Summary

Zitron argues that the AI industry runs on fabricated 'annualized run rate' (ARR) metrics that obscure genuinely alarming underlying economics. OpenAI's ARR was reported as $70B but turned out to be $50B due to inconsistent accounting methods; Anthropic's figures are similarly derived from arbitrary 28-day windows multiplied out. Beyond the bad metrics, he reveals that 80% of Anthropic and OpenAI's revenues come from 1% of customers — AI startups that burn 2–10x their subscription revenue in tokens, requiring perpetual VC infusions to survive. GPU rental prices, he documents via SEC filings, are dramatically lower than published indices suggest, meaning data center economics are also built on guesswork. He concludes that the entire AI bubble is a house of assumptions, and journalism's credulous amplification of these manufactured numbers is actively harmful.

Key Insight

The AI bubble's apparent revenue growth is a circular illusion — AI startups funded by VC dollars buy tokens from Anthropic and OpenAI at a loss, inflating the labs' 'annualized run rates,' while a complicit press amplifies these fabricated metrics instead of demanding actual quarterly financials.

Spicy Quotes (click to share)

• 9

  The entire AI bubble is inflated based on stupid, made up numbers that only exist to pump the bags of investors and make the AI startups look more successful than they are.

• 7

  It is a failure of journalism that they have been popularized, as they do not tell us very much about anything, other than that there's a new, bigger number to get excited about.

• 9

  In basically any industry, the more demand you have, the more money you make, but in AI, the more demand you get, the more money you lose, and your most engaged customers are also your least-profitable.

• 8

  Every AI startup is effectively an extraction mechanism for OpenAI and Anthropic, reselling their tokens through their services at a massive discount because users are unwilling to pay the actual cost of using LLMs.

• 7

  We are basing the vast majority of words written and billions invested in the AI bubble on assumptions built on assumptions built on assumptions, several of which fall apart when you ask simple questions like 'how does that work?' or 'how did you get that number?'

• 8

  If you're an investor in these companies and have not been told the actual most recent quarterly revenue, there's a reason — the real one sucks!

• 9

  The AI bubble is inflated by bullshit numbers peddled by the ignorant, craven or easily-led.

• 9

  There is little difference between how the various run rates, projections, 'models' and 'frameworks' used to justify future AI investment are used and the underlying tools of a religious con.

Tone

combative, investigative, outraged