EVERY SPOKEN WORD
45 min read · 9,405 words- 0:00 – 0:23
Intro
- SGScott Galloway
He brought 17 CEOs with him and three diplomats.
- KSKara Swisher
Flying billionaires on a plane to China to get shit seems problematic. [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
President Trump and, uh, Chinese President Xi,
- 0:23 – 13:09
Trump-Xi Summit
- KSKara Swisher
uh, have met for a little over two hours right now at, and attended a state banquet to start off their two-day summit in China. In Xi's opening toast at the banquet, Xi said achieving the great rejuvenation of the Chinese nation and making America great again can go hand in hand. He's snickering at Trump behind his back, though. The White House said both sides agreed that the Strait of Hormuz must remain open. Xi warned that Trump, that mishandling Taiwan would cause clashes and put the entire relationship in great jeopardy. Trump is joined in China by 17 American business leaders, including Elon Musk, Tim Cook, and Jensen Huang. Uh, a, a surprising lack of women on this trip everywhere. Uh, we, and also China experts. We asked Alice Hahn, uh, director of Greenmantle and co-host of Prof. Xi's own China Decode podcast, uh, for her thoughts on the summit. Let's listen to what she has to say.
- SPSpeaker
So US President Donald Trump is heading to China. This is the first visit by a sitting US president since 2017 when Trump was last president. I'm carrying a three-point scorecard going into summit in terms of reading it. Number one, will there be any indication as to tariffs and trade? Number two, will both sides agree to freeze or maybe even loosen certain export restrictions on chips and rare earths? And number three is the thornier geopolitical question. I think both sides will have two very different readouts on Iran, but certainly both leaders will be talking about it, and I believe that Trump will apply some personal pressure on Xi Jinping to help resolve it, although I suspect the Chinese will be reluctant and push back on any kind of collaboration over Iran. I think this will be largely summitry without substance, and it does pave the way for more summits to come, with potential t- for two or three other meetings and a Xi visit to the US later this year. One concrete prediction I have for this summit is that China will increase Boeing purchases of aviation equipment. I think the fact that the CEO of Boeing is going there with Trump is an indication of that direction.
- KSKara Swisher
Interesting. Um, obviously, uh, so she does, summitry is a really good word. Um, it's, uh, y- you know, it's interesting because a lot of the coverage out of it is that China thinks we're a declining empire, and, uh, of course, who we brought was interesting. You typically bring business people on these things. It's absolutely true, and he brought all mostly tech people or tech adjacent people. Um, I think most people feel that n- as, as Xi says, nothing's gonna come out of this, and it'll be interesting to see what signals, uh, Xi sends, uh, versus Trump, I think. I think he's a more important person to pay attention to. Your thoughts?
- SGScott Galloway
It's not who he brought, it's the ratio. He brought 17 CEOs with him and three diplomats, so it feels as if America's just becoming an operating system for the wealth of the top one percent, and they try to figure out-
- KSKara Swisher
Yeah. Billionaires on a plane, like snakes on a plane.
- SGScott Galloway
Yeah, and what's the minimum amount of cheap calories and, and entertainment, you know, bread and circuses we can throw at the bottom 99 such that they don't, you know, revolt. And there's no, there's no policy, there's no prep. He sounds like an eighth-grader with terrible, you know, who's had to take, who's failed English so many times he's gonna have to take it as English as a second language. It's like, Jesus Christ, can, can someone buy the guy Elements of Style before he gives a talk? I mean, he just-
- KSKara Swisher
I know. The speech was crazy
- SGScott Galloway
... it drives me fucking crazy.
- KSKara Swisher
Chinese restaurants? I, I didn't even understand what he was talking about.
- SGScott Galloway
And-
- KSKara Swisher
They're laughing at us. You can feel it.
- SGScott Galloway
And they, uh, I thought the most important statement, because you can be clear, while he's sort of, he's sort of improvisation with a mic, you can bet Xi calibrates every word. And the words that Xi said that I think should send a chill down everyone's spine is he said that he hopes that America's current approach, something to the effect of America's current approach towards Taiwan could result in a clash.
- KSKara Swisher
Clash, yeah. I agree.
- SGScott Galloway
And Trump hasn't really said a lot [chuckles] about Taiwan. He's not flying to Taiwan with Speaker Pelosi and, and, and publicly cementing our relationship with the ally there. He's basically-
- KSKara Swisher
No, it was a warning. It was a warning.
- SGScott Galloway
Yeah, he, or, or not even a warning. It was more, I saw it more as like a preview that we are gonna start, we are seriously-
- KSKara Swisher
Moving in
- SGScott Galloway
... considering some sort of soft or not so soft repatriation, acquisition, invasion, whatever w- use whatever word you want, of Taiwan, and I think had Trump had more elegant diplomats with him, they would have immediately responded and put out a statement along the lines of, you know, uh, we are all, both nations are committed to peace, and just as I'm sure we've witnessed the incredible fighting force of Ukraine, when armed with technology, they can repel a much larger aggressor. Which, in my opinion, would be an elegant way of saying, "Stand the fuck down when it comes to Taiwan." [chuckles]
- KSKara Swisher
Right. He doesn't sound like he was. [chuckles]
- SGScott Galloway
And he would never, he doesn't think, he doesn't, he doesn't have the diplomats or the IQ-
- KSKara Swisher
Oh, not at all
- SGScott Galloway
... to respond to what was really the only substantive statement made at this summit. And sending Xi, or sending Huang over, Jensen used to have 90% sh- share of chips over there. It's gone to zero.
- KSKara Swisher
Right.
- SGScott Galloway
Because China's figured out that if I provide my local entrepreneurs with the incentives to catch up, they just might. And, uh, our trade has gone from 23% of their exports used to come with us, now it's 17%. They have bigger trade with the, with ASEAN, the Asian, the Association of South East Asian Nations, and also they do more trade now with Europe.
- KSKara Swisher
Yes, they do.
- SGScott Galloway
So w- we showed up, you know, it, it looked less like diplomacy than sort of two casino owners trying to refinance each other's debt. The-
- KSKara Swisher
[laughs]
- SGScott Galloway
But Xi, but Xi is the house right now. Trump c- came in as the guy asking for an extension on his marker or his credit. W- w- we are mutuallyEach of us has a foot, should we decide, on the other's carotid artery. They own 70% of rare earth minerals and 90% of the processing. We own or control, with Taiwan, 80% to 90% of sophisticated chips.
- KSKara Swisher
Which is why Jensen was there, to be able to sell. Uh, this is something Trump barred, by the way, and then now w- w- he wants to sell the chips into China. Can I make a comment about all the business people, as you said?
- SGScott Galloway
Yep.
- 13:09 – 16:18
Sam Altman Testifies
- KSKara Swisher
in the hot seat this week at the Elon Musk-OpenAI trial. Sam denied Elon's claim that he tried to steal a charity and said Elon supported OpenAI becoming a for-profit company as long as Elon had total control. That sounds pretty accurate as far as in my experience. Let's go through some of the other highlights from Sam's testimony. Sam described, quote, "A hair-raising moment when Elon suggested control of OpenAI should pass to his children after his death." That is hair-raising. Sam said Elon's departure from OpenAI in 2018 was a morale boost for employees who did not like his hardcore management style. I was there during that time. That's exactly what they described. I have to say, I heard from a lot of people, he was like a big, giant fucking baby, and he, he does that with all his comes. He comes in, yells, kicks a can, and then leaves, and they can't wait till he leaves. When pressed on his OpenAI equity stake, Sam acknowledged that he holds a passive stake through a company of, in the company through Y Combinator. I also want to mention that Kara Swisher came up in the trial this week. I was surprised, not more, while Microsoft's CEO Sat-
- SGScott Galloway
I was surprised, not more.
- KSKara Swisher
No, 'cause I was texting a lot with all of them.
- SGScott Galloway
That is the most Kara Swisher thing Kara Swisher has ever said.
- KSKara Swisher
I was, uh, so I was gonna t-
- SGScott Galloway
"I was surprised I wasn't mentioned more." [chuckles]
- KSKara Swisher
I texted with them all during this time. The Microsoft's Satya Nadella was testifying. Elon's lawyers were questioning, uh, Nadella about the nature of Microsoft's relationship with OpenAI and pointed to comments he made during an interview with me after Sam's, uh, firing. He was, he c- he was all in for Sam during that period. Uh, closing arguments are getting underway right now. So again, your la-- any-- I don't think there's any more last minute surprises. Elon was not supposed to leave the country, by the way, according to the judge, but he did anyway. Um, he was supposed to be, you know, on call essentially, but he doesn't care. Um, any last minute surprises? Anything? It seems like it's going the way we talked about. Thoughts with this jury?
- SGScott Galloway
I don't have any additional color here. Again, I think this is grievance cosplaying a legal argument. So this is a traditional jury trial, and the jury decides this.
- KSKara Swisher
It's a jury decision, and then the judge will decide remedies. So it c- you know, he, she-- if he lose, if, if Musk wins, they might say, "Well, we're leaving it as it is and going with the California thing, and they can pay him money or whatever. We're not gonna get rid of the CEO." That's one of the things he's asked for, Brockman and Altman to be... I, I think he can't poss-- I think this jury can't possibly side with him. W-- I mean, ultimately, I don't think they proved anything, and it's a sort of he said, he said kinda thing, and Elon's the most loathsome of the pair, right? By far, by a country mile. So I think Elon's made a spectacle of himself. If he wins, it would be something else. Like, I'll tell you that. Um, but I can't imagine the jury thinks this guy got the, got a short end of the stick or that he's stupid and didn't know what was happening to him. I think that's really... He's sort of played this I'm a genius. Well, if you're a genius, how did this happen kinda thing. You're not a dupe. And so, um, so I think they probably think he's lying, and there's enough, there's enough evidence that he is. Um, or, or just, as you said, grievance theater. But we'll see. We'll see. Um, I think it might be, it'll be very fast if that's the case. Um, but I think... And, and also the California has signed off on this, and everyone else agrees. It's just Elon who's butthurt. In any case, I have a feeling it's gonna be quick, but we'll see. It would be a real shocker if he won. Um, the latest inflation
- 16:18 – 32:50
Inflation Surges
- KSKara Swisher
numbers are out, and the news is not good. Consumer prices rose 3.8% last month, the biggest increase in three years. Energy costs obviously cur- accounted for more than 40% of the monthly increase, with gas prices up 28%, grocery prices, rent, and airfares also climbed sharply. President Trump, however, does not appear to be overly concerned. Let's listen to how he answered a reporter's question as he left the White House for his China trip.
- SPSpeaker
When you're negotiating with Iran, Mr. President, to what extent are American's financial situation motivating you to make a deal?
- SPSpeaker
Not even a little bit. It-- the only thing that matters when I'm talking about Iran, they can't have a nuclear weapon. I don't think about American's financial situation. I don't think about anybody. I think about one thing. We cannot let Iran have a nuclear weapon. That's all.
- KSKara Swisher
Oh, wow. That was, that was some quote. That was like an ad. Like they just, he cut an ad for them. It was... That was astonishing, I have to say. I mean, it's what I th- it's what I think he thinks, and this nuclear weapon thing, we're less safe now than we were during the Obama days when we had most of the en-enriched uranium and a deal, and the Strait of Hormuz was open. So a- any thoughts about what he's doing here? Why? Or he's just, just an old addled man who just says whatever's on his mind. I don't know.
- SGScott Galloway
Yeah. So look, [sighs] with this administration, so the, the quote unquote objectives of regime change. Oh, wait, no, no nuclear weapons. Oh, wait, unconditional surrender.I mean, there, there really isn't-- It's so back and forth and, you know, erratic that it's difficult for him to outline or be taken seriously. Having said that, I do believe that loosely speaking, the way-- what he said there is how presidents should approach wars. Wars are more than gas prices. Wars involve killing people and putting our own men and women at risk.
- KSKara Swisher
Sure.
- SGScott Galloway
And I think, uh, and he's not the guy to do this, but I do think the president should be willing to have an adult conversation with the American people and to say that the reason we have decided to put our own men and women in harm's way and commit this type of treasure and talent and potentially kill many of their citizens is because we think it's worth it, and this is why we think it's worth it. And quite frankly, we don't go to war unless we, as your leaders, have decided that the American public are going to have to sacrifice. George Bush told us we could go to war and cut taxes.
- KSKara Swisher
I get it.
- SGScott Galloway
And Americans believed him. So I think an adult conversation with the American public around, "We have consulted with Congress, we've consulted with our allies, and we believe-
- KSKara Swisher
Which they didn't. Which they didn't
- SGScott Galloway
... whatever the objectives are are worth some sacrifice," I think that is the right thing for a president to say.
- KSKara Swisher
Right.
- SGScott Galloway
But i-i this requires an adult conversation, more leadership, more gravitas, and clear objectives, and none of those things are, uh, you know, evident with this president. But again, I think the president should be the person to say to the American public, "I'm not going to take you to war unless I think it's worth it, and also unless I am willing to ask you to sacrifice."
- KSKara Swisher
That's not how he asked it. He's like, "I don't give a fuck."
- SGScott Galloway
Agreed. Agreed.
- KSKara Swisher
He doesn't have any objectives. It's worse than before. He's made it worse, and it's not a war. Like, it's not-- It's-- He's kind of right. It's not. It's something else where it's just a disa- It's just a big fucking mess, the same as his casinos and, you know, everything he touches turns to this in some way. Just even the, even The New York Times story about the reflecting pool, what a mess. He gave it to some group of people who can't fix it. There's already leaks already. It's being painted a color that's not gonna let it reflect. It's gonna-- the non-reflecting pool. Everything he does is shoddy and haphazard and unplanned and with a huge whiff, stink of corruption attached to it. And, you know, and then telling them, "I don't really care about you," is really, I think, disastrous. It's why his numbers are going down, is nobody believes him about anything that he says, except that he doesn't care about you, and I think that's a... I, I agree a president should say things honestly, but I don't think this is honest. I think this is just he could give a fuck, is what he's saying to you, and doesn't have any plan except for disaster.
- SGScott Galloway
Well, there's the perception and there's the reality, and I think the, I think the perception after kind of eight or ten very bad weeks for the president, I think he's actually had a good couple weeks. I do think he looks presidential with Xi. Although nothing got accomplished other than some saber-rattling from Xi. Um, the Virginia... [sighs] I think Virginia's a big deal, the Supreme Court rejecting the attempt to redistrict. I think he's had actually a, a decent couple weeks.
- KSKara Swisher
I actually don't. I think the Supreme Court's gonna give it to Virginia because he gave it to everybody else, and I think it's gonna turn-
- SGScott Galloway
Wait, wait, wait. I'm sorry. Gonna give it to Virginia?
- KSKara Swisher
It's going to the Supreme Court. That decision is going... The Supreme Court has to decide.
- SGScott Galloway
Oh, you think, you think the redistricting-
- KSKara Swisher
Yes
- SGScott Galloway
... will be allowed?
- KSKara Swisher
Yes, I think it'll be allowed, and 'cause he's-- they've allowed it everywhere else. It's very hard not to allow it if they've allowed it everywhere else, and they-
- SGScott Galloway
No, I hope you're right
- KSKara Swisher
... even with Texas. As we said last week, he can do whatever he wants cheating, but polling doesn't lie, and polling is showing, uh, he, he can't outrun the polling no matter how many times he cheats. I think he has had a bad couple of weeks actually, and he looks older and more addled than ever. I just-- I think that this was a typical... He's just saying whatever's on his brain. He wasn't doing it to be, you know, tough with the American... And he didn't do it with care. I don't care what anybody's... Like, I don't think about anyone's financial sit- American's financial situation. I don't think about anybody. That's ridiculous. And he, you know. We were safer before, and we're less safe now. Anyway, um, i-it-- what's interesting is-
- SGScott Galloway
When's the last time you think he had a good two weeks, Kara?
- KSKara Swisher
Uh, when he won.
- SGScott Galloway
Okay.
- KSKara Swisher
When he won. I don't think it's this is-- I think this has been a-- I thought part of his first term, some of the stuff was okay. Um-
- 32:50 – 38:19
Midterm Donors
- KSKara Swisher
we're back. The biggest donor for the twenty twenty-six midterms may or may not surprise you. It's Andreessen Horowitz. The VC firm and its co-founders, Marc Andreessen and Ben Horowitz, have already spent more than a hundred and fifteen million dollars this election cycle, outspending both George Soros and Elon Musk. Uh, mot- most of the money is spent on the right. It's Musk, Jeff Yass, and, uh, these two. Um, Soros is, is the, is the opposite, but much smaller in comparison. A major chunk of that money is going towards pro-crypto and pro-AI super PACs. What a surprise. It's where their investments are. Trump and the GOP are also benefiting. Uh, Andreessen Horowitz and his founders have together donated roughly twelve million dollars to Trump's super PAC, MAGA Inc. And a trust linked to Marc Andreessen gave nearly nine hundred thousand dollars to the Republican National Committee. And Marc, um, you know, not a surprise. [chuckles] I mean, not that this guy has moved, you know, firmly. It's mostly Marc, but Ben is right along with him as always because he's his little follow, little follow puppy. Um, uh, just typical. Just typical. I mean, this is not a surprise. And then he tells nonsensical stories about how he b- went right, none of which are true. Um, uh, your thoughts?
- SGScott Galloway
It's smart.
- KSKara Swisher
Yeah. Yeah.
- SGScott Galloway
Uh, it's wrong, but it's smart.
- KSKara Swisher
Yeah.
- SGScott Galloway
It's the greatest ROI any firm can get right now.
- KSKara Swisher
I think he's figured it out. Yep.
- SGScott Galloway
This is, this is pay for play. And by the way, Horowitz used to give a lot of money to when he thought Kamala was gonna-
- KSKara Swisher
Yeah, he did
- SGScott Galloway
... give money to Kamala.
- KSKara Swisher
He did.
- SGScott Galloway
The-
- KSKara Swisher
Marc used to be a big Gore person, as I recall, a long time ago. He wasn't ever... People are like, "Oh, he used to be Democratic." I was like, "Mm, not... If you've, if you spent any time with him, he was certainly wasn't. He certainly was... He was..." Marc is one thing, which is self-interested in the most extreme way you're ever gonna meet someone. He's very interested-
- SGScott Galloway
That's, that's called a corporation. It, it-
- KSKara Swisher
I agree. But I'm saying it's really quite, it's really quite... He doesn't even pretend. He's really the most selfish-
- SGScott Galloway
Well, I-
- KSKara Swisher
... person I ever come... Uh, Scott, Scott, I get it, but you've, you've never seen some-
- SGScott Galloway
I mean, it's about incentives. It's just-
- KSKara Swisher
Yeah
- SGScott Galloway
... if the greatest ROI, if you're the CEO of a company or the head of a venture capital firm, and the greatest ROI on any spending is not hiring more people, it's not investing in planned property and equipment, it's to give money to a president who will, who will pass legislation or block legislation that takes the value of your portfolio companies up ten, twenty, thirty billion dollars. That hundred and fifteen million dollar investment-
- KSKara Swisher
Yeah
- SGScott Galloway
... is the best money you can invest.
- KSKara Swisher
Absolutely.
- SGScott Galloway
So-
- KSKara Swisher
I, I agree
- SGScott Galloway
... again, it's the boring shit. Term limits on the Supreme Court, no gerrymandering, get rid of Citizens United. Until we do those things, you're gonna have strong men or women or, or fascism from the far left or the far right. It's-
- KSKara Swisher
You're right. I, I, I agree
- SGScott Galloway
... you're, you're always gonna have it. And we're outraged at Andreessen Horowitz. Soros, okay, there'll be Democrats that'll do it. I bet Jensen Huang is about to write a three hundred million dollar check to somebody.
- KSKara Swisher
Who knows? Who kn- I, what... You know, it's interesting 'cause, uh, look, they, they have shifted, right? But I, I... My point is Marc was never, never liked anybody. Like, that's all I'm saying. He's don't-
- SGScott Galloway
I doubt he does now.
- 38:19 – 43:54
AI News Roundup
- KSKara Swisher
new funding that would value it at up to $950 billion. Uh, if completed, the company's valuation would be 2.5 times what it was just three months ago and higher than OpenAI's valuation of 852 billion. Of course, there's the overhang of that trial with OpenAI right now. Um, i- it's a huge thing. Over-inflated? Uh, I don't know. I don't know.
- SGScott Galloway
Uh, look, uh, we've never seen a company scale like that. Um, so and, uh, we've also never seen Pepsi overtake Coke or, or Avis overtake Hertz as quickly. We've never seen this type of, of transition or pivot or reversal in fortunes. And, and also, I still think OpenAI's valuation, uh, uh, IPO is probably gonna be a hit. So get this: in March of 2025, Anthropic's valuation was 61 billion. So it's up 15-fold. It's up 15-fold in the last year. And it's-
- KSKara Swisher
A lot of parties in Silicon Valley.
- SGScott Galloway
Well, okay, it was nine billion in annual recurring revenue in December. Last month it was 30 billion. They think this month it's on track to reach 50 billion. Um, for the first time, more businesses are using Anthropic than OpenAI, uh, 35% versus 32. Anthropic's business adoption quadrupled over the past year while OpenAI's grew, is basically flat. And so a board decision, uh, on this financing is expected later this month with the... And they think the IPO might happen as early as October. And Kalshia is saying it's a 70% chance it goes public this year. Um, and then there's also, um, a 60% chance that they have the best AI model at the end of the year. I don't know what that means. Look, I don't, uh, th- this company is-
- KSKara Swisher
It is what it is
- SGScott Galloway
... it's just absolutely firing on all cylinders. Having said that-
- KSKara Swisher
Yeesh
- SGScott Galloway
... my thesis is that go long GLP-1 and short AI because I don't think-- I think it's impossible to maintain a lead in AI with AI. And that is, if you look at the technical specifications, it's moving more towards parity than differentiation, and I think it's gonna be difficult for any one company to maintain a technical lead here, and that that will drive down margins. And then when these open weight AIs, when she starts engaging in AI dumping, which is what I would do if I were him, I think it's gonna drive down their margins. And the good news is, I think similar to vaccines or PCs or jet transportation, the winners will be us, uh, not these companies. But I'm-
- KSKara Swisher
Yeah. There'll be one or two companies that will dominate. Probably, uh, Anthropic is one of them at this point, interestingly. Probably Google is the other.
- SGScott Galloway
We have become used to any innovation resulting in a small number of companies capturing trillions of dollars in shareholder value. Again, my thesis is that AI might be more like jet transportation, vaccines, and PCs in that no one company-
- KSKara Swisher
Yeah, I get your point
- SGScott Galloway
... is able to sequester shareholder value.
- KSKara Swisher
So it'd be funny if Apple spent nothing and ends up benefiting the most, which is probably gonna happen.
- SGScott Galloway
Oh, that's, uh-
- KSKara Swisher
Yeah.
- SGScott Galloway
That-
- KSKara Swisher
It'll be, it'll be sweet
- SGScott Galloway
... 100%.
- KSKara Swisher
That's sweet. Uh, just last thing, Google, speaking of Google, is in talks with SpaceX for a rocket launch deal to put orbital data centers in space. The deal is based on currently unproven technology that Elon said is the next frontier for his rocket company. I, I kinda like this idea. It's totally unproven, and Google has a history of investing in wacky schemes. At one point they had, um, they were investing... This sounds like a Sergey Brin thing happening here. They used to beef over some girl, but now they're getting along, I suppose. Um, uh, there's, uh, th- anyway, th- this is something. Google has done this. They had wind, they had wind up in wind kites at one point. They were gonna do a chair lift in San Francisco. They had a, a, a, a ship, uh, an energy ship parked off the, uh, the city in San Francisco. This is nothing. This is, feels, uh, smells likeSergey Brin to me, and so he would try anything, and this would seem cool to him. So sure, why not? Why not invest in it? What's the difference? If it works, it works. If it doesn't, it doesn't. Any thoughts?
- SGScott Galloway
I think these guys, they wanna put chips down and options on anything they don't have insight into-
- KSKara Swisher
Yeah
- SGScott Galloway
... so they can get investor updates, have a chance to work with them.
- KSKara Swisher
Yeah.
- SGScott Galloway
It's smart. Everything is so interconnected. Those graphs that look like, you know, a god's eye, remember those in the '70s, where everyone is invested in everybody else, and everybody's suing everybody else.
- KSKara Swisher
Yeah, just like Anthropic is doing a deal with Musk. Not a s- everyone was like, "How dare you, Dario?" I'm like, "Are you kidding? Of course he did." Of course they do. They don't... They, like, beef and then they hug. It's like the mob. Anyway, um, one, uh, one more quick break. We'll be back for predictions.
- SGScott Galloway
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- KSKara Swisher
Okay, Scott, let's hear
- 43:54 – 48:07
Predictions
- KSKara Swisher
a prediction. I will note that people should, something we have talked about and have been in our predictions, a New York Times investigation, which you should all read, found that over 80 per, 80 Polymarket users have placed bets with suspicious characteristics and won money across nearly 30 topics. They're, the insider trading stuff, this stuff is just getting started on all these predictions markets, so w- we, we thought this might happen, but that, just, just please go read that because it's a really interesting piece. Go ahead, Scott. Prediction? Speaking of predictions.
- SGScott Galloway
So my prediction, chip maker Cerebras, Cerebras, Cerebras? I don't know. Chip maker Cerebras went public today at a $40 billion valuation, and that's up from its $23 billion valuation, um, uh, in February and $8 billion in 2025. And, uh, I believe it's over. I believe it's playing into this massive, uh, historic run-up in chips, and after an initial pop, I think it'll fall. Since last year, its revenue has increased less than 2X, while its valuation has increased, uh, sixfold, and the $40 billion valuation implies a 76 times revenue multiple. In other words, it's, this shouldn't be a public company. It's, it's, it's drafting off of what has been an unprecedented increase in value in the sector. So as an example, Nvidia trades at 26 times revenues and still controls 85% of the AI chip market and is growing faster. Cerebras tried to go public in 2024, but withdrew their, uh, filing at the last minute over intense scrutiny of its heavy reliance on a single customer, uh, the Emirati AI firm G42. I don't re- if you remember these guys. It's basically like g- actual giant big chips, physical giant big chips. It strikes me as k- quite frankly, a shitty company, and this is, this is simply, um, massively benefiting from an unprecedented updraft in chip stocks. And anyways, my prediction is that the initial pop, this company, uh, which I think is actually a fairly mediocre chip company trading at 78 times revenue, is not gonna sustain. And-
- KSKara Swisher
Ooh. I like the highly specific stock thing
- SGScott Galloway
... and then that, that same customer, which makes up the lion's share of the revenue, Group 42, accounted for 24% of revenue last year, and a state-owned UAE university accounted for 62% of revenue. Given what's going on in the UAE, given their dependence on one customer, given the 76 times revenue, this feels like one of those bad Chinese firms that could just-
- KSKara Swisher
Oh
- SGScott Galloway
... go down 95%.
- KSKara Swisher
Collapse. Yeah. Yeah. Well, it's a good warning for people. Anyway, there's a lot of froth happening, for sure, and, and so there, it's hard to separate the good from the bad. Anyway, we wanna hear from you. Send us your questions about business, tech, or whatever's on your mind. Go to nytmag.com/pivot to submit a question for the show, or call 855-51-PIVOT. Elsewhere in the Karen Scott universe, this week on Prof G Markets, Scott spoke with Aswath Damodaran, a professor of finance at NYU Stern School of Business, one of Scott's favorites, to break, and he's terrific, I think so too, to break down what's standing out to him in the market so far this year. He shared his thoughts on how the conflict with Iran could ripple through the economy. Let's listen to a clip.
- SPSpeaker
The catastrophic risk here is not that oil and gas prices stay higher than they were before the conflict. It's whether they'll go even further up, because there is that chance of that happening. I think if, uh, in, in many ways, what the market seem, uh, seems to be building in is the economy can survive with gas prices being 450 or 5, depending on what part of the country you're in, and that it might not be as robust as you thought it was three months ago, but it's okay. But I think the, the, the, the worry still remains that this crisis, while it's in a slow boil at any point in time, could become a fast boil, at which point you could say, "What, what happens to earnings now?"
- KSKara Swisher
Yeah, that's interesting. Four, 455. I've seen 6, 7 now. It's really a- across lots of cities. Anyway, uh, that's the show. Thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll be back next week. [upbeat music]
Episode duration: 48:08
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