.

• 8

  The greatest lie of this era is that the tech industry is building the next industrial revolution, when what they're actually building is a monument to everything that's wrong with modern capitalism.

• 9

  Apparently things are so dire that the only way to patch over slowing growth was to fund two giant startups beholden to massive compute contracts that feed venture capital dollars to hyperscalers in a circular motion that mostly equates to eating poisoned cardboard.

Tone

incendiary and investigative — scathing financial analysis delivered with deliberate outrage