AI Summary
5 min readIn Google's most recent earnings call, CEO Sundar Pichai announced the company would raise its year-end capital expenditure run rate to between $19.5 billion and $25 billion per quarter, after burning $80.6 billion in the first half of the year alone. That implies Google will spend another $114 billion by the end of 2026. Host Ed Zitron has been asking the same question for two years, and the numbers have only made it more urgent: what the hell are the hyperscalers doing?
Since 2022, Google has spent $288 billion in capital expenditures. The visible return is a handful of also-ran LLMs and a $13 billion investment in Anthropic, which is also Google Cloud's single largest customer. Zitron estimates that across Microsoft, Amazon, Google, and Meta, hyperscalers have now spent roughly $1.1 trillion on AI infrastructure. When asked what revenue that spending has generated, executives offer vague answers and avoid specifics.
The Anthropic accounting trick
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What you'll learn
- 1 (02:32) **Introduction: The Central Question** - Ed Zitron sets up the monologue by asking what hyperscalers are doing with their enormous capital expenditures.
- 2 (04:28) **Anthropic's Role in Google Cloud's Growth** - Zitron argues that Anthropic is the primary driver of Google Cloud's recent revenue surge, not Gemini.
- 3 (06:40) **The $1.1 Trillion Question** - The host estimates hyperscalers have spent $1.1 trillion on CapEx with no clear payoff.
- 4 (07:03) **OpenAI's Impact on Microsoft's Cloud** - Zitron reveals that OpenAI's spending is propping up Microsoft's cloud growth.
- 5 (08:18) **The Real Reason Hyperscalers Keep Spending** - Zitron explains the circular logic: hyperscalers are feeding their own money into AI labs to boost growth.
- 6 (09:40) **The "Wrestling" Analogy** - Zitron compares hyperscaler spending to pro wrestling: keeping the crowd riled up even though the match is scripted.
- 7 (10:07) **Mainstream Media's Slow Awakening** - Zitron notes that he's being invited on more shows as the AI bubble's flaws become undeniable.
+ Full timestamped outline available in the app
Guests on this episode
Show Notes
In this week's Better Offline monologue, Ed Zitron runs through how hyperscalers have wasted $1.1 trillion in capex on AI in a desperate attempt to sustain hypergrowth, and report on how without OpenAI’s claud spend, Microsoft Azure would’ve only grown 8% year-over-year in 2025.
The Subprime Data Center Crisis: https://www.wheresyoured.at/the-subprime-data-center-crisis/
Nik Suresh: AI Is Eviscerating Global Decisionmaking https://ludic.mataroa.blog/blog/ai-mania-is-eviscerating-global-decision-making/
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