Monetary Matters with Jack Farley
Monetary Matters with Jack Farley

Regulatory Risk is Coming For AI | David Woo on AI Data Center CapEx and Iran War

June 15, 2026

AI Summary

5 min read

In the first quarter of this year, the combined capital expenditure of the five big hyperscalers—Microsoft, Google, Amazon, Oracle, and Facebook—actually declined quarter over quarter for the first time in three years. Even the year-over-year growth rate dropped relative to the fourth quarter of last year. David Woo, an independent economist who applies game theory to global markets and geopolitics, argues this is a crucial signal the market is missing. The real story is not just that nominal spending slowed, but that the hyperscalers are paying more for the same components, meaning real capex—the actual volume of infrastructure being built—likely fell sharply.

The Optical Illusion in AI Earnings

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What you'll learn

  • 1 (00:06) **Guest Introduction & AI Capex Thesis** - David Woo, independent economist, joins to discuss AI data center spending and the Iran war.
  • 2 (01:06) **The Inflation Illusion in AI Earnings** - Woo explains why nominal earnings growth in AI is misleading.
  • 3 (04:08) **Q1 CapEx Slowdown & Token Maxing** - Woo identifies a real CapEx slowdown in Q1 2025 that the market is ignoring.
  • 4 (06:22) **Hyperscaler Financial Strain** - The ratio of capex to operating income for the top five hyperscalers has reached 135%.
  • 5 (10:21) **The Accounting Optical Illusion** - Woo explains how depreciation rules obscure the true economic value of AI capex.
  • 6 (12:04) **Memory Chips: Commodity Boom-Bust** - Woo argues the memory chip rally is a classic cyclical boom, not a structural shift.
  • 7 (16:05) **The New Bear Case: Regulatory Risk** - Woo pivots to his central thesis: AI is now "too good for its own good."

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Show Notes

Sponsor: Teucrium Corn Fund (NYSE Arca: CORN):

https://teucrium.com/corn


In this episode of Monetary Matters, host Jack Farley sits down with independent economist and strategist David Woo to break down the hidden realities behind global tech markets and macroeconomics.  Woo reveals how component inflation and artificial "token maxing" have created an optical illusion of accelerating corporate earnings, obscuring a real-term slowdown in tech hyperscaler CapEx. Rather than arguing that artificial intelligence lacks power, Woo presents a stark AI bear case rooted in imminent global regulatory crackdowns as advanced frontier models like Claude Mythos introduce severe cybersecurity and national security risks. He predicts that the broader AI industry is rapidly heading toward intense competition and commoditization, which will ultimately turn current hardware shortages into a massive compute glut.  Turning to geopolitics, Woo details why he remains heavily bullish on oil as active military conflicts between Iran and Israel continue to jeopardize the blockaded Strait of Hormuz. Applying game theory to President Trump's ongoing ceasefire negotiations, he asserts that Iran is exploiting Washington's public push for a deal to extract tougher terms that will inevitably drive energy prices even higher. Recorded June 10, 2026.

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This episode is sponsored by the Teucrium Corn Fund (CORN). Download our free eBook, "Why Investors Are  Increasingly Turning to Commodity ETFs," to explore the macro forces shaping commodity markets today. 

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