PivotTrump's Latest Crypto Earnings Show "Astonishing" Grift | Pivot
EVERY SPOKEN WORD
55 min read · 10,682 words- 0:00 – 0:23
Intro
- KSKara Swisher
This is grift on a very explicit scale and also like, "Yeah, that's right, I'm taking it. I'm cheating." [upbeat music] Hi, everyone. This is Pivot from New York Magazine and the Vox Media podcast network. I'm Kara Swisher.
- SGScott Galloway
And I'm Scott Galloway.
- KSKara Swisher
We should get to the news, actually. There's a big piece of news.
- SGScott Galloway
Why not?
- KSKara Swisher
Yeah. First, let, let me just tell you,
- 0:23 – 9:29
Trump’s Crypto Windfall
- KSKara Swisher
Donald Trump's embrace of crypto is paying off in a big way. Trump earned about $1.4 billion over the past year from crypto, according to a new financial disclosure, which I think is undercounting all the grift he's doing. A big chunk of that came from sales of his Trump meme coin and digital tokens for the Trump family crypto company, which he gets paid no matter what, and everyone who's invested in it is losing, just so you know. He got all this money. It's not just crypto. Trump pulled in at least $2.2 billion in total income for the year, up from $622 million in 2024 before he returned to the presidency. That includes more than $620 million in real estate, hotel, and golf-related income, which is almost nothing, um, plus $86.5 million from legal settlements from ABC, CBS, YouTube, Meta, and X. Uh, this grift is just a- as-- And it turns out we're paying for the East Wing, we're paying for the Kennedy Center, we're paying for all manner of things that he is up to, um, which he said the, the public wasn't paying for. So this is astonishing. I think they're undercounted. What did you-- I mean, nobody's surprised, but the grift is really quite astonishing.
- SGScott Galloway
Well, there's the grift and there's the, I mean, there's the micro, and that is $2.2 billion in personal income, you know, while sitting, w- as you're occupying the Wa- the Oval Office, and $1.4 billion of it from crypto, a financial system that he now supposedly regulates. It's, i-i- it's not a conflict of interest, it's a business model.
- KSKara Swisher
Yeah.
- SGScott Galloway
And essentially-
- KSKara Swisher
A really good point
- SGScott Galloway
... what you have in America is slowly but surely we're monetizing everything. We monetize healthcare, we monetize education, we monetize, uh, enragement online, and now the president is monetizing the full faith and credit and power of the White House.
- KSKara Swisher
Yeah.
- SGScott Galloway
He, he went from six hundred and twenty-two million the year in net worth before taking office to two point two billion after. He's essentially set up a tollbooth, uh, for the American government. And the meme coin would've been a five-alarm scandal for anyone else but him.
- KSKara Swisher
Absolutely.
- SGScott Galloway
It's a financial instrument with no underlying value that goes up when the president tweets about it, and that's securities manipulation with a big red hat. And the fact that he did it the Friday night before his inauguration under the cover of dark, you know that he called people and said, "Thanks for giving me ten, twenty, a hundred million dollars for my campaign. FYI, the coin, coin gets announced tonight. Uh, it'll, it'll go up, and then you can-- If you dump it, you dump it." Uh, but on a larger level, I was thinking about our two hundred and fifty-year anniversary, and in-- I mean, this is a reality, that since 1991, childhood poverty has gone way down, way down. Crime has been cut in half.
- KSKara Swisher
Yep.
- SGScott Galloway
We have a-- The number of people have gone, gotten educations has gone up. We have a healthier, better educated populace, uh, than ever before. The m- Crime is at its lowest rate ever in New York, right? But happiness, as Jimmy Carr says, or satisfaction isn't a function of what you have, it's the delta between what you have and your expectations. And what's happened in America, because there is now a normalization, an algorithmically normalized 0.1% in terms of your expectations. I'll give you an example. W- From twenty-two to forty-two, I did nothing but work, and I think my first vacation, I-- The only vacations I took with my mom, we went to Niagara Falls once. We used to go to Magic Mountain because we couldn't afford to go to Disneyland. And I remember going to Club Med in Mazatlán when I was, like, in my late twenties.
- KSKara Swisher
Oh, wow. Wow.
- SGScott Galloway
And I thought it was fucking-
- KSKara Swisher
Were there beads? Was it beads?
- SGScott Galloway
I mean, it couldn't have been any tackier. Bad daiquiris.
- KSKara Swisher
Right.
- SGScott Galloway
Not a very nice beach.
- KSKara Swisher
Mm-hmm.
- SGScott Galloway
All you can eat, but that you wouldn't wanna eat all of it. And I thought it was amazing.
- KSKara Swisher
Yeah.
- SGScott Galloway
I just thought it was the most... I was br- I, I brought back Club Med shirts, I had a Club Med hat.
- KSKara Swisher
Oh, my God.
- SGScott Galloway
I just thought Club Med was the most amazing thing, and I was talking about going to different-
- KSKara Swisher
Did you pay by beads? Was it-- Didn't you have beads for-
- SGScott Galloway
Yeah, you get beads for bars-
- KSKara Swisher
Beads
- SGScott Galloway
... for drinks.
- KSKara Swisher
Yeah.
- SGScott Galloway
It's amazing.
- 9:29 – 22:11
Dems’ “Anti-Establishment Avalanche”
- KSKara Swisher
that came out. Politico is calling this week's Democratic primaries in Colorado an anti-establishment avalanche. Obviously, it was happening in New York, which was no surprise with Mamdani getting, you know, backing a bunch of people, one of whom is really problematic. Colorado Attorney General Phil Weiser, though, upset longtime Senator Michael Bennett, who you and I both have a lot of regard for, who looked like a lock for the nomination a year ago. We thought he'd be governor of Colorado. And then twenty-nine-year-old Democratic socialist Malot Kirvas unseated a fifteen-turn Cong- fifteen-term congresswoman, and Manny Routonnel, a progressive state representative, defeated a moderate Democrat. The results add up to a growing string of progressive anti-incumbent. I think that's the-- Actually, Steve Bannon was very canny on this stuff. Victories, notably with what happened in New York, and there are a number of primaries still to come over the next few months. Um, all this as a New York Times, uh, Siena poll showed Democrats within striking distance of putting the Senate majority back in play. I want you to not go negative yet because I want you to understand. Talk about these victories and what, what they are, and let me read something that Robert Reich wrote on Substack about these elections. Pundits eager to declare a new movement or sound the alarm about socialism are having a field day, but they're wrong. Voters who, who have supported these candidates haven't done so because they've been particularly attracted to the idea of Democratic socialism. Most even don't know what Democratic socialism is. In reality, voters-
- SGScott Galloway
Yeah. That's right
- KSKara Swisher
... have been attracted to vigorous young people who are committed to getting stuff done. Steve Bannon said nearly the same thing, which was really interesting. And I would agree talking to, like, Louie. Like, he's just sick of people not getting stuff done, like, and looking for something else, which is interesting. What are your thoughts on this? I think Reich, and I hate to say it, Bannon, are correct.
- SGScott Galloway
I think that's exactly right. The establishment didn't lose on policy here, Kara. They lost on energy.
- KSKara Swisher
Yeah.
- SGScott Galloway
And look, I've been calling for disruption in the Democratic Party. I think Leader Jeffries and, and Minority Leader Schumer are absolutely the wrong people to provide the kind of robust, energetic pushback that the Trump administration warrants. But here's the thing about disruption, is you don't get to pick the exact calibration of your disruption. So for example, I consider myself a moderate, and I'm convinced that the true litmus test of someone who's truly a moderate is everybody hates you. So think about the senators who are moderates, like Fetterman and Manchin. Everybody hates them. So people claim they want a moderate, but when someone actually shows up and occasionally agrees with the other side, they become an apostate. At the same time, guys like me claim we want disruption. We need to disrupt the Democratic Party, and then when it happens-
- KSKara Swisher
Mm. Yeah
- SGScott Galloway
... we freak out about it.
- KSKara Swisher
Yeah.
- SGScott Galloway
But here's the bottom line. There's a lot to like here, and I say this, full disclosure, I have given money to Senator Michael Bennet for everything he has run for for the last ten years. I hosted a fundraiser for him for president. You know [laughs] by the way, if you get money from me, it's not a good sign. Uh [laughs] but I, I think the world of Senator Bennet, former school superintendent, one of the most credentialed people in the Senate.
- KSKara Swisher
Very qualified.
- SGScott Galloway
Lost to a state AG nobody had ever heard of a year ago. But h- here's the bottom line. If you want disruption, you don't get to pick your form of disruption, and these candidates, they are-- There's a lot to like about these candidates. They're young. They're energetic. They're unafraid. They don't have a bunch of blather about how you would go about universal healthcare. They're just like Medicare for all. So there's a lot to like about them, but the reality is, for those of us in the center, we don't get to pick our flavor of disruption. What I would say that bothers me is that Democratic socialists effectively want socialism through democratic means. The reality is, if you really look at history, socialism just doesn't work, folks. And they will always point to, well, what about Northern Europe? Northern Europe is actually more capitalist than we are right now.
- KSKara Swisher
Mm.
- SGScott Galloway
They just have a social safety net, and they spend-
- KSKara Swisher
Right
- SGScott Galloway
... they spend-
- KSKara Swisher
They call themselves that, though, don't they? They-- I mean, you, you always, you always, um, thread about, um, Sweden, for example, or the Netherlands.
- SGScott Galloway
Here's the system that's worked: democracy, individual rights, and capitalism. Call it what you want. When you start believing that you should have government-sponsored grocery stores or that you shouldn't have border... I mean, that shit, quite frankly, it just not only doesn't make sense, it threatens our ability to win the midterms. Rahm Emanuel had a fantastic statement in the thread we were on, and he said it publicly. We have to stop arguing and atomizing ourselves between blue and cobalt blue. So I'm more focused on my energy on, you know, the, the, the grift and corruption and just stupid decision-making of the Trump administration. The thing, uh, so I-- There's a lot I like about this disruption. It, it... You don't get to pick your flavor of disruption, and you know what? Young people just want change.
- KSKara Swisher
Interestingly, I was just on Scaramucci's podcast, and he said he actually has been impressed by, by Mamdani, and he was very against him. He was sort of where you are, right?
- SGScott Galloway
Yeah.
- KSKara Swisher
That kind of thing.
- SGScott Galloway
I think that's right.
- KSKara Swisher
And he's like, "I have to say, he's effective." And I do think they're not looking for necessarily just upsetting the incumbents. They want effective-
- SGScott Galloway
People who do shit
- KSKara Swisher
... And I, I-
- SGScott Galloway
Do shit, yeah
- KSKara Swisher
... one of the things about Weiser, and I was watching this thing, is he was just a more energetic campaigner. He wanted your vote more, and he was-- he wasn't necessarily much more liberal. It wasn't that, 'cause Michael's pretty liberal, relatively speaking, right? Especially in Colorado. He just looked like he could, like... He, like, uh, he just was energetic and not just fake-
- SGScott Galloway
Youth
- KSKara Swisher
... fake energy.
- SGScott Galloway
It's-
- 22:11 – 34:31
Supreme Court Decisions
- KSKara Swisher
It's been a big week for the Supreme Court as it wrapped up its term. Let's go through a roundup of some of the cases the court ruled on. A court struck down a federal law that bars the president from firing members of the FTC, so he-- n- no more independent agencies essentially. They lifted limits on how much political parties can spend on advertising and other expenses with candidates, a problem, and more, more Citizens United. Upheld two state laws barring the participation of transgender female athletes from girls and women's sports team, and upheld birthright citizenship, striking down, uh, an executive order. Let's hear some thoughts from, uh, Leah Litman, who co-hosts the podcast Strict Scrutiny, which breaks down all things Supreme Court.
- SPSpeaker
[air whooshing] Hey, Kara and Scott. Here are some quick thoughts on the most recent Supreme Court term. We came within a single vote, one vote, of saying the Constitution doesn't mean what it says on birthright citizenship and nullifying a constitutional amendment that is the foundation of our constitutional order of multiracial democracy after the Civil War. They have also been systematically undermining our democracy, killing the Voting Rights Act, enabling partisan and racial gerrymandering. They've also just killed campaign finance regulations that were designed to prevent political corruption. As a result, the super-rich will be able to effectively funnel more than $500,000 directly to candidates in the upcoming election, and they have been killing Congress's capacity to govern and expanding presidential power against a backdrop of a president who has been engaged in corruption and pay to play, and that is just the start of it. [air whooshing]
- KSKara Swisher
Yes, I think she sort of articulated it. I-- uh, well, the ones that really upset me, and I, I'm-- uh, the d- birthright citizenship was far too close, far too close, and-
- SGScott Galloway
Agreed
- KSKara Swisher
... that was disturbing. And, and by the way, a lot of the Trump people have to go back home wherever they come from. The, the two that really upset me to me are-- is this-- the, um, the Voting Rights Act obvi- V- Voting Rights Act, absolutely. But the finance-- the-- to me, it's all the money. The, the finance regulations, uh, designed to prevent political corruption, that was-- more, more Citizens United was the last thing we need. And then secondly, the ability of the-- no independent agencies on things that Deserve independence like the FTC. And you've seen what Brandon Carr has done, although one of the justices did say Brandon Carr is a moron and part of his, essentially said that in, in his ruling. I think it was Kavanaugh. Could've been Gorsuch. Whatever. They, they look the same to me. So those two were, like, giving more power to the president in general, which I think will be just as bad with a Democrat and is terrible with Trump, um, was two problems. But the money, to me, was the focus, the focus I had. What about you?
- SGScott Galloway
Yeah, Citizens United is arguably one of the worst things that's happened in recent history to the US because of the 900 billionaires, they, they make up a third of political giving. It's probably more than half of influence, 'cause they can be much more targeted. You know, unions just give money to whoever's the union candidate, but a private equity firm can give $700,000 to Senator Sinema and say, "Just be the holdout for the infrastructure bill," and ask that they strip out the carried interest loophole, and that costs $20 or $30 billion, which is the most ridiculous loophole in history. See above, $2.2 trillion spent on loopholes where private equity owners get their commission on investment gains in the form of long-term capital gains. It, it's totally indefensible. So that's, that's bad. The, the, the silver lining, the dotted silver lining on, on this out-of-control spend is that what we're finding is it's gone past its utility, and that is it used to be 20 years ago, like 97% of the time, who raised the most money won. Uh, it's no longer happening. Like, Tom Steyer spent a quarter of a billion dollars and didn't win. It's almost like the full local news station employment act. The amount of money they're spending, on the whole it's really bad, but what you are seeing is it's no longer the key fulcrum for who, or the key lever for who wins. The thing that upset me the most, uh, uh, that, which is so frightening that it was even this close, was, um-
- KSKara Swisher
Birthright
- SGScott Galloway
... birthright citizenship. I mean, this is the Constitution.
- KSKara Swisher
Right.
- SGScott Galloway
Just straightforward. The Constitution says if you're born here-
- KSKara Swisher
Yeah
- SGScott Galloway
... you're a citizen.
- KSKara Swisher
14th Amendment. It's right there.
- SGScott Galloway
And I'm gonna give you a couple anchor babies. Uh, Balogun, who got a red card unfairly, the attack, the, the premier striker for the World Cup team, his parents were here. I forget, she couldn't go home.
- KSKara Swisher
She couldn't go home.
- SGScott Galloway
He was born here.
- KSKara Swisher
She was too pregnant.
- SGScott Galloway
She was too pregnant.
- KSKara Swisher
Couldn't get on a plane.
- SGScott Galloway
I think the airline said you're too-
- KSKara Swisher
Yeah.
- SGScott Galloway
Good for us, right?
- KSKara Swisher
Yay.
- SGScott Galloway
A- and also, it's a fairly small number. It's only 7%. It's a fairly n- small number of, of babies.
- KSKara Swisher
It is.
- SGScott Galloway
And I would argue-
- KSKara Swisher
The, the whole word anchor baby is so fucking ridiculous. But-
- SGScott Galloway
Look at that, but to a certain extent, this is what we don't like to talk about. Immigration is not only the secret sauce, it's the most... Illegal immigration is probably the most profitable form of immigration, 'cause they're risk-takers [laughs] and they-
- KSKara Swisher
Yes
- SGScott Galloway
... generally fold back-
- 34:31 – 44:33
Government Deals & Big Tech
- KSKara Swisher
The Trump administration has talked with SpaceX about donating stock to the administration's Trump accounts child savings program. It's unclear whether Elon Musk has agreed to that or how it would be structured. Trump accounts are set to launch on July 4th with over six million children enrolled. Other big donors include, uh, billionaire Michael Dell and his wife and companies like BlackRock and Bank of America, which have agreed to match donations made by employees. The OpenAI is reportedly also discussing giving Trump administration a 5% stake in the company, uh, proposal reportedly involved other US, uh, AI companies also giving government similar stakes. To me, it was really interesting. Paul Graham had a really interesting point. The reason that OpenAI was doing that is 'cause they don't get asked for 10%. Like, I thought that was true. This all feels like a shakedown or you get something in return for doing this kinda stuff. I don't hate the idea of accounts. I don't wanna-- I wish we will, hope we will re- renaming them from Trump accounts to something else, USA accounts. Um, but it seems a little, uh, socialist to me. I don't know. What do you think?
- SGScott Galloway
Again, it's where the far right and the far left meet that with just different objectives and different claims. OpenAI offering the government a 5% equity stake is essentially to buy protection, neutralize regulation, lock in a government anchor client. It's not patriotism, it's protection money. It's a moat. And w- and you don't think they're gonna be the first to get government contracts versus other AI startups? It's also the beginning of what I think is gonna be the, one of the biggest bailouts in recent history, and that is we're starting to see cracks-
- KSKara Swisher
Oh, AI, yeah
- SGScott Galloway
... cracks in the wall where there's fewer companies who have actually figured out a way to create demand. There's only two now, OpenAI and Anthropic, consistently. And their, their spend and CapEx commitments are so out of control that I think Sam Altman says, "I like the idea of the full faith and backing and maybe even government-backed debt-
- KSKara Swisher
Right. Yeah, so bailout
- SGScott Galloway
... from the president."
- KSKara Swisher
Bailout.
- SGScott Galloway
And here's the bottom line. The government should not, the government [chuckles] should not be taking equity stakes And companies, they just shouldn't... I, I mean, there are some exceptions occasionally when I do think you can make an argument in the great financial recession that it made sense for the government to bail out the automobile industry because it was a huge employer. But they didn't start saying you can only buy Fords or-
- KSKara Swisher
Yeah, Tesla
- SGScott Galloway
... I, I occasionally have-
- KSKara Swisher
They saved Tesla's ass back, back when it needed it.
- SGScott Galloway
These companies have gotten trillions of dollars in market cap, let them run. I mean, this is just straight up cronyism. Privatize the gains, socialize the losses.
- KSKara Swisher
Yeah. Can I ask you a question? One of the things, Al Karp is in- seems insane every time he opens his mouth and, and, and, you know, hopped up on something. But he w- he, he was going on sort of trashing-
- SGScott Galloway
Very cogent.
- KSKara Swisher
Very-
- SGScott Galloway
I thought he was very cogent-
- KSKara Swisher
I do too
- SGScott Galloway
... in his last remarks. Yeah.
- KSKara Swisher
And I had to listen for a second because he's so nuts. He al- always throws in some nutball thing on the side and, and his manner is so... But what he was saying is something that Mark Cuban had said to me previously, is this token maxing is gonna come back to bite people, and that when people find people are cheaper than the tokens, it's gonna sort of collapse. Mark said, Mark Cuban said this absolutely first to me, um, uh, months and months and months ago. And, and Karp was, was articulating this idea of these open, uh, systems, mostly from China, as you predicted, Scott, um, taking the place of, you know, with regular corporations. Um, and he... Two things he was saying is, one, keeping your data yours and not giving them to OpenAI's and Anthropic's, and secondly, the cost of these tokens is really untenable. And I, as nutty as he is, and he, he took a number of, like, slaps at competitors because he can't help himself, he made a lot of sense. I can't believe I'm saying this too, but, but, but he did. As I was lis- I had to listen to it twice, and I was trying to think if I could put it in someone else's voice, um, 'cause I, every time I hear him, he says nutty things. But, what, tell, tell, this is the kind of thing, I was like, "We're, we're gonna, this is gonna collapse." And a bunch of economists, all of these world economists are all worried about these cracks that you've talked about. So talk a little bit about this, 'cause this idea, you had the idea of China, these open systems from China replacing and, and sort of knocking the stuffing. You have these economists saying this. You have Karp saying this. Again, I wanna give credit to Mark Cuban for being the first to mention it to me. Um, talk a little bit about this, 'cause all this, like, government intervention seems really problematic going forward.
- SGScott Galloway
The government intervention is bailout cosplaying growth, and Karp is right. Cheap models are eating the expensive ones. The token consumption of Chinese models has surpassed the token consumption of frontier models in the US, because all of a sudden the CFO of U- of Uber goes, "Our entire AI budget was burned through in eight weeks, and I don't see any consumer talking about the improvement in ride hailing service. I, I don't, you know-
- KSKara Swisher
Or it's not improving. It's not improving.
- SGScott Galloway
Well, it's sort of like experimentation is over. This can no longer be a magic trick. You either have to incorporate this in the pl- in the plumbing and show me ROI, or we're gonna reduce our budgets here. And AI is following kind of the same curve as cloud computing, and that is margins compress. There's... This reminded me of '99, and tell me if you think this, this analogy is apt. Okay, so the internet comes and we think everyone's gonna buy their dog food and their cars, and Pepsi's gonna buy their sugar online on the internet, and we're all gonna buy not just CDs and books, but we're gonna buy everything online. And there's the front layer. So everyone invests in Amazon and eToys and, you know, Pets.com, and it ends up that they're just not nearly creating enough demand and not enough commerce is going through e-commerce to justify anything resembling the valuations these companies are getting. So they go, "Oh, wait. We're not sure which part of the application layer, which LLM, if you will, is gonna win, so let's all invest in the infrastructure layer." And everyone invested safely in like, "I can't pick the winner, so I'm gonna invest in Cisco or in telco infrastructure." And Cisco hit an all-time high, lost ninety-three percent of its value from '99 to 2001. And I see kind of the same thing here, where everyone's saying, "All right, let's invest in the demand side. You know, xAI, Llama, uh, uh, Groq, oh, Anthropic, or excuse me, Claude, uh, ChatGPT." And all of a sudden it looks like the demand may not be as exponential as we thought. And then the-
- KSKara Swisher
Or it's too costly. Or it's too co- too cost-
- SGScott Galloway
Or it's too expensive.
- KSKara Swisher
Yeah, right.
- SGScott Galloway
Yeah. Which lowers demand. And some of the players who thought they were gonna need infrastructure for their own demand, specifically Meta and xAI, have said, "We overestimated the demand of our own LLM, so we're renting out our infrastructure."
- KSKara Swisher
Right. Which is smart.
- SGScott Galloway
In a matter of 30 days, it looks like we've gone from a supply crisis to a demand crisis.
- KSKara Swisher
Yeah.
- SGScott Galloway
And what you'll see, I think, is just as in '99, the first companies to crash were the B2C, then it went to B2B. Oh wait, I c- not Pets.com. Let's go to, remember, Internet Capital Group?
- 44:33 – 53:46
Predictions
- KSKara Swisher
get into this week's predictions, I wanna play a prediction you made last week at CAN.
- SGScott Galloway
My prediction is the biggest IPO in terms of first day pop is gonna be a European, the Berkshire Hathaway of forgotten internet brands, and that's this company called Bending Spoons that I had not heard of until two weeks ago. I'm kind of fascinated with it.
- KSKara Swisher
Well, Scott, take a victory lap. Bending Spoons surged 40% after the company's IPO this week. What's next? Before you get to your prediction.
- SGScott Galloway
Well, so first off, the company was up... So SpaceX was up, I think, 22 or 23%. We predicted it'd be up 20. Bending Spoons was up, close up, I think 42% yesterday. They're gonna have to show that they can scale a model of buying stuff at, you know, ex EBITDA, and then-
- KSKara Swisher
Orphans
- SGScott Galloway
... these orphans, and then substantially reducing costs, which is Latin for hire younger people and replace the expensive 40-year-olds. And to their credit, they have some of the highest revenue per employee of any digital company right now or any internet company. But they're gonna have to show that they can consistently make these accretive acquisitions. What this really is, is like Martin Sorrell kind of pioneered this model. He went and bought all the big agencies. I don't even remember them now. Ogilvy, Mather. He could go in and buy these companies at seven times EBITDA or eight, and they'd immediately... He'd take their earnings, and the market reward him-- would, would reward him with 12 times. They're gonna have to show that they can... That this model, this private equity-like model of acquiring companies, they don't get them cheap. They get them for a good price, you would argue. That their ability to reduce costs, continue to see growth, add some growth organic, and then the market will give them a markup. They're gonna have to show they can continue to do that.
- KSKara Swisher
Yeah, they're slightly down right now today. They're going down today.
- SGScott Galloway
Well, uh, uh, to be clear, the, the, the valuation last year, it was about $7 billion. It came out at $19 billion. It's trading at about 23 now. The stock's not expensive, but you would argue that they are going to have to show sooner rather than later their ability to continue to scale these types of accretive acquisitions. So but I thought when I talked to, when I looked around and I said, "Okay, all of the oxygen had been sucked out of the air for SpaceX," and when these guys came out at seven or eight times earnings and all of those brands, and the fact they were only raising a billion and a half dollars, I thought, "This thing's gonna get..." I mean, th- this is the sad part about IPOs. This is what I believe J.P. Morgan and Goldman Sachs are doing, and that is they use AI and their incredible market insight and their incredible marketing machine. They are the new engineers. They engineer a 20-plus percent pop on day one, because the reality is that is the ultimate branding event. Everywhere in the news today is that Bending, Italian company Bending Spoons is up, is up 20%. And personally, I wanted to see the company go up, and the reason I brought some sunlight to it was because I am so sick of talking about American AI companies. I love the idea of a European company that's not AI.
- KSKara Swisher
And also cleanup, a cleanup company.
- SGScott Galloway
Yeah.
- KSKara Swisher
You know what's interesting is that I- I'm just looking at the Meta thing. Th- there are 20, m- tw- tw- the PE ratio is 20, which seems healthy. Um, and, and, and that SpaceX is more, is valued at $500, uh, million dollars-
- SGScott Galloway
That makes no sense
- KSKara Swisher
... more than them is insane.
- SGScott Galloway
Yeah, no, I'm-
- KSKara Swisher
I don't care how good they are at robots
- SGScott Galloway
... it-
- KSKara Swisher
It's just nutty. They'll-
- SGScott Galloway
It makes-
- KSKara Swisher
What he'll do is he'll fold-
- SGScott Galloway
Makes no sense
- KSKara Swisher
... Tesla into this, but as I've said many times.
- SGScott Galloway
Which is another anchor.
- KSKara Swisher
Yeah.
- SGScott Galloway
Two anchors-
- KSKara Swisher
Yeah
- SGScott Galloway
... c- two anchors clinging to each other. [laughs]
- KSKara Swisher
Down they go. Um, but it, it is, there are some real values here, right? Like Meta seems to be. I mean, I don't even usually make stock.
- SGScott Galloway
Meta on a price earnings basis I don't think has ever been this cheap, and the cheapest of them all, and it was my big tech stock pick for '26, the, uh, Amazon has never had a price earnings ratio this low.
- KSKara Swisher
Yeah. What is theirs? Wow. The, so, you know, you know, Google, Go- uh, Alphabet is 27, Meta's 21. Amazon, you're right, is low, 29.
- SGScott Galloway
Yeah, and it's usually, its average over the last 20 years has been 55. Um- And, uh, anyways, industrialized robots all go on forever. But, uh, so my prediction is, um, um, that essentially, and I said this, we're starting to see, uh, uh, cracks in the wall around, um, evidence. And I think it's nuanced, not definitive. It's not cracking because AI doesn't work. It's cracking because investors are starting to ask much more pointed questions, specifically, can we actually earn a return on the trillions of dollars being spent here? And the evidence, the, there's evidence that the narrative around AI is changing, and that is CapEx is outrunning, uh, monetization. The largest cloud companies are on pace to spend six to seven hundred billion on AI infrastructure just this year, yet many enterprise customers are struggling to demonstrate measurable ROI. And that is the narrative's moved from can A- can AI work to can AI pay? And it, it used to be spend more money, this is the future, infinite demand, and it's like, whoa, hold on. CFOs are starting to tap the brakes here. And the market is splitting. JP, JP Morgan noted, uh, uh, the divergence. AI infrastructure suppliers continue to outperform, uh, and the companies writing the biggest AI checks, the hyperscalers, have begun to lag. And that's reminiscent, again, of late-stage infrastructure booms where the suppliers prosper before the customers earn adequate returns. And also, Wall Street, as it does, eventually focuses on ROI. And the debate has shifted from twelve months ago, the debate was who can build the biggest model? Now it's who can make money.
Episode duration: 53:47
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Transcript of episode SNux8FKsx8c
