57%

Of Americans placed a bet last year. Only 38% read a book.

1. OpenAI had another terrible week

2. Market broadening is a myth: 50% of the S&P 500 is AI

3. Netflix earnings disappoint as engagement slips

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OpenAI Could Miss Its 2030 Revenue Forecast by 70%. Here’s Why

It was another terrible, horrible, no good, very bad week for OpenAI. The company was caught selling advanced AI models to Chinese firms blacklisted by the Pentagon, its first AI device leaked (it’s reportedly a movable speaker), and according to new Emarketer estimates, OpenAI’s ad business is on track to miss its own forecast by 95%.

That’s not all. Apple sued OpenAI last week, alleging its consumer hardware plans are the product of stolen intellectual property. S&P Global Ratings also downgraded Oracle’s debt to BBB-, just one notch above junk status, citing OpenAI as a “key credit risk.” Plus, DeepSeek is reportedly preparing for an IPO and could file as early as this year. A successful public debut of a cheaper Chinese AI model provider could make it even harder for OpenAI and Anthropic to attract capital.

Taken together, these issues all call into question OpenAI’s ability to hit its revenue projections and fulfill hundreds of billions of dollars in contractual obligations to compute providers and chip companies.

First, Apple’s lawsuit could put OpenAI’s entire hardware business on hold. Apple alleges that OpenAI poached over 400 Apple employees, extracted confidential information from them, and then tricked Apple’s suppliers into doing proprietary work for OpenAI that they didn’t have permission to do. Apple is asking the court for monetary damages and an order for OpenAI to return or destroy all misappropriated property.

Second, the AI price wars have begun, and Chinese firms like DeepSeek are the biggest threats. Open-source Chinese models now account for nearly 50% of enterprise token usage on OpenRouter, a marketplace for AI models. That’s up from just 4.5% in the first half of 2025.

In response, American firms are cutting their prices dramatically. Last week, Meta announced a new model, Muse Spark 1.1, that is up to 75% cheaper than OpenAI and Anthropic. Under industry pressure, OpenAI released a model undercutting itself by 80%.

In a worst-case scenario, if the Apple lawsuit shuts down OpenAI’s hardware business, ChatGPT advertising revenue is as low as EMarketer’s projections, and price wars force OpenAI to reduce their model pricing by 80%, OpenAI’s 2026 revenue would fall by 40% and its 2030 revenue would fall by 70%.

That scenario would be disastrous for a company that is, in an ideal case, covering only about 80% of its cash burn by 2030.

This would also impact when OpenAI becomes cash flow positive. According to internal projections OpenAI will become cash flow positive by 2030. In this downside case, it would instead lose $165 billion that year.

OpenAI CEO Sam Altman tried to calm investor concerns with a tweet, but his statement ultimately amounts to a promise to “do the right thing.” Whatever that means.

The best business model in history is IP theft. Second best: giving 80% of a product’s value at half the price. That’s what DeepSeek and the rest of the Chinese open-weight models are trying to do right now.

America has made a massive bet on AI, and China just showed up with a near-frontier product for a fraction of the cost. This becomes the next geopolitical football once Trump figures out what’s happening.

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The Market Isn’t Broadening — It’s Just Getting Better at Hiding AI

Investors keep hearing that the stock market is broadening. But is it? The deeper you look, the harder it is to argue that stocks, bonds, and even alternative assets are now one big bet on AI.

This pattern is most evident across the equity markets. AI-related stocks account for more than 50% of the S&P 500 by weight, and if you removed AI and energy from the S&P this year, the S&P would be in the red.

AI is the hidden catalyst driving returns across seemingly unrelated sectors. For example, 3 of the 4 top performers in the S&P 500 real estate sector are real estate investment trusts (REITs) that focus on developing AI data centers.

Utilities companies are benefiting from AI’s skyrocketing demand for power. U.S. electricity demand jumped to a record high last year, with data centers accounting for around 50% of the demand growth.

Industrial stocks are soaring on construction demand from building AI data centers. In fact, for the first time since 2021, industrials in the S&P 500 are trading at a higher forward price-to-earnings multiple (26x) than technology companies (24x).

The financial sector hinges on AI, too. Big banks are collecting record fees from AI company IPOs and M&A activity and record trading revenues from market hype around AI. The Financial Times’s Robert Armstrong went so far as to write: “It’s not too much of a generalisation to say: the big banks are a straight AI play now.”

Even 52% of the Russell 2000 small-cap index’s return in the first half of the year came from AI-related companies.

Emerging markets are no different. South Korea and Taiwan have accounted for 75% of emerging-market returns, and most of those gains came from three suppliers of AI semiconductor chips: TSMC, Samsung, and SK Hynix.

And in Europe, just nine AI-winners have accounted for about 47% of returns to the Stoxx Europe 600 this year.

Torsten Slok, Apollo’s chief economist, articulated the implications of this dependence succinctly: “This AI thing better work out.”

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances real estate — apartment buildings, hotels, or, increasingly, data centers. Many REITs trade publicly like stocks, so buying a share means buying into a professionally managed real estate portfolio. REITs are required to distribute at least 90% of their annual taxable income to shareholders as dividends.

CNBC pundits own stocks, so they’re always going to make the case for why everyone else should buy more. But don’t be fooled: The market isn’t broadening; it’s just finding new ways to buy Nvidia.

Everything’s becoming an AI stock. That’s not necessarily bearish, but investors are kidding themselves when they call that “broadening,” like it means diversifying away from AI. It doesn’t. Buying “AI-adjacent stocks” and calling it broadening is like ordering a Diet Coke with your Double-Double from In-N-Out. Be clear: You still bought a cheeseburger.

Of the Big Tech names, who’s least dependent on AI? Apple. Apple’s stock is up 60% over the past year and just surpassed Nvidia to again become the most valuable company in the world. Amazon, still AI related but more diversified than the other hyperscalers, is up 11% over the past year. Microsoft, ground zero for AI, is down 23%.

If I could go long one basket of stocks, it’d be GLP-1s. If I could go short one, it’s AI. But to be clear: I’m not telling you to hold gold bars or cash. I’m always in the market — you never know how fast or how irrational it’s going to run. But you should understand how exposed the market really is to one sector.

I’m a big fan of index funds and passive investing: Put your money in and let the market do the work. But now we have to ask what true diversification actually means. Putting your money in the S&P doesn’t do that job anymore, which means you have to start doing some homework.

The question is: Can you find sectors with real distance from AI?

One sector I’d point to: healthcare. It was one of my picks at the start of the year, and I’m sticking with it. AI hasn’t touched it yet — which means the real returns might still be ahead. But finding these sectors is the hard question investors are facing right now.

Netflix’s Engagement Slips as Competitive Pressure Mounts

Netflix reported disappointing second quarter earnings. Revenue grew 13%, short of expectations, and the streaming giant spooked investors by reporting weak engagement data — and then announcing it would start publishing engagement metrics less frequently. The stock fell as much as 8% Friday.

Netflix once boasted of its transparency; now, that claim seems almost ironic. In Q1 2025, Netflix stopped reporting quarterly subscriber counts, telling investors to instead focus on engagement. Last week, the company decided to cut its What We Watched engagement report from twice a year to once a year, starting in 2027.

The final biannual engagement report looked weak. Total viewing hours rose just 2%, while the subscriber base grew an estimated 10%, implying an 8% decline in per-subscriber daily engagement.

Netflix has been facing increasing competition from short-form video providers, specifically YouTube. In response, it added “Clips,” a TikTok-style scroll feature surfacing short content from its own library, video podcast deals with Spotify and Barstool, and new licensing deals with outside publishers (BuzzFeed, Condé Nast) that bring new short-form content onto the platform.

Netflix has lost more than $250 billion in market value over the past year, and fellow streaming giant Disney has lost nearly $50 billion. Both are well-managed companies that are growing revenues and subscribers, raising prices — and being punished for it. This raises an important question: Is streaming just a bad business? Or have Netflix’s and Disney’s creative juices run dry? Let us know your take in the comments.

In the next six months, OpenAI is going to acquire Sierra, an enterprise AI company, and install Bret Taylor as CEO. Sam Altman will be moved up to chairman. Altman is an innovator, not an operator, and Bret Taylor may be the best enterprise software operator of his generation.

1. Teens give their verdict on Britain’s social media curfew

2. The Conspiracy World Cup

3. Investors now value Eli Lilly more like a tech giant than a drugmaker

18%

of Gen Zers (and 10% of all Americans) have an ongoing personal friendship with an AI chatbot.

1. SpaceX joined the Nasdaq 100 and got nearly unanimous “buy” ratings — but still fell 12%

2. Crypto has lost half its value since October and most of its “cool” factor

3. First-time homebuyers hit a record low, while prices hit a record high

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Who Decides What SpaceX Is Worth?

SpaceX officially joined the Nasdaq 100 last week. It qualified under new fast-track listing rules, which reduced the required trading history from at least three months to just 15 days and eliminated the minimum public float requirement. Prior to the rule change Nasdaq 100 stocks had to have a minimum float of 10%.

The stock also received a torrent of new ratings from Wall Street analysts. Of the 32 analysts covering SpaceX, only one published a “sell” rating — and it came from CFRA Research, an independent financial intelligence firm with no investment banking, asset management, or trading arms.

Financial analysts typically set price targets that estimate a stock’s future value and write notes to their clients explaining their reasoning. The price targets for SpaceX were notably optimistic.

Raymond James’ Brian Gesuale projected that SpaceX would be worth $800 per share over the next 12 to 18 months. SpaceX stock would have to increase more than 400% for that to happen, and its market capitalization would hit $10.5 trillion, equivalent to one-third of US GDP. That would make SpaceX worth more than the stock markets of the U.K., France, and Germany, combined.

Research has found evidence that analysts bias stock recommendations upward, especially if the bank they work for is affiliated with the stock they are analyzing. This was particularly rampant during the dot-com bubble. One notable example: Just two months before Enron went under, 16 of the 17 sell-side analysts covering the stock rated it “buy” or “strong buy.” Many of them were from banks that did business with Enron.

Investor protections were put in place after the bubble burst, and it is now illegal for investment banking divisions to influence bank analysts. However, studies have shown that even after these reforms, affiliated analysts (i.e., those covering companies that also do business with their investment banking divisions) are still reluctant to issue pessimistic recommendations.

Optimism bias in the analyst community runs deep. Even controlling for accuracy, more-optimistic analysts are more likely to move up to top brokerages, and more optimistic analysts are more likely to be called on in company earnings calls.

Today, of all the 84 holdings in the Global X Artificial Intelligence & Technology ETF, only 2% of them have a net “sell” recommendation.

The analysts whose banks took SpaceX public were, on the whole, more optimistic than the group of unaffiliated analysts. One hundred percent of the affiliated analysts issued “buy” recommendations. Of the 17 analysts whose banks did not take SpaceX public, only 65% did.

Despite the optimistic ratings, SpaceX shares fell 12% last week and are down 36% from their peak.

Morgan Stanley’s price target is $300 — that’s double where the stock is now. They also write that their bull case is $600 and their bear case is $75. They’re telling us: It could fall 50%, but it could also rise 300%. So they’re basically not telling us anything.

What we learned from the dot-com bubble is that there’s a structural conflict of interest embedded in equity research. If you assign a company a “sell” rating, then it’s unlikely that the company will be interested in working with you to underwrite their IPO, through which you would receive your 1%. So, Elon is naturally going to choose the investment banks that are nice to him.

The SEC tried to fight this with regulation in 2003 that aimed to separate the research arm of investment banks from the banking divisions responsible for getting those underwriting fees. Seven months ago, that rule was terminated by the SEC.

After that happened, former SEC Chair Arthur Levitt wrote an article in The Wall Street Journal titled “The SEC May Make Wall Street Analysts Corrupt Again.” He warned about the dangers of getting rid of this regulation.

I don’t think the analysts have as much power as they used to have. Back in the ’90s, these analysts were all over CNBC all day long. But it’s not the same today, because there are so many other sources of information.

To a certain extent, I view these targets as embarrassing. Wouldn’t it be embarrassing like in a couple years’ time, you’re at parties and people ask you, you’re the guy who said SpaceX at $300?

For those who aren’t familiar with these ratios, no company trades at 100x sales. It just doesn’t happen, and the companies that do trade at very high price-to-sales ratios are software companies where sales basically convert straight into profits — there aren’t a lot of fixed costs. In SpaceX’s case, it has massive costs: the rockets, the Nvidia GPUs, etc. It’s not just losing money, it’s losing a shocking amount of money.

And do you really want to pay 100x? You have to wait a hundred years to get your money back. It’s not really growing much either: It’s growth rate is close to 15%. SpaceX is presenting itself as an AI company, but it only has a 3.5% market share, so it’s really just hype.

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The Great Brotation

The crypto market has now erased more than half of its value in the past eight months, and bitcoin ETFs have seen $8 billion in outflows in the past eight weeks. Meanwhile, AI has become the new frontier. It’s the technology people are most excited about, and it has captured the same sense of disruption and possibility that crypto once represented.

Crypto has lost its cool, and there’s academic work backing this up. A recent paper by David Krause, an associate professor of finance at Marquette University, pins the turning point on a specific date: January 2024, when the first bitcoin ETF launched. Krause’s thesis is that the moment Wall Street made crypto easy and mainstream, it stopped being cool.

As a proxy for public interest, he measured how often people Googled crypto terms and how often they visited the related Wikipedia pages. After the bitcoin ETF launched, he found that Google searches through June 2026 for dogecoin dropped 63%, searches for “cryptocurrency” dropped 47%, and Wikipedia visits to both pages fell 76% and 56%, respectively.

Crypto’s only selling point is that the line is going up and people want to buy it because they know someone who bought it for $1 and now it’s worth $60,000. So it’s really just a trend-based asset, something you talk about at parties.

But now, when you say you own bitcoin, you’re not really doing something exciting anymore. When the SEC chair is a crypto bro, and Commerce Secretary Howard Lutnick is a crypto bro, and all of Epstein Island was involved ... it’s no longer anti-establishment. The claims of use cases have evaporated as well.

If you want to be exciting, you’re probably telling people that you’re making bets on prediction markets.

Home Prices Aren’t Meant to Just Go Up

The U.S. housing market is showing new signs of strain. Last month, the median price of a home in the U.S. hit a record high at $408,838, and in April, the National Association of Realtors reported that the share of first-time homebuyers dropped to 21%, the lowest proportion since NAR began tracking the data in 1981.

This is part of a broader trend: Homeownership is increasingly out of reach for the average American. In fact, 75% of homes currently on the market are unaffordable for the typical household.

For young people, the housing market looks especially bleak. Between 2019 and 2024, the inflation-adjusted median home value rose 30%, while the inflation-adjusted median household income for those under 40 rose 9%.

Americans still want to buy homes. Fifty-six percent of Americans say owning a home represents the American Dream, and nearly two-thirds of Americans who don’t currently own a house would like to buy one within the next five years. Unaffordability is making that goal harder — and putting off other life milestones. Nearly 1 in 5 aspiring homeowners are putting off marriage or having children until they own a home, and 17% are delaying career changes or getting a pet.

Homeownership is a hallmark of American culture, but it’s also seen as a savvy financial decision. Ninety-three percent of Americans believe that buying a home is “definitely” or “probably” a better investment than buying stocks. That’s not necessarily the case.

Moody’s compared two people earning $150,000 a year: a homeowner who bought a $500,000 house (20% down, 6.25% mortgage) and a renter paying $2,500 a month with 3% annual increases who invested the difference at a 10% return. After 30 years, assuming average annual rent and home appreciation increases, the renter came out ahead with a net worth of $2.8 million versus the owner’s $1.6 million. The analysis did not take taxes into account.

If you look at the long history of housing prices, there’s no reason to think they should go up. But it’s become an investment class. If you speak to your grandparents, they’ll never talk about the concept of real estate investing. They bought a home that they needed to live in.

So how did we get in this situation? Governments have incentivized people to buy homes, so they want prices to go up or at least stay steady. You see politicians saying, we want affordable housing for young people, but they don’t want to damage the home values of retirees who are relying on it, because young people don’t vote as much as older people. And, well, you get one or the other.

Also, if you’re buying an asset at an all-time high and it seems really unaffordable to a regular person like you, it might mean that that’s not a great investment.

I understand the emotional urge to own the place you live, but an emotional urge is different from an investment decision. If you look at the long-term return on housing versus the stock market, housing grossly underperforms the stock market.

This conversation has an interesting parallel to the crypto phenomenon: The incentive that was keeping the price of crypto up was because people just fundamentally believed that it would keep going up. I think there is the fundamental belief among Americans and current non-homeowners that the price will go up. And if you believe that, then there’s more incentive to go out and buy a home as opposed to investing in anything else.

The only reason you should assume that your house is going to be more valuable five years from now than it is today is: if you invest in renovation and make it nicer or if you believe that the specific locale that you have bought your house in is going to become a hot neighborhood and everyone’s going to want to live there.

We’re going to uncover that some very funky stuff has been happening with these price targets for SpaceX.

1. Young San Franciscans hate AI

2. Analysts’ stock recommendations are colored by their cultural biases

3. The deceptive rise of the short king

100 billion

That's how many transistors IBM says its new prototype chip can fit onto an area roughly the size of a fingernail.

1. Why investors are dumping Big Tech for memory chips

2. How inflation could derail the second half of 2026

3. The stock market is the second most expensive in history

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H1 2026 Market Review: Why Investors Are Dumping Big Tech for Memory Chips

The first half of 2026 is coming to a close. It’s been a volatile six months — marked by a war with Iran, persistent inflation, and a major transition in the AI trade.

The old winners have become the laggards. The hyperscalers, Microsoft, Alphabet, Amazon, Meta, and Oracle, have solidly underperformed the market. Microsoft is on track for its worst monthly loss since 2008, down 20% in June alone. Oracle is down 30%.

Meanwhile, investors have piled into memory chip companies, whose products help power AI and other consumer electronics. Samsung, Micron, and SK Hynix are now the 10th-, 13th-, and 14th-most-valuable public companies in the world, surpassing Berkshire Hathaway and JP Morgan Chase.

In many ways, the rotation looks rational. The hyperscalers will spend $805 billion on capex this year, up from $449 billion in 2025 — consuming 93% of their cash flows from operations, compared with 33% in 2023.

For that bet to pay off, AI revenues need to be enormous. So far, global AI sales exceeded depreciation costs in Q1 — but just barely, and that margin is under pressure as competition from China and business backlash push AI prices down.

Depreciation is an accounting method that spreads the cost of a major asset (like a factory, airplane, or computer) over the years it’s expected to be used. Instead of recording the full cost up front, companies expense a portion each year to reflect the asset’s loss of value as it ages.

The memory boom has had a knock-on effect on emerging markets. SK Hynix and Samsung, which are listed in South Korea, and TSMC, listed in Taiwan, have helped push the emerging markets index excluding the U.S. ($ACWX) up 13% year to date.

Beyond chips, there’s been a genuine broadening of the market as investors look for value in a historically expensive environment. Companies like GE Aerospace, FedEx, and Caterpillar are up 47%, 82%, and 164%, respectively, over the past year, and the Russell 2000, the small-cap index, hit a record high last week.

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Inflation Returns. Here’s What It Means for the Second Half of 2026

Inflation is now running at a three-year high. The Personal Consumption Expenditures Price Index (PCE) rose 4.1% last month, and core PCE, which strips out food and energy, came in at 3.4%.

This raises two key questions: Will the Fed raise interest rates this year to combat inflation, and what do higher prices mean for the American consumer?

Energy has been one of the biggest drivers of inflation, and last week, oil prices declined 7% after a new deal opened the Strait of Hormuz. However, over the weekend, the U.S. and Iran traded new attacks, and oil futures jumped as much as 1.5%. Even if the truce to keep the strait open holds, it will be months before lower oil prices register at the gas pump.

And — there’s a new inflationary culprit waiting to take energy’s place.

The AI buildout is becoming an inflation catalyst by driving up costs for consumer electronics and electricity.

Nintendo, Microsoft, Sony, and Apple have all raised prices on their devices, and data centers are expected to push consumer electricity prices up 6% this year and next. Markets are now pricing in a 64% likelihood that Fed Chair Kevin Warsh raises rates as early as September.

Higher prices and higher interest rates would strain the engine of the American economy: consumer spending. There are already warning signs. Consumer spending grew 0.5% in Q1 — the weakest pace in four years. The personal saving rate fell to 2.6% in April, lower than at almost any point since 2008, and a recent NY Fed report noted a “remarkable” increase in food insecurity among American families.

Over the past 25 years, every time inflation has run hot and the Fed has had to hike rates, markets have corrected. I’m not saying one causes the other, but the correlation is there. If inflation stays roughly where it is, markets can probably live with that. But if it starts climbing again, I don’t see how stocks hold at these levels.

Then there’s the new Fed chair. Kevin Warsh spent 15 years on the outside criticizing the Federal Reserve, and now he has the keys. I don’t think Trump is going to bully him into doing anything — he tried that with Jerome Powell, and it completely failed. No Fed chair wants to be remembered as the guy who let inflation get out of control. Warsh is going to have his eye on the ball.

What I think he’s actually doing with his communications policy is signaling that he wants markets more scared and less dependent on the idea that the Fed will always step in when things go wrong.

Are We in Dot-Com Territory? Does It Matter?

The stock market is trading near its most expensive valuation ever. The Shiller CAPE ratio, which compares the current price of the S&P 500 to inflation-adjusted earnings over the previous 10 years, is currently at 41. Its historical average is 17, and it has crossed 40 only twice before.

The first time was during the dot-com era. The ratio peaked at 44 in December 1999, and within months the bubble burst, sending the S&P 500 and Nasdaq down 49% and nearly 80% peak-to-trough respectively. The second time was January 2022, when the ratio briefly touched 40 before a nine-month bear market wiped out 25% of the S&P 500’s value.

There’s one more uncomfortable data point, and it’s tied to the catalyst behind the market’s record gains. The only other time the semiconductor index gained more than 230% in a 14-month span was December 1998 to February 2000. The dot-com bubble burst the following month.

The whole market looks expensive. The only sectors trading below their five-year average price-to-sales multiples are real estate, telecom, and healthcare.

That said, I think a correction from here looks a lot more like 2022 than 2000. The big tech companies — Meta, Google, Amazon — have the cash to fund this buildout, so this isn’t a housing bubble situation where the problem is at the heart of every American family’s finances.

The most expensive thing I’ve ever done with my own money is get out of a bubble too early. You miss out on a lot of gains doing that.

What makes me nervous now, however, is that the momentum has stopped. For the past six weeks or so, markets keep trying to rally and they can’t. Micron just put out earnings that were better than anyone expected, but the Nasdaq is still down. What does a man have to do to get this market moving? A trendless market is the most unsettling one.

There’s also a data series from FINRA that tracks margin debt in securities accounts. That line is up and to the right right now. Leveraged ETFs have been growing, too. So there is clearly an appetite for speculative leverage out there. The question is whether the people outside the AI circle are using borrowed money to bet on what happens inside it. In 2008, European banks had leveraged exposure to American housing and nobody knew. You don’t find out where the leverage actually is until prices start falling.

At the start of every year, I make predictions. This year, I’m holding myself accountable by doing a midyear check-in. Join me live on Substack Tuesday, June 30, at 3 p.m. EDT. The livestream is exclusive to paid subscribers. Register here. And if you aren’t a paid subscriber, but want in, upgrade here.

The midterms will not matter for markets. Why? Midterms are about Congress, and what we’ve learned about Trump is that he doesn't give a sh*t about checks and balances. Trump has issued more than twice as many executive orders in this term than Congress has passed bills. In contrast, Biden issued four times fewer executive orders than Congress passed bills.

1. The U.S. doesn’t produce enough missiles

2. What do America’s earliest menus teach us about America?

3. Is the World Cup a festival for corporate has-beens?

$250 million

That’s how much Fox could make from hydration break ads during the World Cup, recouping more than half of the $485 million it paid FIFA for the U.S. English-language TV rights.

1. The Strait of Hormuz reopens — but then closes again. Trump’s MOU explained.

2. The numbers behind OpenAI’s leaked financials

3. Snap’s new $2,200 AR glasses erase $1.7 billion in market value

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The Art of the Unfinished Deal

The United States and Iran signed a memorandum of understanding last week that paused the conflict and reopened the Strait of Hormuz free of charge for commercial shipping.

However, over the weekend, Iran reclosed the waterway, citing continued fighting between Israel and Lebanon and the U.S. military’s continued presence in the region. In response, President Trump threatened to restart the war and take control of the strait.

The now fragile-looking memorandum covers 14 key points, including the U.S. lifting its naval blockade immediately, unfreezing billions of dollars in Iranian assets, terminating all sanctions, and creating a $300 billion reconstruction fund (equal to roughly 80% of Iran’s entire GDP) financed by private companies based in the U.S., the Gulf Arab states, Asia, South America, and Africa. In exchange, Iran reaffirmed that it will not develop nuclear weapons — a key component of President Obama’s 2015 deal.

But the agreement leaves some of the toughest issues unresolved. Key negotiations, including the future of Iran’s nuclear program, as well as the disposition of existing stockpiles of enriched uranium, have been deferred to a second round of talks scheduled over the next two months.

President Trump acknowledged the ambiguity, stating: “It’s a very strong deal. Nobody knows what it is, but it’s very strong.”

Along with the $300 billion reconstruction fund, Iran could access up to $100 billion in frozen assets.

The price of oil fell 6% last week in anticipation of the deal, but climbed 1% over the weekend as talks broke down.

This agreement will not hold. Israel isn’t a signatory and has continued to strike Lebanon, Iran has already fired drones at commercial ships since this was signed, Trump has called reports of the $300 billion reconstruction fund fake news — and it’s only a 60-day agreement, so by definition it’s a pause, not a resolution.

The clearest signals are coming from Trump himself. He’s said if he doesn’t like it, “we’ll go back to shooting at them, dropping bombs on their head.”

When asked if the 60-day window was a hard deadline for finalizing negotiations, Trump said “No, I don’t … just as long as they’re behaving I really don’t care that much.”

If the president isn’t treating this as real, I don’t see why we should.

The perfect reflection of the stupidity of this “deal” was the signing at Versailles, where nobody in the Trump administration has taken a history course and realized that Versailles is known for elaborate signings that don’t mean a f*cking thing.

This isn’t an agreement, it’s a memo of understanding. Those convert to real agreements less than half the time. The JCPOA, Obama’s deal, cut Iran’s enriched uranium stockpile by 98%, dismantled two-thirds of its centrifuges, capped enrichment at 3.7%, and required unannounced International Atomic Energy Agency inspections. This memo has none of that.

In addition, something that hasn’t gotten any coverage and is really important is the JCPOA was a multilateral agreement. Its signatories included the U.S., Iran, the EU, U.K., France, Germany, and — get this — China and Russia. This deal is just us and Iran.

We have reduced our credibility globally. We have given up leverage of our military. We have alienated European allies. We have sent the world into economic disarray. We have shown the Gulf states and every other nation around the world that when you put a U.S. military base on your territory, it’s not protection, it’s a bull’s-eye.

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OpenAI vs. Anthropic, by the Numbers

Last week, leaked financial statements revealed that OpenAI lost $39 billion in 2025, raising questions about how long the company can sustain its current level of spending, and whether its $852 billion valuation is justified.

The financials are particularly relevant as investors prepare for OpenAI’s and Anthropic’s IPOs later this year. Both companies have filed confidentially and are expected to list early this fall.

OpenAI’s revenue more than tripled from $3.7 billion to $13.1 billion in 2025, but research and development costs (most likely referring to model training) ballooned to $19 billion from $8 billion the year before. That makes OpenAI more R&D intensive than Eli Lilly, which spent 13% of its revenue, or $13 billion, last year on R&D.

Sales and marketing spend also jumped 418% last year, from $1.1 billion to $5.7 billion — and now comprise 44% of revenue. For context, Facebook’s marketing peaked at 28% of revenue in 2008. Google hit 13% in 2003.

Anthropic, meanwhile, appears to be on a different trajectory. According to reporting from The Wall Street Journal, the company expects revenue to surge 130% year over year to $10.9 billion in the second quarter, putting it on track to generate its first operating profit.

The Prof G Markets team used OpenAI’s leaked financials, estimates from The Wall Street Journal and The Information, and publicly available information to approximate Anthropic’s 2025 financials.

OpenAI’s headline numbers need some unpacking. Revenue hit $13 billion in 2025, up 240% year over year, and the reported net loss was $38.5 billion. Supposedly around $30 billion of it came from a one-time charge tied to their restructuring out of nonprofit status. But what isn’t up for debate is the $21 billion operating loss. That’s what they lost running the actual business.

Anthropic, by our estimate, lost around $11 billion last year, about half of OpenAI’s loss. We got there by correcting The Wall Street Journal’s compute cost estimate, which undercounted OpenAI’s real spend by roughly 60%, and applying the same correction to Anthropic’s numbers.

Anthropic claims $47 billion in current ARR. If that revenue is real and they manage to keep cost growth under 200%, there’s an actual path to profitability.

The SpaceX IPO demonstrated that the numbers don’t even matter anymore, and now everyone at OpenAI and Anthropic is asking themselves: How can we manufacture the same artificial scarcity and infinite TAM?

This feels like 1999 to me. The tech sector has gotten so hot that the fundamentals have stopped mattering and multiples just keep expanding.

I think both of these IPOs pop hard on day one regardless of what the income statement says, and I’m telling anyone who calls me asking about allocation to take it, but as a trade, not an investment. Wait for the first couple of trades and then sell into the strength.

Unless something like 40% of jobs actually get displaced by AI, I don’t see how the math holds up long term. But the trade is working right now, and that’s what’s pulling in more capital.

Snap Keeps Betting on AR, and Shareholders Keep Paying

Last week, Snap unveiled its new augmented reality glasses, the Snap Specs.

CEO Evan Spiegel called the glasses, which are as heavy as a baseball and cost $2,200, his “life’s work.” Investors were less impressed. Snap shares fell 14% last week, erasing $1.7 billion in market value.

Snap, which has never achieved full-year profitability, has doggedly pursued augmented reality projects. It has launched five previous generations of smart glasses and plowed $3.5 billion into AR initiatives since 2014 — 11% of its total revenue over that period.

These efforts have attracted activist investors who, this spring, urged Spiegel to focus on the core business and divest or shut down Specs, its AR division.

Refocusing on its core assets, its user base, could unlock substantial value. If Snap were to achieve Reddit’s forward earnings multiple, it would be worth 3.5x what it is today.

But activist progress will be challenging. Snap is a dual-class shareholder company, and Spiegel and his co-founder have 99% of the voting power in the company. In practice, that means they can block any board or governance changes they don’t support, making it difficult for outside investors to force leadership or strategy shifts.

Dual-class companies have only become more common. More than 40% of tech companies that went public last year did so with dual-class stock. In the ’90s, that number was less than 10%.

When I saw him in those glasses, I thought: For the first time in my life, I am much cooler than Evan Spiegel.

This is the beginning of the end of Snap as a hardware company. The stock is down 90% over five years, while the S&P is up 80%. And the tragedy is that the core business is actually good. Snap has a young, engaged user base. American Snapchatters open the app, and I can testify to this as the father of teenagers, 30 times per day.

On a larger level, this reflects the danger of dual class shareholder stocks. Investors value Meta’s daily users at $400 each and Snap’s daily users at $16 each. The reason is Evan Spiegel. Spiegel is the controlling shareholder. He’s already a billionaire married to a model. He does not care what the stock price is.

The board needs to either spin out the Specs business or kill it, and focus on what Snap actually is: a great messaging platform with one of the most attractive user bases in media. This is a $5 stock, but it could easily be a $20 or a $30 stock if they get this guy’s lips off of the crack pipe of believing he’s Steve Jobs and can come up with the next iPhone.

Snap has a market cap of $8 billion. It’s less valuable than Domino’s Pizza. It’s roughly as valuable as the Gap. This is a very acquirable company, and I would be shocked if other firms aren’t looking at that market cap and thinking, let’s make an offer, acquire the audience, maybe some of the hardware and wearables tech.

Our producer Claire Miller suggested a company that I think will probably do it: OpenAI. OpenAI loves spending money on stupid bullsh*t. They’ve acquired 18 companies so far. If they’re trying to build a wearable device with Jony Ive, they could justify this.

AI lab Midjourney’s new full-body ultrasound scanner is going to inspire a hardware revolution. Hardware is about to become the new software, where the coolest thing to be working on isn’t the next large language model, but something physical.

1. Midjourney pivots to health with ultrasound machine

2. Aswath Damodaran’s updated take on OpenAI, SpaceX, and Anthropic

3. Human wealth managers need to focus on the emotional needs of the truly rich

~4,400

That’s how many current and former SpaceX employees became millionaires after its record-breaking IPO last week.

1. SpaceX IPO: Everything you need to know

2. World Cup 2026 by the numbers: $9 billion for FIFA, $50 billion in bets, and $38,000 tickets

3. U.S. inflation surges to a three-year high as wages fall

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SpaceX’s IPO Just Made Elon Musk a Trillionaire

We have blastoff for the biggest IPO in history. SpaceX began trading under the ticker SPCX at $150 on Friday, an 11% jump from its IPO price, and ended the day up 19%. As of Friday’s close, SpaceX’s market cap was $2.1 trillion, making it the 6th most valuable public company in the U.S.

IPOs often start strong but typically fizzle over time. According to JP Morgan, the average IPO this decade popped 32% on the first day of trading — but was down 26% from its offering price after one year.

The debut marks a historic milestone for Elon Musk, whose net worth has now surpassed $1 trillion. That makes Musk richer than the bottom 46% of humanity, and worth 3.4% of U.S. GDP. At peak wealth, John D. Rockefeller was worth 1.5% of GDP.

It’s also a major moment for the broader market. After years of waiting for the biggest private companies to go public, investors are finally getting their chance. With Anthropic and OpenAI expected to follow, SpaceX is the first in a wave of blockbuster IPOs that could define the next era of the public markets.

SpaceX is currently trading at 112x revenue, growing at 33% year over year. Google went public at 10x revenue growing at 240% a year, and Meta at 28x revenue growing 88% a year.

Despite the astronomical valuation, SpaceX’s IPO was nearly 5x oversubscribed. Orders from retail investors hit $70 billion — almost enough to fund the entire $75 billion IPO.

Part of SpaceX’s big first-day pop was a function of simple supply-and-demand dynamics. SpaceX sold just over 4% of the company’s total shares on Friday — most companies going public sell 10% or more of their shares. Heavy demand for the relatively small float led to a sharp increase in price.

Strong demand will likely continue over the short term, as SpaceX will be eligible for inclusion in the Nasdaq 100 index after just 15 trading days — after the index changed its listing rules.

The key tipping point will be SpaceX’s first earnings report in late July or early August. Two days after that, insiders will be allowed to sell the equivalent of 7% of outstanding shares — nearly double the amount sold during the IPO.

Float is the number of shares a company has available for public trading. Generally, a larger float means less price volatility.

What freaks me out isn’t the SpaceX lockup period. What freaks me out is that a man who is estranged from one or more of his children, has a substance abuse issue, sleeps with a loaded gun next to his bed, and believes there’s a white genocide taking place in South Africa is now the most powerful person to ever exist on the planet.

Wealth in a capitalist society means power, and my guess is Donald Trump has had many conversations with Elon Musk in advance of him becoming a trillionaire about the different ways they can help each other.

When a massive new position hits the market, like this SpaceX IPO, people who want to buy in have to fund it somehow. They’re not selling their house, they won’t sell their defensive positions — they’ll sell their existing tech stocks.

That’s why you saw Rocket Lab, EchoStar, and SpaceMobile decline as much as 10%, 12%, and 14%, respectively, on Friday. You’ll start to see this same pressure across the Mag 7 and chip stocks, and it will only get worse when OpenAI and Anthropic go public.

Also — to clarify, retail investors that bought in can sell their SpaceX shares immediately, but supposedly if they do sell, then they’re not gonna be allowed to buy into future IPOs.

Whatever your take is on the morality of trillionaires or the valuation of SpaceX, the world is a more scientifically advanced — and better — place with SpaceX in it. In this moment, it’s worth considering the economic and political decisions that made SpaceX possible. Specifically: This is a company founded by a genius immigrant. His enterprise wouldn’t have been possible without the U.S. government, specifically NASA, which provided loans, grants, and tax subsidies, and, ultimately, became a paying customer.

Thanks to the Trump administration, the next SpaceX founder will be barred from entering the U.S. or will run out of money after its grants get canceled.

Anyone who wants to see the next SpaceX should also want to see a change in DC.

For more on how the Trump administration is canceling funding for science, check out my colleague Kristin’s latest piece here.

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The 2026 World Cup Is the Most Expensive in History. Here’s Why.

The FIFA World Cup has officially started, and it will be the most watched and most lucrative sports event ever.

An estimated 6 billion people — almost three-quarters of Earth’s entire population — will engage with the tournament, and FIFA will rake in almost $9 billion, 54% more than its payoff from the 2022 Qatar World Cup.

Football (soccer) fans are lining FIFA’s pockets. Adjusted for inflation, ticket prices are up an estimated 1,000% since the U.S. last hosted in 1994. The cheapest seats this year range from $450 to $990. In 2022, tickets started at $262. If you want to watch the final match, it’ll cost you at least $10,000.

Ticketing historically accounts for around 10% of World Cup revenue; this year it will account for 27%.

Two strategies are driving this increased haul. FIFA used to sell tickets at a fixed price, but this year, they’re using dynamic pricing, algorithmically adjusting ticket prices based on supply and demand. FIFA is also running its own resale platform, where it takes a 15% cut from both the buyer and the seller on every transaction.

These new practices have generated backlash. Sixty-nine members of Congress signed a letter to FIFA President Gianni Infantino calling it the most “financially exclusionary” World Cup to date, and attorneys general in New York, New Jersey, and Texas have opened investigations into the pricing strategy.

It might be more advantageous to be a second-order beneficiary of this spending frenzy. The World Cup is set to be the biggest betting event in history with an expected $50 billion in wagers, up from $35 billion wagered in the 2022 tournament.

Video game maker Electronic Arts is also well positioned. During the 2022 World Cup in Qatar, sales of EA’s FIFA video game grew by 40% in the U.S.

The Scots are also winners. King Charles approved June 15 as a national bank holiday so Scots can watch their country’s first match against Haiti without worrying about making it to work the next day.

This will be my fourth World Cup. I take my boys every time, and I’m absolutely going. But here’s the math. The first time I went to the World Cup, in 1994, the average ticket cost $58 and the most expensive final ticket was $475. Inflation-adjusted, that’s $131 and about $1,069. Now it’s $38,000.

That number tells you who FIFA is pricing this tournament for. The rich have seen an explosion in their wealth, and when you have a scarce asset that appeals to rich people, your pricing power is out of control.

FIFA has made a choice to take every dollar off the table and, in doing so, sacrifice the vibe and electricity of a live game. Because here’s the thing: Nobody buying a $38,000 seat paints their face. Those are people invited by corporations, sipping Pimm’s Cups and asking who this Ronaldo character is.

It’s easy for me to say, but I don’t think that’s what a steward of the beautiful game — and a nonprofit — should be doing.

I hope they get stuck with a lot of tickets, similar to F-1 in Vegas, where they vastly overestimated demand and sold only 40% of capacity.

Let’s be clear about one thing: FIFA already crushed it. The headline about 180,000 unsold tickets is misleading. Those tickets were sold; they’re now sitting on the resale market, where prices have fallen 20% over the past month. That decline doesn’t hurt FIFA at all. It sold those tickets once, and through its own resale portal it will sell them a second time. As a pure exercise in extracting profit, this was a master class.

The real question is which parts of it should be legal. The congressional letter is mostly constituent theater, but the state investigations cite opaque pricing, artificial scarcity, and dynamic pricing that quietly raises rates, and all of that sounds valid to me.

FIFA President Gianni Infantino’s defense was essentially that if this is a problem for FIFA, it’s a problem across all of America. He’s right, and that’s exactly why this matters. Target, Walmart, and Whole Foods are experimenting with digital price labels that adjust prices instantaneously.

With AI and personal consumer data, a store could recognize that a wealthy customer walked in and raise the price on the spot. State legislatures are now asking whether pricing regulation needs a fundamental rethink, and the World Cup has become the case study for that debate.

Energy Prices Are Driving the Worst Inflation in Three Years

Inflation rose 4.2% in May from a year ago, marking the highest reading in three years. Meanwhile, real wages fell for the second straight month, meaning Americans are once again seeing prices rise faster than their incomes.

Adjusted for inflation, Americans’ hourly earnings have now fallen 0.7% over the past year.

When President Trump was asked about the inflation report, he quipped: “I love the inflation” and promised that prices would come down “like a rock” once the war with Iran ended.

Most of the inflation surge came from energy, which increased nearly 24% year over year. This has had a trickle-down effect on the rest of the economy: Gas prices are up more than 40%, airfares are up 27%, and grocery prices have increased more than 6% year over year.

The report adds pressure on the Federal Reserve ahead of Wednesday’s interest rate decision, the first with Kevin Warsh serving as Fed chair. On Kalshi, the odds of a rate hike before 2027 have climbed to roughly 50%, up from single digits at the start of the year.

Inflation is also yet another transfer of wealth from earners to owners. Inflation has been out of control in Argentina since the end of World War II, yet the same wealthy families are still wealthy, because if you own land and assets, you’re hedged. As prices rise, so does rent, so does the price of an iPhone, so my real estate and my Apple shares go up.

Those who get hurt are earners, because their wages don’t keep pace with inflation. Revolutions aren’t started by the unemployed. They’re started by people working two jobs who are still hungry. Inflation literally brings down nations.

The consensus among the analysts and economists I speak with is that this inflation increase is temporary because Trump will cut a deal with Iran, the oil blocked in the Strait of Hormuz will flow again, and prices will come back down.

I think that is wrong. They said Iraq would be eight weeks; it was eight years. They said Afghanistan would be a few months; it was two decades. Trump said this would be four weeks; it’s been 14. Why are we all assuming this won’t last multiple years?

So the oil will stay blocked, and inflation will keep rising. The oil price increases we’ve already seen still need time to funnel through the rest of the economy, and the longer this drags on, the higher oil price expectations climb, which raises prices outright.

Earlier this year I predicted 4.5% inflation by year-end and was told I had Trump derangement syndrome. We’re at 4.2%. I’m updating the call: at least 5%, sustained for at least six months. Rate hikes are inevitable, especially with unemployment coming in better than expected.

The World Cup will spark a relationship boom as young people get together in bars and parks to watch the beautiful game.

1. California’s public universities spent $16.9 million on A.I. and the result has been chaos

2. Today’s biggest tastemakers predict the trends of the summer

3. The adult in the room at SpaceX

59%

That’s the percentage of Americans who say they will not watch any World Cup matches.

1. Google is planning the largest public stock sale in history

2. Fast food is in crisis, and GLP-1s might be to blame

3. The Prof G Markets tour is over. Here’s what we learned

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The Biggest Stock Sale in History

Google is planning the largest public stock sale in history — an $85 billion equity offering — to fund its AI buildout. The raise was initially announced at $80 billion, and then upsized after the first tranche was so oversubscribed that it raised $45 billion on its own. Around $10 billion of that is expected to come from Berkshire Hathaway, which will receive a 6.5% discount on shares. Google stock fell 4% after the announcement.

The move comes as Gemini has surpassed nearly 900 million monthly active users and Google has already projected capital expenditures of $180 to $190 billion for the year, with 2027 expected to be even higher.

At the same time, SpaceX and Anthropic have both filed for IPOs. SpaceX is targeting a $75 billion raise at a $1.75 trillion valuation, with shares set to trade on Nasdaq as early as June 12. The offering bundles its rocket business, Starlink, and xAI, the AI company Musk merged with SpaceX earlier this year. Anthropic filed confidentially last week just days after closing a $65 billion Series H that pushed its valuation to $965 billion, with a debut above $1 trillion now the base case. OpenAI is expected to follow later this year.

Ruth Porat, Google’s President and Chief Investment Officer, doesn’t get enough credit. Google could probably fund this off its balance sheet; it’s one of the most cash-generative companies in the world. But why do that when you can raise $80 billion in cheap capital, and step in front of everyone else doing it? Every resource is finite, including investor appetite for AI infrastructure bets. Google just took $80 billion off the table before Anthropic or OpenAI could.

The pitch to investors is simple: you want exposure to the AI buildout, but you are not sure Anthropic or OpenAI are worth those multiples? Buy Google. It is already one of the greatest businesses ever built, priced reasonably by comparison, and it gives you the upside with a fraction of the downside. If AI disappoints, Alphabet does not disappear. You cannot say that about the others.

The supply dynamic here is what keeps me up at night. The largest IPO year ever was 2021, when roughly $140 billion was raised. We are about to triple that in a single wave — and that is just the headline names. When you add Google’s offering and the rest of the 2026 pipeline, total issuance could top $400 billion. That is 9x what the IPO market raised all of last year. At some point, supply outstrips demand and prices come down. That is Econ 101.

If you are an investor wondering whether to buy at the public offering, across 30 major IPOs, the average maximum drawdown within a year of going public was 55%. That does not mean these companies are bad long-term bets. But it does mean that the IPO moment is peak hype, peak demand. You are competing with every fund manager on the planet for shares that everyone wants right now. The smarter play is usually to wait for the hype to fade and find your entry when fear is higher than greed.

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Fast Food’s Real Problem

It has been a rough year for fast-food franchise operators. In January alone, a 43-unit Subway franchisee and a 130-unit Popeyes operator both filed for bankruptcy, followed by a 53-unit Applebee’s operator in March and a 59-unit Carl’s Jr. franchisee in April. Some operators are blaming the franchise model, with McDonald’s franchisee saying operators cannot absorb rising costs, fund discounting programs, and still pay for restaurant renovations.

McDonald’s has responded with an initiative called McDonald’s > NEXT, focused on making restaurants easier to run and better for franchisees. Given that franchised and affiliated locations account for more than 95% of its restaurants, the health of its operators matters a great deal to the company.

But foot traffic data suggests the problem runs deeper. Fast-food visits fell more than 1% last quarter and around 2% the quarter before. Even chains posting positive sales, like McDonald’s with 3.9% same-store sales growth in Q1 2026, are doing it through price hikes and value promotions, not more customers walking in.

I don’t think this is primarily a story about the franchise model. I think it’s about GLP-1s. One in eight American adults (30 million people) are now on GLP-1 drugs. That is the population of Texas. Fast food has always relied on the fact that cheap, engineered, salty, fatty food is hard to resist. GLP-1s are changing that calculus.

Think about what happened to newspapers. The New York Times thought its problem was the LA Times or the Chicago Tribune. It was not. The real threat was a structural shift in how people consumed news, and by the time the industry understood that, it was too late. Fast food is facing the same thing. This is not a competitor problem or a franchise model problem. It is a demand problem.

I want to be clear about what I think the math looks like here. Four in five Americans eat fast food at least once a month. Around two in three eat it weekly or more, roughly 140 million adults. If 30 million of them are now on GLP-1 drugs, you are reducing the addressable market by roughly 27%. That number is only going up. At some point these companies are going to have to stop saying they are not worried about GLP-1 penetration and start answering it.

I agree with the GLP-1 thesis.

There is also a downstream winner worth flagging: Victoria’s Secret stock rose 40% last week after reporting revenues up 15% to $1.56 billion, with sales increases across every income group. We have been talking for years about GLP-1s creating downstream beneficiaries in apparel and fitness. The theory is that when people lose weight and feel better about themselves, they want a new wardrobe. It is difficult to prove causation from one quarter, but it is also difficult to look at that number and not wonder.

What We Learned On Tour

Over the past two weeks, Prof G Markets traveled to five cities: San Francisco, Los Angeles, Miami, Chicago, and New York. We met listeners, talked about markets, and got a firsthand look at what people around the country are thinking about the economy. It was a blast.

The experience was stressful but ultimately very rewarding. If you record a podcast and it bombs, the listener can turn it off and go back to walking their dogs. When you have 1,200 people show up for an event and they’ve spent $100 or more, you really want them to enjoy themselves.

A couple observations: Live events are booming, because people want to get out and touch grass. That’s why Flexjet is doing well and LVMH isn’t: People are realizing that they overestimate the happiness they’ll get from things and underestimate the pleasure they’ll get from experiences. Also, every brand needs a certain number of evangelists. Getting out there and finding them is important.

There’s been an interesting transition in the Q&A. A few years ago, people wanted stock tips — it was about greed. Now, it’s more about anxiety. People were asking about AI, housing, and, quite frankly, whether their kids are going to do as well or better than they did. The catastrophizing coming out of the AI community is working.

It was also great bonding for all of us. I felt like Mick Jagger traveling around with NSYNC.

It’s important to note: This doesn’t make that much sense for us financially. The tour is profitable, but we could do other things that would be a lot more profitable, But, there are some important reasons why it pays off for us to do this in the long run.

First, it’s a lot of fun! Boosting team morale is essential when you have a team working as hard as we are, producing content every day. Second, it’s really important for us to understand who the audience is, to connect with them, and to deliver a payoff for our superfans.

In the business of advertising, there are two things that you want to do. One: You want to get as many downloads and clicks as possible. Two: You want to demonstrate to advertisers that there is a depth and strength in your relationship with the audience, and that the audience has a level of loyalty to you. If you can show that 1,300 people in New York showed up on a Tuesday night and paid hundreds of dollars for a ticket to your show, that’s very meaningful. It was also genuinely so fun meeting everyone who listens to this show.

Finally, we got a lot of clips from the tour. We wanted to inspire a massive sense of FOMO among anyone who wasn’t showing up to these live events, and I think we accomplished that.

People care about issues more when they feel personal — even in the context of a business podcast. Scott is very good at bringing data down to the “every-person level.” For example, when talking about inflation data, he would make it personal by telling the crowd to imagine how a single mom would afford her child’s asthma medication and also an extra $400 per month in fuel costs.

Also, “fake it till you make it” is one of the most powerful techniques in the world. We started this podcast knowing next to nothing about markets. We worked hard and frankly pretended to know more than we knew at the beginning, and now we are cogent analysts selling out live shows.

It’s hard to feel close to an audience you’ve built online. It’s especially difficult when the loudest among them are often the most negative. But hearing our audience’s laughter, questions, and heckles in person, across the nation, reminded me that not only is our audience real — they are wonderful people.

In Miami, on the third stop of our tour, Scott answered a question about relationships. He gave the answer you might expect: the most important decision you’ll make is who you choose to partner with. While he delivered that message, I watched from the wings as couples in the front row moved to put their arms around each other. Being there with our audience in each city made me realize that our podcast is actually bringing people together, even when we can’t see them in front of us.

If I were to rank the three big IPOs, I think that Anthropic has the biggest first-day pop.

Check out this week’s live episode from New York City, the final stop of the Prof G Markets tour, where Scott and Ed were joined by surprise guest Secretary Hillary Clinton. Watch here.

$109,700

That’s the threshold the San Francisco Housing Authority considers “low income” for a single person annually.

1. The hidden costs of AI efficiency

2. Can Netflix survive the clip economy? Ft. Netflix Co-CEO Ted Sarandos

The Markets team is on tour! We’ve hit San Francisco, Los Angeles, and Miami so far, and we’re in Chicago tonight and New York tomorrow. Follow along on X (Twitter), Instagram, and Substack.

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Is AI More Expensive Than the Humans It’s Replacing?

Nearly 50,000 workers have been laid off this year — (supposedly) because of AI. That’s almost as many as in all of 2025. For companies adopting AI, the thesis is simple: AI will do much of the work that humans do.

In recent weeks, however, that thesis has hit a roadblock. More and more companies are reporting that, despite the enormous power of AI, the technology is actually more expensive than the humans it’s supposed to replace.

Uber, for example, just blew through its entire 2026 AI budget in four months. According to the COO, it’s now getting harder to justify AI costs within the company. Microsoft is canceling its Claude Code licenses across multiple divisions because it’s simply gotten too expensive.

At Nvidia, one executive said that the cost of compute is now “far beyond the costs of employees.” Meta, Pinterest, and Spotify all cited rising inference costs as a drag on their margins in the first quarter.

How much are enterprise AI budgets? Some 45% of firms surveyed by cloud cost company CloudZero said they spent more than $100,000 per month on AI in 2025, up from 20% the year before.

At Anthropic, a single employee used $150,000 worth of Claude Code in one month. To justify this bill, that engineer would have had to do the work of more than 11 average engineers.

In this market, the appearance of efficiency has been so consistently rewarded that actually calculating it hasn’t been necessary. Seventy-nine percent of S&P 500 companies talked about AI on their most recent earnings call, but only 8% disclosed any AI revenue.

The same CloudZero report found that only half of organizations surveyed said they could confidently evaluate the return on their AI investments. Spencer Rascoff, Match Group CEO, said AI is costing the company between $5 million and $10 million per year. When asked about ROI, he said, “I think we’re benefiting from it, but it’s hard to feel it.”

Here’s what I think is gonna happen: companies will start to resort to the cheapest models, which are Chinese LLMs. Chinese models are 10x to 30x cheaper than U.S. models. We’re already seeing evidence of this: Chinese models went from about 1% of developer usage in 2024 to more than 60% in May, and 80% of U.S. AI startups are now using Chinese open-source AI models.

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Netflix vs. the Clip Economy

Long-form content is under siege. The new competitor? Short-form video. Since 2019, the amount of time Americans spend watching short-form video has more than doubled. TikTok’s revenues have grown tenfold, YouTube now beats Netflix on TV watch time, and Reels now account for 50% of all time spent on Instagram. For more on the clip economy, check out Ed’s piece in his newsletter, Simply Put.

No company has more to lose from this shift than Netflix. With 325 million subscribers and $45 billion in annual revenue, it is the world’s dominant long-form streaming platform — and investors are starting to worry about this new threat.

Despite reporting strong revenue growth and profitability gains, Netflix has underperformed the market over the past year and now trades at a 25% discount to its 5-year average price-to-earnings multiple.

The question is, how will the largest streaming service in the world respond?

Netflix is expanding beyond its traditional business model. Its ad tier now has 250 million subscribers, up 30% from November, and the company is on track to double its ad revenue to $3 billion in 2026.

It’s also building out a suite of more than 30 video podcasts. Just last week it announced a joint $100 million deal with Spotify for Jay Shetty’s self-help podcast, On Purpose.

Thirteen percent of U.S. Netflix households have watched at least a minute of a podcast on the platform. For context, 21% of Netflix households watched KPop Demon Hunters within 30 days of its release.

Note: This interview with Ted Sarandos, co-CEO of Netflix, is condensed for clarity.

Ed: Netflix is competing with YouTube for TV time, but, increasingly, people aren’t even turning on the TV. They’re taking their phones out and scrolling. For Gen Z, we’re spending around eight hours a day on our phones. How are you thinking about competing with short-form content?

Ted: What’s really remarkable is that through the entire advent of the internet, phones, YouTube, and all these free options — television consumption and movie watching on bigger screens is remarkably stable. How is that possible? People are multitasking.

There’s this idea that people don’t have the attention span for TV anymore — well, wait till the new season of Wednesday comes out. People will sit in front of their TVs and watch eight hours straight. It happens every season.

Netflix provides entertainment worth paying for. Our big mantra was always that our content has to be better than free.

Scott: You made a big bet on advertising back in 2022. A lot of people said Netflix needs to stay premium. How did you think about that decision?

Ted: The one part of the audience we were not addressing was the one who wanted a lower price point and didn’t care about ads — and there’s a lot of them, it turns out.

The reason we were not in the advertising business at the beginning was that “no ads” was a counterposition. When we got into streaming, our competition was TV. What didn’t people like about TV? Advertising, and having to wait till next week for an episode. So we were the no-ads company.

When we first got into DVD, our competition was Blockbuster Video. What did people hate about video stores? Late fees. So we were the no-late-fee company.

Scott: What is your counterposition today?

Ted: People are already complaining about AI slop, so I think people will increasingly value high-quality production.

You also have to remember everything is being viewed through the lens of affordability. And I’d say we have the highest-quality programming at [an] unbelievably low price. If you take what you spend for Netflix every month and how much time you spend watching it, it ends up costing about 30 cents an hour. It’s probably one of the greatest values in the history of entertainment. So the counterposition really is: You can afford it.

Trump is going to ban or restrict Chinese LLMs. He has too much to lose if the American AI trade collapses.

1. Ferrari’s new EV sparks Italian angst

2. Five emerging themes for US stock investors

3. Research shows the World Cup brings countries together

80%

Women account for 80% of all fiction sales in the U.S., U.K., and Canada.

1. SpaceX filed to go public; the numbers are ugly

2. Bond yields just hit a 19-year high. Why does that matter?

3. What the $300 million Vox sale says about the future of media

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Starlink Is a Great Business. SpaceX Is Asking You To Ignore Everything Else

One of the most anticipated IPOs in years is finally happening. SpaceX officially filed to go public last week, giving investors their first detailed look at the company’s financials ahead of its planned June 12 debut.

The company is looking to raise at least $75 billion at a valuation of up to $2 trillion, which would make it the largest IPO in history.

SpaceX made $18.7 billion in revenue in 2025, up 33% from the previous year. But losses have ballooned from a profit of $791 million in 2024 to a loss of $4.94 billion last year.

The company’s new AI division is to blame. Out of SpaceX’s nearly $21 billion in capex spending last year, $12.7 billion went to building out data centers for xAI — that’s more than the company spent building rockets or satellites.

Sixty percent of SpaceX’s revenue comes from Starlink, its satellite internet business that now has more than 10 million subscribers. Its core rocket launching business accounted for 22% of total revenues.

SpaceX’s target valuation is hard to square with the reality of its financial statement. At $1.75 trillion, the low end of the target, SpaceX would trade at 94x sales. To understand how high that is, Palantir has the highest trailing P/S multiple in the S&P 500 — and it trades at 67x sales.

If investors take the sum of the three business lines — space, connectivity, and AI — and assume that each segment will command a multiple that is twice as high as competitors, the sum of those parts equals about $1 trillion.

So how are SpaceX’s bankers explaining the target $1.75 trillion valuation? By telling investors that the company’s total addressable market (TAM) is the size of the entire U.S. economy — $28 trillion. That target market includes an estimated $22.7 trillion in revenue from enterprise applications. That is 30x larger than the entire existing enterprise software market.

• It also assumes that every single household in the world will start using Starlink for WiFi.

The implied growth is so ambitious that SpaceX is targeting a valuation higher than Meta, Broadcom, and Berkshire Hathaway — while having lower revenues than Macy’s.

SpaceX’s governance is also unusual. Elon Musk, who will likely become the world’s first trillionaire after the IPO, will be CEO, CTO, and chairman of the board. With 85% of total voting power, Musk essentially cannot be fired without his own consent.

This feels like an amazing company with bags of sh*t strapped onto it.

Start with the S-1, which reads like an ayahuasca trip. The first 14 pages are pictures of rockets. A direct quote from the filing: “We do not want humans to have the same fate as dinosaurs.” Well, thank God you’re here.

Here’s the reality: Starlink is genuinely excellent — $3.3 billion in revenue in a single quarter, $1.2 billion in operating income, a 36% margin, no serious competitor. If that were the whole company, it would be one of the great businesses of our era.

But stapled onto that rocket ship is xAI, which is — clinically speaking — a money furnace.

This valuation doesn’t hold up against the IPO comparables. When Meta went public, it was growing 88% and traded at 28x trailing revenue. Google was growing 240% and traded at 10x. Saudi Aramco — not exactly a growth darling — traded at 5x trailing revenue and was actually growing faster than SpaceX is today.

Most IPOs allocate between 5% and 10% of shares to retail investors. SpaceX is making as much as 30% of shares available to retail investors through Robinhood, Charles Schwab, and Fidelity.

Musk isn’t doing this out of the goodness of his heart. He knows that the only way SpaceX gets to this valuation is if it becomes a meme stock. He’s betting that the same retail investors who have stanned Tesla will buy SpaceX shares at any cost.

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Bond Markets Are Flashing Red, and This Time, Trump Can’t Tweet His Way Out

Inflation fears drove the yield on 30-year Treasurys to the highest level since 2007 last week, and 10-year notes hit a 15-month peak of 4.613%.

Surging yields weren’t just an American story: The average 10-year yield across the Group of Seven (G7) nations (Canada, France, Germany, Italy, Japan, United Kingdom, and the United States) hit the highest since 2004.

Why is this happening? Conflict in the Middle East is driving prices higher, and when inflation rises, bond yields rise. Inflation also increases the likelihood that the Federal Reserve will have to hike interest rates — which will only push bond yields higher.

• On Kalshi, the odds of a Fed rate hike before year-end have climbed from 15% a month ago, to above 42% last week. At the beginning of the year, investors were expecting rate cuts.

Gas prices are up 45% year over year, and there’s still no end in sight for the Iran war. President Trump has now promised that it is almost over on 28 separate days since the war began; but without any real progress, his assurances have become … less reassuring.

Higher yields don’t just impact bond investors; they can have a significant impact on the equity market and consumers. This is because the 10-year Treasury yield serves as a benchmark for lending rates across the economy. So, when Treasury yields rise, banks charge higher interest rates on mortgages, student loans, car loans, and business loans.

A bond yield is the annual return you earn based on the price you pay for the bond. If you buy a 10‑year bond for $100 and its yield is 5%, you earn $5 per year for 10 years. Bond yields and bond prices move in opposite directions: when prices go up, yields go down, and vice versa.

Three main factors cause bond yields to move: recession risk, inflation, and expectations of Fed rate cuts or hikes.

• If investors believe the economy is headed for a recession, there’s more demand for bonds (they’re safer than stocks), and that demand pushes prices up and yields down.

• If investors believe the economy is going to experience higher inflation, they’re going to demand a higher yield to compensate for the loss of purchasing power over time.

If investors believe the Fed is going to keep interest rates high for the next few years (because inflation is sticky), they’re going to demand higher yields.

A year ago, the bond market was the adult in the room. Trump dropped his tariffs after the 10-year yield jumped more than 50 basis points in three days — the biggest three-day move in over two decades.

The question now is whether the same mechanism works with Iran. And the honest answer is probably not. We’ve already spent north of $25 billion, lost 13 lives, nearly 400 wounded. Trump’s already requested $1.5 trillion for next year’s defense budget. This isn’t a tariff you can pause with a tweet.

The difference between now and last year is that the escape hatch is gone, and that’s what makes this potentially more dangerous — not just economically, but structurally.

When interest rates go up, the first casualty is speculation, and right now, the market is basically all speculation — 75% of S&P gains have come from AI companies.

Here’s the thing about growth stocks: These companies aren’t making much money today. The entire bet is that in five or 10 years, they’ll be generating Microsoft-level revenue. But that future revenue is only valuable if you can translate it back to what it’s worth right now. And that’s where interest rates come in.

Higher rates and higher inflation make future money worth less — and growth stocks are essentially just a pile of future money. So when interest rates spike, their valuations get cut in half.

But here’s the thing — and this is why capitalism is such a gorgeous organism — rate spikes are painful because they’re supposed to be. It’s the economy destroying excess and repricing risk. It’s the cold shower we’ve all needed to take for a while.

Why Did James Murdoch Buy Half of Vox Media?

There’s a shake-up happening in the media industry. James Murdoch is acquiring the Vox Media Podcast Network, along with New York magazine and the Vox news site, in a deal reportedly worth around $300 million.

The sale reflects the realities of the changing media landscape. Google’s AI overviews are cutting off traffic to digital media outlets, and, at the same time, consumers increasingly favor podcasts and video formats. The result is that organic search traffic has plummeted for written publications. Vox’s properties that are primarily text-based, including The Verge, Popsugar, and SB Nation, are not included in the deal.

Media executives have been frank about the impact of AI overviews going forward. The Atlantic’s CEO, Nicholas Thompson, told staff to assume Google traffic would “drop toward zero.”

Podcasts are a different story. Last year, podcast advertising grew nearly 18% and 55% of Americans reported watching or listening to a podcast monthly. That’s up from 17% in 2015.

Vox’s podcasts, which generated about $80 million in revenues last year and together have almost 15 million subscribers on YouTube, were a major driver of the deal.

The Vox Media Podcast Network sells advertising for Pivot and Prof G Media’s pods.

New York magazine is a trophy asset. It punches above its weight — it’s like the HBO of magazines. But at the end of the day it’s a magazine business. It’s like the New York Jets: Nobody makes money owning it, but there’s always someone who wants to.

James Murdoch seems genuinely civic-minded, so part of the draw was probably the cultural influence and the ability to punch out stories that actually matter.

I’ve said this before: Billionaire Republicans buy football teams. Billionaire Democrats buy media properties.

The crown jewel, though, is the podcast business. That’s what Murdoch actually wanted.

SpaceX does not price at $2 trillion. This thing is a $600 billion company.

1. Tech Bros Are Going to Etiquette School

2. What Jeff Bezos Got Wrong About Billionaire Taxes

3. Why IPO Mania Could Signal the Top of the Market

$109 billion

That’s how much Americans spent on lottery tickets last year, which is more than they spent on movies, books, concerts, and sports tickets combined.

1. Trump’s inflation problem is now worse than Biden’s

2. Is Cerebras the Pets.com of the AI boom?

3. Is dating too expensive — or has AI just made it too easy to quit?

This Wednesday, May 20, at 12:30 p.m. ET, Ed debuts a new presentation exclusively for Prof G+ subscribers. He’ll cover how loneliness is producing the next generation of billion-dollar businesses, how the “inheritocracy” is rewriting the rules of economic mobility, and the erosion of “brand America.” Subscribe here for access.

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Could Inflation Be What Finally Bursts the AI Bubble?

For the first time in three years, American wages are not keeping pace with inflation. Two new inflation reports last week painted a discouraging picture: Consumer prices rose 3.8% in April from a year ago, marking the highest inflation reading in three years, and producer prices, which measure wholesale inflation, climbed 6% year over year. That was not only hotter than expected, but the biggest increase since 2022.

The conflict in Iran is partly to blame. Higher energy prices accounted for over 40% of the total increase in inflation last month. Nationally, gas costs more than $4.50 per gallon, up more than 40% from a year ago.

Despite increasing prices, overall consumer spending stayed resilient; however, the most recent University of Michigan consumer survey showed sentiment has plunged to the lowest level on record going back to 1952. Why?

According to Federal Reserve economists, consumers put more weight on higher prices than on higher incomes when assessing their current economic conditions.

Inflation is also influencing how Americans view the president. President Trump won reelection in 2024 in large part because of his promise to reduce prices, but now his approval on how he’s handling the economy is worse than President Biden’s ever was

We are underestimating the impact that lower consumer spending could have on the stock market.

This is what happened in 2022. Consumer spending growth fell 70%, and suddenly because consumers didn’t have as much money to spend, advertisers decided to stop spending too.

This was what really killed the tech sector in 2022, which by the way, fell around 30% that year — a bigger drop than the S&P, which fell around 20%. These companies are still very dependent on advertising as a business. Advertising makes up 97% of Meta’s revenues; for Google, it’s about 75%. These companies still need regular people to spend money such that advertisers go out there and buy ad inventory.

To summarize, inflation had a material impact on consumer spending, which had a material impact on advertising budgets, which had a material impact on the businesses of Big Tech.

This feels very much like what could happen this year. The entire market is dependent on the capex guidance of a few tech companies that happen to get their cash from digital advertising.

The narrative Ed outlines is a logical one, but there are two reasons why I disagree.

First, the AI companies are gonna spend tens of billions of dollars on marketing, and that’s money that didn’t exist three years ago.

OpenAI and Anthropic are in a celebrity death match, and in the next 12 or 24 months, I think some marketing executives will talk Dario and Sam into spending $10 billion on branding.

In addition, we’re about to see the most obnoxious, unhealthy, antidemocratic tsunami of money going to the midterm elections. For example, two or three years ago, Andreessen Horowitz spent $0 on elections. This year, they’re gonna spend $115 million.

All this spending is going to flow through podcasts, print ads, direct mail, and local news stations. So I’m actually less bearish on the ad market than Ed is.

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Cerebras Keeps the Chip Rally Going With the Biggest IPO of the Year

AI chipmaker Cerebras pulled off the biggest IPO of the year so far. Shares were priced at $185, but opened at $350 – an 89% pop. That’s the biggest since 2000 for a listing raising more than $2 billion. On Friday, the day after the IPO, Cerebras shares declined 10%.

Cerebras’ market cap is now more than $60 billion. On just $510 million in revenues, it’s trading at a price-to-sales multiple far above its competition.

It’s hard to imagine a better time to IPO as a small, unprofitable chip company. The Philadelphia Semiconductor Index (PHLX) is up more than 150% over the past year, and now, semiconductor stocks account for more than 15% of the S&P 500.

• That kind of concentration has only happened to a few sectors in history — tech hardware during the dot-com bubble, energy companies around the financial crisis, and software firms in the late 2010s.

Still, Cerebras doesn’t have it easy. Breaking into the highly competitive chip market means taking on Nvidia, which still dominates with 85% market share. In fact, Nvidia’s AI chip business is more than 400x larger than Cerebras’ and is growing almost as quickly.

However, Cerebras products are meaningfully different: Unlike most postage-stamp-sized semiconductor chips, Cerebras’ are about the size of dinner plates. For context: 57 H100s (Nvidia’s premium GPUs) can fit onto each one. Their size, in addition to other, more complex factors, makes them more powerful than traditional GPUs.

Most AI workloads are powered by groups of chips strapped together. Some chips handle memory, while others handle processing. With Cerebras, all of that happens on the same chip, making them, reportedly, 15x faster than other GPUs for standard tasks.

Last year, Scott and I discussed this company and we pointed out that they were getting 85% of their revenue from G42, which is this UAE state-backed AI firm. Investors agreed that this was risky, and there was scrutiny from CFIUS, The Committee on Foreign Investment in the United States.

They ultimately got cleared, and this year, they said, don’t worry, we’ve reduced our G42 revenue exposure to 24%. But 62% of revenue now comes from Mohamed bin Zayed University of AI — another UAE state-backed entity, which means 86% of their revenue is still coming from one customer, which is the sovereign wealth fund of the UAE. So they didn’t fix the problem, and the part that really bugs me is that they’re lying about it.

The finances aren’t great either. Revenue doubled, but in AI, that’s not that impressive.

The exciting part, supposedly, is OpenAI. They have a deal where OpenAI deploys 750 megawatts of Cerebras chips — at full capacity, that’s roughly $7 billion in annual revenue, more than 13x their 2025 total. However, they have an exclusivity agreement in there, which says that you can’t sell your chips to these other competitors.

The real issue is who Cerebras is asking investors to trust. The stock only makes sense if OpenAI pays. And if Altman is who they say he is (a serial liar), that’s not a bet I’d make.

I f*cking hate this company. And it’s not just revenue mix; it’s the quality and incentives of the customer base.

Both customers are UAE government entities. When I sold L2 and Prophet, the reason we got extra turns on revenue was customer quality. We had Nike, P&G, Toyota — quality companies as clients. That’s what institutional buyers want to see. This is the opposite. This is Pets.com out of the UAE.

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The $200 Date and the Free AI Girlfriend: Why Young People Are Opting Out

The romantic recession isn’t letting up. Recent earnings from Match Group and Bumble showed continued weakness in dating apps, with paying users declining across the board. Match Group’s total paying users fell 5%, while Bumble’s dropped 21%.

Young people just aren’t dating. Only 31% of young adults — a quarter of women (26%) and 36% of men — regularly go on dates. Even more troubling, only about half of young, single adults are interested in starting a relationship.

One problem? Romance has gotten expensive. According to a survey from BMO’s Real Financial Progress Index, the average cost of a date in the U.S. has climbed nearly 13% year over year, to $189.

Nearly half of single Americans say dating is no longer financially worth it.

But the romantic recession starts even before the financial challenges of adulthood. In 2024, only 46% of high school seniors said they ever went on dates, down from nearly 90% in the 1980s. Now, only 56% of Gen Z enter adulthood having engaged in a romantic relationship, compared with 75% of members of older generations.

The elephant in the room is AI. Specifically, young men being slowly sequestered from real relationships into frictionless ones with Character AI and porn.

When they’re speaking to an AI girlfriend or absorbing porn, they never feel rejected, they never feel insecure.

I mean, we’ve all had those feelings. We’ve all texted people and not heard back and wondered, what did I do wrong? We’ve had our hearts trampled on. It sucks, and now AI tells you that you can have a reasonable facsimile of life without any friction. And it is such a hollow, empty promise.

The most rewarding things in life are relationships, but you have to endure rejection, persevere, figure out what a woman wants … Frankly, it’s just very difficult. And that’s why it’s so wonderful.

On the economics of dates, I think men should pay. When a woman who is of childbearing age is spending time with you, quite frankly, her time is more valuable than yours. In addition, she spent $400 on her appearance before she even showed up.

But it’s not just paying for everything; it’s demonstrating excellence and effort.

Unfortunately, impressing a woman in a capitalist age with Instagram has become all about money. What I would offer to men is: You can replace money with effort. Think of something cool to do, and even if it’s cheap, you come across as cultured, like you know what’s going on.

I saw this clip recently go viral in which this YouTuber Mike Majlak was asked how much he spends on his dates. And obviously this isn’t representative of everyone, but he said $700 to $800.

That isn’t normal. It also isn’t cool. But the trouble is when you see more and more of these clips, which go viral because they’re so absurd, I think it’s starting to make people think that it is normal to spend thousands of dollars on a date.

People want to be like these famous influencers, and it affects both men and women. Women start to expect it: He didn’t spend enough money on this date. I saw this clip of this guy spending thousands of dollars. Clearly this guy isn’t a baller; clearly he doesn’t respect me enough. And then the same thing goes for men: They start thinking I need to spend thousands of dollars on this date because real men do, so I’m a loser if I don’t.

Cerebras will be below $50/share in 12 months.

1. Trump’s and Xi’s Body Language at the Summit Mirrored Their Styles

2. What AI Did to My College Class

3. Typing Is Being Replaced by Whispering

54%

54% of Democrats think an 8-year-old boy could beat Donald Trump in a fight. Only 6% of Republicans think the same.

1. Middle management is the new target of AI cost-cutting

2. Ken Griffin vs. Zohran Mamdani: The pied-à-terre tax fight, explained

3. GLP-1 drugs are coming for big alcohol

Today at 10 a.m. ET, Scott and Ed are going live with Professor Aswath Damodaran. On tap: Big Tech earnings, the SpaceX IPO, OpenAI vs. Anthropic, and the market’s disconnect from the Iran war. Prof G+ subscribers get access to the livestream and can submit questions. Register here.

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AI Will Replace Your Manager… Or Will It?

The conversation around AI and jobs is evolving. It’s no longer just about AI replacing individual workers — company leaders are starting to suggest that AI could eliminate layers of management, or even managers entirely.

Last week, Coinbase CEO Brian Armstrong announced plans to cut roughly 14% of staff. He blamed challenging market conditions, reinforced by the company’s dismal first quarter earnings in which revenue plunged 31% — but also AI. Specifically, Armstrong said that the restructuring was designed to eliminate “pure” managers.

Last year, Microsoft laid off 6,800 employees, citing AI and an effort to become more streamlined and have fewer managers.

Perhaps the clearest expression of this new thinking came from Jack Dorsey, who, in a blog post about his company, Block, wrote: “For the first time, a system can maintain a continuously updated model of an entire business and use it to coordinate work in ways that previously required humans relaying information through layers of management.”

Eliminating managers has become the go-to solution for companies looking to prove returns on their AI investments. Gartner projects that 1 in 5 companies will eliminate more than half their middle managers by the end of this year.

Every generation of executives has a fever dream of flattening the organization. The version from the 1980s was called Reengineering. But the truth is, management is the connective tissue in any organization. A lot of companies are about to discover that institutional memory was not inefficiency, it was the f*cking company. This was the subject of my No Mercy / No Malice post last week.

We work to create economic prosperity and shareholder value, sure. But the whole shooting match of work is you have the opportunity to build something with someone else. The most rewarding thing in life is relationships, and the things that fuse relationships are building things together. If you take away coworkers, it’s like you’ve literally sucked the soul and humanity around what it means to work.

Does that mean there aren’t cases where management layers become fat and add negative value? No. But I actually think this is one place where AI is absolutely not going to live up to the hype. AI is not going to replace management and mentoring.

What’s really happening here is that a group of CEOs who overhired want to juice their valuations.

Brian Armstrong articulated his vision pretty clearly in his email to employees. The goal isn’t just cutting head count, it’s rebuilding the entire company around AI with humans managing agents rather than managing each other. Sam Altman, Dario Amodei, and others have been pushing the same idea: the one-person billion-dollar company, where a single person manages fleets of AI agents that do everything for them. They’re just glorifying how much value and power you can put into one person’s hands.

I don’t think it’s going to work, and not because it can’t technically, but because people don’t actually want it. You don’t spend years building something meaningful and then celebrate alone with your AI agents. Sam Altman said AI consumes less energy than human beings and children. That framing tells you everything about where this thinking has gone wrong.

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Why New York’s Second-Home Tax Is Smart Policy

The wealth tax debate is escalating. Billionaire investor and Citadel CEO Ken Griffin is now publicly feuding with New York City Mayor Zohran Mamdani over a proposed pied-à-terre tax. If passed, it would levy a new annual fee on properties worth more than $5 million that are not used as a primary residence.

The tax, which New York Gov. Kathy Hochul has included in the state’s tentative budget, would raise approximately $500 million annually, per the city comptroller. Montana and Florida are also reportedly exploring measures that would increase taxes on second homes.

I own a pied-à-terre in New York. Under this tax, it would cost me an additional $100,000 per year. I’m in favor of it anyway.

Property taxes are the largest source of revenue in New York City, and they work. Unlike income taxes, which chase high earners to Florida and Texas, taxing real estate tends to raise revenue before it drives people out. A second home worth $10 million sitting empty adds nothing to the city’s tax base and removes housing supply, which drives up prices for everyone else.

If it cost me another $100,000 to have a second home in New York, I don’t love it. But here’s the bottom line: If I can go to Jack’s Wife Freda and watch all the hot men and women and the world pass me by, and then I can go out for the best food in the world and walk around looking at the absolute wondrous freak show that is New York, f*cking A, I’m not going anywhere. It is the pinnacle of America, the greatest collision of culture, commerce, creativity, fashion, art, and media. People who own second homes in New York will spend a lot more than that to stay and be witness to that amazing experiment.

No one likes taxes, but I hate this tax less than any other idea. But here is where Mamdani made a real mistake: He announced the pied-à-terre tax right in front of Ken Griffin’s building. Griffin has given $650 million to New York charities. He’s planning a multi-billion-dollar development project he’s now considering putting on hold. His only crime here is being very wealthy in New York. That’s not a crime.

Folks, let me be clear, most billionaires are really good people. Some are OK, and some are bad. Most poor people are really good people. Some are OK, and some are bad. The demonization of rich people and the demonization of success is how we get JD Vance as president.

The pied-à-terre tax is the right policy tool. It’s so funny to hear the argument where people say, if you add additional taxes, these billionaires are going to leave. And it’s like, brother — they already have. It’s their second home that we’re talking about. They’re not New York residents. Their income isn’t being taxed in the city. Their empty apartments just inflate the price of housing for everyone who actually lives there. Taxing them is not driving anyone out because they’re already out.

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Two Trends Are Destroying the Alcohol Industry: GLP-1s and Sober Culture

Alcohol companies are on the rocks, and two major shifts are to blame: GLP-1 drugs and a growing cultural wariness toward drinking.

Diageo, the maker of Johnnie Walker and Smirnoff, reported a 9% year-over-year decline in North American sales last week. Revenue dropped 11% at Constellation Brands, the company behind drinks like Corona and Modelo, and at Pernod Ricard, the world’s second-largest wine and spirits seller, revenue fell 15% in the six months through March.

Shares of the world’s top listed beer, wine, and spirits makers have shed more than $830 billion since 2021.

The outlook for booze companies doesn’t look promising. According to a study of 14,000 Weight Watchers members, roughly 50% of patients who drink alcohol prior to starting a GLP-1 decrease their alcohol consumption after starting the drugs. Morgan Stanley estimates that GLP-1s, can suppress alcohol consumption by up to 75%.

The companies behind GLP-1 drugs crushed earnings. Novo Nordisk’s sales rose more than 30%, reflecting growing demand for its new Wegovy pill. Revenue from Eli Lilly’s weight loss drug Mounjaro rose 125% year over year to $8.66 billion.

GLP-1s aren’t the only problem for booze companies — they also face a growing cultural movement away from alcohol. Increasingly, the new status symbol isn’t buying a bottle of Grey Goose, it’s red light therapy, and NAD treatments, and wellness retreats.

Fifty-four percent of Americans say they drink alcohol — the lowest rate since records began in 1939. The decline is even more pronounced among younger generations. Of people ages 18 to 34, only 50% say they drink, down from 72% two decades prior. Young people are also increasingly driving wellness spending: Gen Z and millennials are 36% of the U.S. adult population but drive 41% of annual wellness expenditures.

AB InBev’s nonalcoholic sales grew 27% this quarter and actually drove growth in overall sales. So they are figuring out a way to avoid the alcohol bogeyman.

AB InBev’s CEO also pointed out on CNBC last week that beer has protein, which I thought was one of the greatest quotes ever.

People are definitely moving away from alcohol. On Eventbrite, sober curious gatherings have risen 92%, and sauna raves, which are DJ sets and dance parties that happen in saunas, are up 256% this year. Sidenote: What the hell is a sauna rave?

Finally, one of our research team members, Dan Chiolan, highlighted that there seems to be this idea that if Gen Z isn’t drinking alcohol, then they must not have a substance abuse problem. He argued — and I think this is really smart — that actually they do have a substance abuse problem, but their substance is screens.

It’s a different addiction, and it certainly has its own set of negative effects.

People don’t realize how severe it is. In London, I have a couple of friends who are super into wine, and they’ve said you can get amazing wine now for 70% less than you could get it three or four years ago. There are wineries supposedly in Italy and France where if you just take on the debt, you can own the winery because they just can’t sell.

At some point, it will bottom out, and these companies will be overshot to the downside. They have incredible brands, and there’s few businesses with greater margins than alcohol. I think it still has a ways to go. But typically these stocks bottom before their businesses bottom.

Last week, this really talented TikToker named Hunter Peterson crowdfunded $132 million in nonbinding pledges to buy Spirit Airlines. I think we’re gonna see a company in distress that’s got a big brand be crowdfunded and either brought out of bankruptcy or acquired.

1. Bad government statistics can cost the economy billions

2. The power of patience at Apple and Berkshire Hathaway

3. You can buy a sorority rush consultant for $5,000

19

Of the 20 horses in the Kentucky Derby lineup this weekend, 19 were related to Secretariat, the record-breaking winner of the 1973 Triple Crown. The winner, Golden Tiempo, was one of the descendants.

1. OpenAI’s week from hell

2. Spirit Airlines cancels all its flights and shuts down

3. Big Tech’s earnings report card

There are 23 days left ’til the Prof G Markets Tour kicks off in San Francisco. Join Scott, Ed, Claire and surprise guests live in the Bay, LA, Miami, Chicago, or New York. Visit profgmarketstour.com to get your tickets.

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Courts, Cash, and Competition: OpenAI’s Week From Hell

Last week, the WSJ reported that OpenAI missed its own targets for new users and revenue. CFO Sarah Friar has privately told company leaders that she is worried OpenAI might not be able to pay for future computing contracts if revenue doesn’t grow fast enough.

Related: The board of directors have been more closely scrutinizing Sam Altman’s data center deals as the business slows down.

Meanwhile, court proceedings kicked off in Elon Musk’s lawsuit against OpenAI, seeking to oust Altman and unwind the company’s conversion into a for-profit entity. The case centers on claims that OpenAI abandoned its original nonprofit mission.

Separately, families of victims from a mass shooting in Canada have filed a lawsuit against OpenAI and Sam Altman, alleging that ChatGPT played a role in the attack and that company safeguards fell short.

Taken together, these three stories touch on three concerns that have been raised about OpenAI: financial viability, leadership, and safety. OpenAI said there is “no truth” to the Journal’s reporting, and that the business is “firing on all cylinders.” But the company that has spent years selling the world on a more intelligent future is now struggling to convince its own board, its critics, and the courts that it has things under control.

OpenAI set extraordinarily ambitious internal goals, so the financial miss is more an issue of optics than substance. But the real story is how fast the competitive picture has shifted.

Anthropic, a company that was a distant second just six months ago, is now squarely the leader. Anthropic recently hit a $30 billion run rate; OpenAI is now at $25 billion. Anthropic expects to break even by 2028; OpenAI not until 2030, and it plans to burn 14x more cash.

On the Musk-Altman lawsuit, I actually think Altman comes out on top. According to people close to the matter, Musk was the one who pushed to convert OpenAI into a for-profit company, demanding 80% ownership and control. When OpenAI said no, he walked and signed away all rights. He then went and founded xAI, arguably the AI company with the fewest safety guardrails. This isn’t about principle; it’s seller’s regret. The one corner of the internet he didn’t get to own. The defense will have no trouble painting that picture.

One of our team members, Kristin O’Donoghue, said it best: We’re not in an AI bubble right now. We’re in an OpenAI bubble.

AI businesses broadly are doing exactly what you’d expect: growing off enormous bases at startup-like rates, posting the kind of numbers that shouldn’t be possible for companies this size. The problem is that OpenAI has spent the last year making commitments that don’t match its actual capabilities. They announced plans to spend $1.5 trillion over the coming years on a $13 billion revenue base. When that number became embarrassing, they revised it down to $600 billion by 2030. That’s still an extraordinary figure for a company generating what Meta spends in a single quarter. Yet they’re valued on secondary markets at around $880 billion, roughly 35x sales. The math only works if you believe the growth trajectory is essentially guaranteed. This week suggests it isn’t.

What’s changed is that Anthropic has emerged as the more credible operation. A year ago, OpenAI had a 75% chance of IPOing before Anthropic. That’s now down to 34%. Anthropic is trading at a $1 trillion valuation on secondary markets, ahead of OpenAI. The revenue gap has closed fast.

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Spirit Airlines Is Going Out of Business

After 34 years of operation, Spirit Airlines shut down for good this weekend after failing to reach a bailout agreement with the federal government.

Spirit filed for bankruptcy twice in the past two years, including most recently last August. It was aiming to emerge from its second bankruptcy this summer, but those plans were derailed by an 80% increase in the price of jet fuel since the start of the U.S. war in Iran.

The airline’s closure means that thousands of travelers with Spirit Airlines tickets now need to file for a refund and rebook, and Spirit’s 9,500 employees and 7,500 contractors need to find new jobs.

Ultimately, the government bailout deal didn’t materialize because the Trump administration insisted the government get paid back first if Spirit went under — meaning existing lenders would have little chance of getting any of their money back.

Industry analysts worry that Spirit’s closure will lead to higher ticket prices. Spirit exited 90 routes between 2024 and 2025, and those tickets rose on an average of about $19, or 14%. That compares with a 6% to 7% typical airfare inflation on routes where it continued to operate.

The only time a government bailout makes sense is when the failure is systemic. The 2008 bank bailouts were defensible because if JP Morgan or Bank of America had gone under, you would have had lines around the block and food shortages. That’s an existential risk. In contrast, Spirit Airlines had a 3% share of the U.S. airline market.

A government bailout would have been conscripting taxpayers into being unwilling, unwitting equity holders in f*cking Spirit Airlines.

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Microsoft, Amazon, Meta, Google, Apple: Earnings Season Recap

Big Tech delivered across the board last week, with Microsoft, Amazon, Meta, Google, and Apple all reporting objectively strong earnings.

However, the market’s reaction was mixed — perhaps in part due to the massive capital expenditure commitments that these once-capital-light businesses are making.

In the first quarter alone, Microsoft, Amazon, Meta, and Google spent $131 billion on capex, up 71% from a year ago. In other words, these four companies are spending the equivalent of the Manhattan Project every month.

Microsoft

Microsoft’s revenue rose 18% year over year, and Azure revenue grew 40%. However, shares are still down 12% year to date amid uncertainty about capex spending and Microsoft’s relationship with OpenAI.

Microsoft’s own AI products are now generating $37 billion in ARR, up 123% year to date. That’s more than OpenAI and Anthropic are making on AI. Microsoft also reported that engagement with its AI assistant, Copilot, is now at the same level as Outlook, its email app.

Amazon
Amazon also topped expectations with strong cloud and AI growth. Amazon Web Services (AWS) revenue increased 28%, the fastest growth in 15 quarters, and its AI revenue run rate is now over $15 billion — nearly 260x larger than it was three years ago.

Another highlight noted on the call was Amazon’s progress in developing and selling its own AI chips. CEO Andy Jassy called Amazon “one of the top three data center chip businesses in the world,” noting that if Amazon’s chips were a stand-alone business, it would be generating $50 billion in ARR (that’s more than AMD and about as much as Intel).

Amazon’s earnings beat expectations as well, but notably, more than half of Amazon’s pretax income for the quarter came from gains from its investment in Anthropic. The company’s $8 billion investment in Anthropic is now worth more than $70 billion.

Prof G Media’s Big Tech stock pick of the year (Amazon) is looking pretty good so far.

A former colleague of mine at NYU Stern, Peter Golder, had a piece of research I’ve held on to for 15 years: Innovators aren’t the ones that reward shareholders. If you look at the first movers in PCs, smartphones, and online platforms, those companies probably don’t exist anymore — CompuServe, AltaVista. It’s usually the second mouse that gets the cheese.

Amazon is second-mousing like no one’s business. They saw an opportunity to be number two in space connectivity behind SpaceX, and they created Amazon Leo. Now Jassy is saying Amazon is one of the top three data center chip businesses in the world.

And I think what the market is responding to is a narrative shift. The street no longer wants I’m going to raise a trillion dollars and buy $300 billion of compute. That’s the Altman narrative. What they want is: We’re participating in the AI boom, our core businesses are strong, and we’re adults about capex.

Alphabet

Alphabet had the best quarter of the group. Revenue grew 20%, and net income grew over 80%, but Google Cloud was the highlight. Sales increased 63%, and now represent 18% of Alphabet’s total business, up from 14% a year ago.

• Cloud margins have also expanded from 9.4% a year ago to 32.9% in Q1.

Shares rose 10% on the news, adding $421 billion in market cap — the second-largest single-day market-cap gain for any stock in history. Alphabet finished April up 33%, its best month since October 2004, the month it went public.

Meta

Despite posting 33% revenue growth — its fastest in five years — Meta fell 10% after raising capex guidance. The company also reported its first decline in daily active users across all its properties since it began tracking the metric seven years ago. Management pointed to internet disruptions in Iran and a WhatsApp restriction in Russia.

The only company with a gigantic question mark — explained by both its valuation and its stock performance since earnings — is Meta. Meta raised capex guidance to $125 to $145 billion for the year, comparable to Microsoft, Amazon, and Google. The difference is Meta is the only one without a cloud business. Microsoft has Azure, Amazon has AWS, Google has Cloud. Meta generates 97% of its revenue from advertising. It is purely an ad business.

So the question for Meta is: What are you actually going to do with these data centers? Are you going to monetize them, or just use them to turbocharge your existing ad business? They haven’t explained it. They’ve used vague allusions to AI being the next big thing — okay, fair enough — but with the other companies you can see the ROI right now. Meta can’t show you that. They need to get their messaging straight and tell Wall Street what the actual monetization plan is.

Because right now you’re basically praying Zuckerberg figures it out. And given what happened with the metaverse — where he plowed billions into a distant dream and said trust me — you’re asking a lot from investors. Meta’s forward PE is now 20, the lowest of the group. Google’s at 34, Amazon 33, Apple 32, Microsoft 21.

Apple

Apple reported revenue growth of 17%, its fastest quarterly growth in four years. iPhone revenue grew 22%, Services hit an all-time high, and sales in China jumped 28%. Unlike its peers, Apple made no significant changes to capex guidance.

There are different types of risk. Apple risks missing out on upside by not making forward-leaning AI capex bets — but they don’t face an existential threat from AI. They’re the plumber of Big Tech. Nobody is talking about vibe-coding an iPhone or replacing the App Store with the latest Claude update.

But I think Apple’s saying, no, our job is to create the most aspirational signaling ecosystem in history. Nothing signals that you’re part of the 1 billion most attractive mates in the world more than having an iPhone. And that supply chain,I don’t think it can be replaced by AI. Figuring out a way to get 2,000 distinct parts from probably 400 different sources to different regions in China and then build a phone for $400 that would cost $3,000 anywhere else is really hard.

Apple got criticized for not getting into the search wars and for killing the car project. Both turned out to be smart. They’re making the same call on the capex race around AI. They might be wrong — but if they are, the consequence is they miss out on earnings growth. Not that they get disrupted.

Intel gets cut in half within the next 12 months. Intel is up roughly fivefold since we called it a buy, and at these levels now it is a short. The stock is now trading at 118x forward earnings, the highest forward PE of any large-cap chip stock, while its business is expected to grow slower than every peer trading at a lower multiple. Good for anyone who bought in when the thing was nearly left for dead. But at 118x earnings, look out below.

1. Chinese court rules that a worker cannot be replaced by AI

2. ChatGPT became so obsessed with goblins that OpenAI had to intervene

3. Must we really, do lunch?

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That’s how much New Jersey Transit will charge for a round-trip train ticket between Manhattan and MetLife Stadium during the World Cup this summer.

1. Two months into the Iran war: The standout markets and the stragglers

2. What makes a great leader? Learnings from Tim Cook and Reed Hastings

3. SpaceX strikes $60 billion deal to buy AI coding startup Cursor

4. Justice Department drops its criminal probe into Powell

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Two Months Into the Iran War: The Biggest Market Winners and Losers

The war with Iran reaches its two-month mark tomorrow, double the four-week timeline the Trump administration initially promised – and there’s no end in sight.

Since the start of the conflict, Israel and Taiwan’s stock markets have outperformed, both up 6%. Israel’s performance is likely tied to the war. A weaker Iran ultimately lowers Israel’s long‑term risk premium.

Taiwan’s growth is a reflection of continued investment in AI, and, specifically, TSMC. The company makes up 40% of the entire Taiwan Stock Exchange’s value, and its run-up helped the Taiwan Stock Exchange overtake the U.K. stock market for the first time.

Among the worst performers have been India, the Philippines, and Indonesia; their main indexes are down 4%, 9%, and 10%, respectively. All three countries depend on oil imports, which have gotten scarcer and more expensive — especially as their own local currencies weaken against the dollar. A weaker local currency makes imports and foreign debt more expensive.

• The Indonesian rupiah and the Philippine peso are down nearly 4% against the U.S. dollar this year, and the Indian rupee is at its cheapest valuation in nearly 12 years.

Meanwhile, U.S. markets have surged to record highs since the start of the cease-fire on April 8. What may have been optimism about the conflict coming to an end has turned into a rally fueled by strong earnings and AI hype.

Every sector’s earnings estimates have risen since the war began, especially tech, where earnings projections have seen the largest increase in recorded history.

Energy is still the standout sector this year, with U.S. crude on track for its two strongest months ever in April and May. Even so, the sector is down nearly 7% this month as hopes for an Iran peace deal deflated some of the war premium in oil prices.

It feels like there are two main things that determine how you’re doing in the market right now: your proximity to AI, and whether you have a trade surplus of oil — but one is stronger than the other.

Israel and Taiwan have tremendous proximity to AI, but they’re both oil importers. What that says to me is that proximity to AI beats out your need for energy.

Then you look at the U.S. We’re not only ground zero for AI, but we’re also an oil exporter. Increases in oil prices will cost consumers money, but the only difference for oil companies is that they’re now getting 40% more per barrel.

The market has just become this incredibly resilient organism. It’s surviving wars and pandemics. But it still feels like we’re in uncharted territory.

How do you play this market? You don’t. If you’re worried about the world, then diversify. But my view is: always be in the market, and don’t try to time it. It would have been very easy to make an emotional decision in March. Well, of course, the market is down 10 percent. It’s going to be a forever war. But now the markets are back up at record highs.

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What Makes a Great Leader?

2026 is shaping up to be a landmark year for corporate succession. Last week, news broke that Tim Cook will step down as CEO of Apple. He’ll be succeeded by John Ternus, senior vice president of hardware engineering.

The week before, Netflix co-founder Reed Hastings announced he would be leaving as executive chairman of the board.

2025 was already a record year for CEO turnover. One in nine CEOs was replaced last year across 1,500 of the biggest publicly traded companies, according to an analysis by executive-recruiting firm Spencer Stuart. That’s the highest rate since 2010.

The new leaders were, on average, younger and less experienced. The average CEO appointee in 2025 was 54 years old, down from nearly 56 in 2024. Ternus, the future CEO of Apple, is 51 years old.

Tim Cook is the most successful successor in history. He inherited the hardest role in business history after Steve Jobs left. Jobs had become something closer to a deity than a CEO. Tim Cook didn’t have to fill shoes. He had to fill Jesus’ sandals.

Cook’s most impressive achievement was reengineering Apple’s supply chain. He cut the number of component suppliers by 75% and established a massive production hub in “iPhone City” in Zhengzhou, where specially trained workers can make up to 350 iPhones per minute. In fact, Apple has trained more than 28 million workers in China since 2008 — larger than the entire labor force of California. Put all of this together, and it’s estimated Cook reduced labor costs per iPhone by nearly 23% while tripling the price.

Generally the rules of marketing are you can have an aspirational, niche product like a Ferrari that is highly differentiated and has huge margins, or you can have a product that’s great value where you focus on cost and you have huge production volumes, like Toyota. Apple’s iPhone is the only product I can think of that has the margins of Ferrari with the production volumes of Toyota. It’s arguably the most successful product in history.

Tim Cook’s management style was quiet and methodical. He reportedly embraced the “rule of awkward silence”: When faced with a tough question, you pause and think before you answer. A 2008 Fortune profile said that in meetings Cook was “known for long, uncomfortable pauses, when all you hear is the sound of his tearing the wrapper of the energy bars he constantly eats.”

In another account of Apple’s culture, a manager described how he tried to follow Cook’s example by spending the first 10 minutes of every one‑on‑one just listening, keeping his body language neutral.

He did have some failures. The Vision Pro was a flop. The car project burned years and resources before he shut it down. Apple Intelligence has underwhelmed. But a CEO without gigantic flops isn’t operating at the frontier, and killing the car project rather than keeping it on life support is the mark of a good operator.

People might say his Trump sycophancy is a bit of a stain on his legacy. But look — I think he decided to take one for the team, and the team was shareholders. I can’t imagine that his skin didn’t crawl going to the Melania premiere.

No one gets it right all of the time. Try and find a CEO who’s been more right than Tim Cook. It is really difficult.

Reed Hastings is known for taking these bold, risky bets that paid off. He took on a $6 billion incumbent (Blockbuster) and invested in original content before any other streaming service. And what happened? Netflix stock returned 26,000% over his tenure against the S&P’s 340%.

He also co-created the Netflix Culture Deck in 2009, which played a foundational role in setting Silicon Valley work culture. Sheryl Sandberg called it one of the most important documents ever to come out of the Valley.

Some of its core principles are:

• Adequate performance gets you a generous severance. The fastest way to destroy morale is to let mediocre performers survive.

• We are a sports team, not a family. Netflix leaders were instructed to hire, develop, and cut smartly such that there were “stars in every position.” Families don’t lay people off.

• The keeper test. Managers were encouraged to regularly ask themselves: If this person quit tomorrow, would I fight to keep them? If the answer was no, they would get generous severance. The woman who co-created the test with him, Patty McCord, was eventually let go by the very standard she helped build.

• Take recruiter calls. Hastings encouraged employees to take calls from competitors. Transparency about market value benefits everyone.

• When someone was fired, the whole team was told why. The philosophy behind it was the same one that ran through everything Hastings built: Honesty, even when it’s uncomfortable, produces better outcomes than the alternative.

• No vacation policy, no expense approvals. Just act in Netflix’s best interest. This eventually became a norm across Silicon Valley.

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SpaceX Moves to Acquire Cursor as It Preps for a Massive IPO

Last week, SpaceX secured the option to acquire AI coding startup Cursor for $60 billion. If SpaceX doesn’t exercise the option, it will pay Cursor $10 billion (essentially a breakup fee). The timing is notable, as SpaceX prepares for what could be the biggest IPO in history.

Standard breakup fees are usually 2% to 4% of deal value, so this one (17% of deal value) is unusually large.

Cursor was founded in 2023 by a group of MIT students. In less than two years, the company hit $100 million in annualized revenue; now, ARR sits at $2 billion and 67% of Fortune 500 companies use the product.

This acquisition makes slightly more sense than headlines reveal. Cursor has a real AI product and valuable coding data — both assets that SpaceX’s subcompany xAI will use. SpaceX and xAI have excess compute capacity after building Colossus, the xAI supercomputer that Elon Musk has described as having compute equivalent to 1 million Nvidia H100 chips. Together, Cursor will help improve xAI’s models, while Cursor gets access to a giant pool of GPUs.

The deal may help convince potential IPO investors that SpaceX isn’t just a space company — it’s an AI company. Either way, it will be huge. SpaceX is reportedly working with 21 banks and targeting a June IPO.

xAI is desperate, and I think Cursor is an attempt to establish a front end that might help them get more actual revenues going.

There’s a saying that statisticians lie, and liars use statistics. The thing that struck me about the deal is that this $60 billion number just feels like such bullsh*t to me. First off, nobody’s cashing a check for $60 billion. SpaceX only has $25 billion in cash on hand. I’d love to see the actual deal terms, but it’s something along the lines of, if we go public and you stay for a couple years, you’ll get options on 3% of the company.

These numbers are more about a press release and a jaw drop-value than they are about something that’s actually real. Musk is just stuffing more rabbits into the hat.

If you add the valuations of OpenAI, Anthropic, and SpaceX, their combined market cap could exceed the value of every single IPO from the dot-com era combined.

We’re looking at one of the biggest moments in financial markets in a really long time. Between the OpenAI, Anthropic, and SpaceX IPOs, we’re going to be inserting almost $4 trillion in value into the markets, while, at the same time, adding zero dollars in earnings because all of them are burning billions in cash. SpaceX lost $5 billion last year. OpenAI is expected to lose $14 billion this year.

We’re now getting to a point where private companies are doing all of the things that gigantic public corporations would do. They’re spending tens of billions of dollars on huge M&A transactions; they have valuations in the hundreds of billions. But they have no obligation to actually disclose the facts. We don’t even know Cursor’s exact revenue.

When we finally see the S-1s, there’s gonna be no more capacity for the bullsh*t we’ve been receiving in the past several years. I think it’s very possible that suddenly investors realize that the SpaceX conglomerate is pretty ugly.

Justice Department Drops Its Criminal Probe Into Powell

The Department of Justice dropped its criminal investigation of Federal Reserve Chair Jerome Powell on Friday. The decision clears the way for Kevin Warsh’s confirmation as the next Fed Chair.

Prosecutors were focused on whether Powell lied to Congress about the cost of Federal Reserve office renovations. However, many saw the case as a thinly veiled attempt by the President to remove Powell from his position. Trump has repeatedly criticized Powell for keeping interest rates higher than he’d like.

Now that the case has been dropped, the Senate banking committee is expected to vote to advance Warsh’s nomination on Wednesday, putting him on track to be confirmed before Powell’s term as Fed chair ends on May 15.

The biggest IPO in history will be SpaceX. The best-performing IPO will be Anthropic, and I don’t think OpenAI gets out. OpenAI has been so overshadowed by the upward trajectory of Anthropic, that I think they’re gonna come up with a jazz hands reason for why they’re delaying a public offering.

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1. How the Iran war put billions of Gulf-backed dealmaking in doubt

2. Does your boss have AI brain?

3. Is the US falling out of love with cocaine?

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Sally Ride, the first American woman in space, was asked by NASA engineers if 100 tampons would be enough for her week-long voyage.

1. If the news is bad, why are stocks at all-time highs?

2. AI’s newest obstacle is … humanity

3. The real reason Amazon is buying Globalstar, plus a check-in on Prof G Media’s stock pick of 2026

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Why Markets Are Ignoring the Iran Crisis

Last week, peace talks with Iran collapsed, the U.S. blockaded the Strait of Hormuz, and the International Monetary Fund warned that further disruptions in oil markets could raise the risk of a global recession.

Still, the S&P 500 and Nasdaq both hit fresh all-time highs. With so much uncertainty, why are markets so bullish?

There are a couple potential explanations. First, historically, wars aren’t that bad for U.S. markets. The U.S. is isolated geographically and insulated by having the largest and most liquid financial markets in the world. During times of uncertainty, the American equity and credit markets are seen as safe havens.

The average U.S. stock market decline during 30 major geopolitical events since 1939 was just 4%, and stocks typically bounced back within six weeks.

• One year later, outcomes improved even more: the S&P 500 posted double-digit gains in the 12 months following Pearl Harbor, the Cuban missile crisis, the John F. Kennedy assassination, and the start of the Israel-Hamas war.

Second, company earnings are strong. The S&P 500 just posted its fifth consecutive quarter of double-digit earnings growth — the last time that happened was in 2018.

Third, rising gas prices may be affecting big companies and consumer spending less than expected. In the 1970s, spikes in oil prices triggered a recession. But since then, the U.S. economy has grown less dependent on oil: GDP has tripled, while oil consumption has stayed about the same.

Furthermore, consumer spending now hinges more on the wealthy than the middle class, and high-income consumers are less affected by energy costs.

The top 10% of earners account for half of consumer spending, or a third of GDP, and the highest-income quintile spends only 2% of their budget on gasoline. That’s compared with low income households that spend nearly 20% of their budgets on gas.

I’ve been calling this the ketamine economy. Ketamine is dissociative. You leave your body and watch your life from the outside. That’s exactly what the Dow and the Nasdaq do. They give the illusion that society is doing well, but they’re not a measure of prosperity. They’re a proxy for earnings and the wealth of the top 10%.

Think about what’s actually driving this market. Fifty percent of consumer spending comes from the top 10%. Do they care that gas is $6 a gallon? It doesn’t register. Tech dominates the market indexes. What does chaos in the Strait of Hormuz do to Nvidia’s margins? Nothing.

In addition, there’s this phenomenon of buying the dip. If you look at the last four major exogenous events, the Gulf War, 9/11, the Iraq War, and COVID, basically, there was a dip and then the markets ripped back the following year.

We did have a drawdown here in March, but it’s rebounded since. I think what’s happening is the cycle time between fear and uncertainty around a war and the opportunity to buy is compressing. Now people are like, let’s move to the part of the program where we make money.

Let me break down what’s actually happened in the markets. Year to date, the biggest winners were industrials, materials, and energy. That made sense — war in the Middle East, oil prices surge, and energy stocks move higher.

On March 30, we hit the market bottom. Since then, it’s completely reversed. Energy is down 11%. Meanwhile, financials are up 8%, communication services up 10%, tech up 21%.

So what happened? For weeks, investors were doing what you’d expect. They were pricing in the risk of the Iran war. Then something switched. I call it timeline fatigue. The Iran story kept producing plot points with no resolution. Ceasefire, then no ceasefire. Blockade, then no blockade. Trump says negotiations are going somewhere, then they don’t. At a certain point, investors just gave up trying to interpret the headlines.

When investors stopped looking at the geopolitics, they looked at the fundamentals. Earnings are strong, guidance is strong. Microsoft and Nvidia are trading at some of their lowest forward multiples in years. Suddenly the math was simple: Big Tech is executing, multiples are attractive, let’s buy.

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The AI Industry Faces a New Threat: An Angry Public

The AI backlash is turning violent. On April 10, a man threw an incendiary device at OpenAI CEO Sam Altman’s house, and then went to OpenAI headquarters and threatened to burn it down. A few days earlier, a gunman fired 13 rounds into the front door of an Indianapolis councilman’s home. The perpetrator left a note that read “No Data Centers.”

Americans are making it increasingly clear they don’t like where AI is headed.

Data centers, the most physical manifestations of AI, are an obvious target. Last year, 48 data center projects, representing at least $156 billion in investment, were blocked or stalled by local opposition, predominantly in the form of peaceful protests.

Anti-AI sentiment is starting to shape policy: Maine just introduced a bill to ban data centers altogether, joining 11 other states with active bills proposing restrictions or outright bans.

Opposing data centers is one of the few topics popular on both sides of the aisle. Of the elected officials who’ve taken positions against AI data centers, 55% are Republicans and 45% are Democrats.

Another, perhaps surprising cohort coming out against AI is Gen Z. A recent survey found that 44% of Gen Z admitted to having sabotaged their company’s AI rollout in some way.

This isn’t really about AI — it’s about inequality, and AI has become the most visible symbol of it.

The top 19 households in America own 2% of all wealth, up from 0.1% just 40 years ago. We have more private security guards in this country than high school teachers. Now you have this technology that promises to reshape the entire economy, and the people positioned to benefit are the same people who already own everything. Meanwhile, local communities are watching their electricity bills go up to power data centers they had no say in building.

That’s the context for the violence. And when you look at the reaction online, it mirrors the Luigi Mangione response. People sending support, asking about bail funds. That’s not fringe behavior. That’s a signal about where a meaningful portion of the country actually is.

There’s no justifying the violence. Full stop. And I’d push back a little on the idea that this is specifically an AI problem. Historically, public figures have been targets of violence. One in three presidents has been shot at. The difference is, CEOs are now famous. Nobody knew who CEOs were when I was growing up. Now they’re the figureheads of the American economy, and that makes them targets. Oh, and there’s access to assault weapons and guns at every f*cking corner.

But separate from the violence, there’s a real story here about brand collapse. Sam Altman used to be the tech CEO we actually wanted. He spoke in hushed tones to Congress about the dangers of the thing he was building. He didn’t own equity in OpenAI. He was going to save us from AI while building it responsibly.

Then the mask slipped. He started sh*tposting Microsoft. He compared data center energy use to the calories it takes to raise a child, essentially telling critics to stop complaining. Then Marc Andreessen started saying he doesn’t believe in reflection, only forward momentum. These are not people who are winning hearts and minds.

The result is that AI’s brand has collapsed, and it’s self-inflicted.

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Amazon Buys Globalstar in $11.6 Billion Satellite Deal

Last week, Amazon announced it will acquire satellite communications firm Globalstar for $11.57 billion. Globalstar’s infrastructure will help accelerate Amazon’s plans to develop its own satellite network, deemed Amazon Leo.

On news of the deal, Amazon’s shares increased almost 4%, adding almost $100 billion in market capitalization — essentially paying for the acquisition eight times over. Globalstar shares rose almost 10%.

Still, the deal will be Amazon’s second-largest acquisition after Whole Foods, and it wasn’t cheap, especially given the size of Globalstar’s business. Globalstar operates just 24 satellites and has never been profitable.

So, why is Amazon paying so much for an unprofitable satellite company?

Amazon isn’t buying Globalstar for its 24 satellites, but rather the spectrum that Globalstar owns.

Spectrum refers to the invisible radio frequencies that wireless signals travel on. Some spectra carry Wi-Fi signals, some carry broadcast TV signals, some carry our smartphone data.

There is a finite amount of spectra, and the government, specifically the Federal Communications Commission, auctions off licenses for them every few years. But since there’s a fixed amount, they are expensive and hard to get. The last auction was in 2022, and Verizon paid more than $50 billion for its licenses.

Amazon wants Globalstar’s spectrum so that it can create its own private wireless network. In his annual letter to shareholders, Amazon CEO Andy Jassy described the company’s plans to use Amazon Leo to sell Wi-Fi to rural customers, airlines (Amazon already has a contract with Delta), and to integrate it into AWS.

But there’s another, even more important angle. Amazon’s industrial robots and expanding fleet of drones need to communicate constantly, and they will be able to operate more efficiently on a private wireless network. Essentially, Amazon’s purchase of Globalstar is an extension of their investment in their logistics infrastructure.

Prof G Media’s Big Tech stock pick of the year was Amazon. Why? Over the past few years, excitement about AI has made it easy to overlook the importance of hard assets. But this year, the rise of the HALO trade (heavy assets, low obsolescence) has made Amazon the best-performing member of the Magnificent 7.

Amazon’s hard assets are its biggest moat. It has as many airplanes as the Austrian or Norwegian military (110 aircraft), and more industrial robots in operation than all other companies in the U.S. combined.

These investments in automation are expected to boost productivity by roughly 25% at fulfillment centers.

The Allbirds pivot to AI is gonna inspire a bunch of copycats. Think: Kmart AI.

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NASA is a point of national pride, a driver of technological progress, and a reason for top minds around the world to choose America. It is one of the most underrated brands in the world.

What unites humanity more than space exploration? Passion for sport? Love for our families? The list is short. A fifth of the world’s population — 650 million people — watched Neil Armstrong and Buzz Aldrin walk on the moon in 1969. Five decades later, Americans are still excited about it.

• In 2019, 45% of Americans said there hadn’t yet been any other national accomplishment that gave them as much pride in the U.S. as the moon landing.

The NASA website gets more site visits than The Economist, twice as many as SpaceX, and almost as many as Tesla. Of all traffic, less than half is from the U.S.

Today, NASA is the most popular federal institution, ahead of the U.S. Postal Service and the Department of Veteran Affairs. That is despite the fact that NASA is vastly less efficient than the privately run SpaceX. Over 118 space missions, NASA saw an average cost overrun of 90%. Over 16 missions, SpaceX saw an average cost overrun of 1.1%.

Yet, as recently as last week, 80% of Americans hold a favorable view of NASA. What other seemingly inefficient government agency do 80% of Americans like?

The NASA logo is so broadly admired that it has become a status symbol. Coach, Balenciaga, Kith, Estée Lauder, Nike, Adidas, and Vans have all collaborated with NASA or used its iconic red branding. Ariana Grande named a song after the agency, and NASA has been mentioned more than 230 times in rap lyrics since the 1990s. How many other icons can claim that kind of cachet?

ROI

NASA may look inefficient compared with SpaceX, but be clear: Its second-order effects on innovation and America’s reputation make it one of the most valuable U.S. assets. President George H.W. Bush reportedly called the Apollo program “the best return on investment since Leonardo da Vinci bought himself a sketchpad.”

For each dollar invested in the Apollo program, the U.S. got $7 back. Today, NASA creates more jobs per million dollars in budget than federal spending on defense, healthcare, or infrastructure.

It is also the launchpad for crucial American innovations. NASA calls the commercial products and services that have emerged from its research “spinoffs.” Most notably, NASA funding kick-started microchip and computer innovation in the 1960s. It is estimated that the Apollo program accelerated computer technology by 10 to 15 years.

Other spinoffs include products as impressive as precision GPS, solar panels, satellite TV, implantable heart monitors, and LASIK surgery, and as mundane as memory foam, golf ball dimples, and invisible braces.

Even more importantly, NASA’s achievements have inspired students and innovators. In the decade following the 1961 launch of the Apollo program, the rate of doctoral degrees in physics conferred in the U.S. tripled. Even as late as 2009, 50% of high-profile scientists named the Apollo missions as a major reason they pursued science.

Elon Musk, one of the most gifted entrepreneurs of this century said, “Landing on the moon was probably the most inspiring thing in history. It certainly inspired me. I’m not sure SpaceX would exist if not for Apollo 11.”

Vivek Ranadivé, a tech entrepreneur and billionaire, decided he wanted to study in the U.S. after hearing the moon landing broadcast on a transistor radio in Bombay. He now owns the Sacramento Kings.

NASA’s future

​​In many ways, space is Trumpian. It’s full of superlative opportunities — the farthest flight, the most powerful engine, the biggest rocket, etc. Space also provides another frontier — a key ingredient in America’s manifest destiny ideology. Last December, Trump signed an executive order calling for the U.S. to return to the moon by 2028, and establish a permanent lunar base by 2030. (Prediction: Trump names a moon crater after himself.)

Future lunar missions depend on SpaceX’s Starship to transport astronauts to the moon. NASA’s reliance on SpaceX makes the American space program vulnerable to Elon Musk’s whims — but that’s a separate post.

Another motivating factor behind our return to the moon is that China is trying to beat us there. Since 2015, China has increased funding for its space program by over 1,000%, and its robotic space missions have already retrieved samples from the far side of the moon — a feat the U.S. has not achieved.

National treasure

When Americans were asked what our country’s greatest achievement of the 20th century was, the most common answer was our space program. That sentiment doesn’t seem to have faded. Today, nearly 70% of Americans say it is “essential” that the U.S. continue to be a leader in space exploration.

We may be more divided than ever, we may be at war, and the American brand may be tarnished — but the American spirit is alive and well in NASA. In fact, NASA might be the last bastion of American patriotism, and it is undoubtedly a timely reminder of human unity.

Children in Juárez, Mexico, watched the launch livestream of NASA’s Artemis II mission. Source: Jose Luis Gonzalez/Reuters

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Of Americans think they would lose in an unarmed fight with a rat

1. Markets in review: Trump, Iran, and the worst consumer sentiment on record

2. Is the $2 trillion tech sell-off a buying opportunity?

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US-Iran Talks End With No Deal

President Trump said that the U.S. Navy would begin blockading the Strait of Hormuz after peace talks fell through over the weekend. Oil prices spiked more than 8% and major indices fell more than 1% on Sunday night.

In a post on X, Iran’s lead negotiator cited lack of trust in the U.S. as a primary reason for the failure of the peace talks.

News about the conflict has changed quickly. Just last week, President Trump threatened to destroy Iranian civilization unless its leaders reopened the Strait of Hormuz. Hours later, he announced a two-week ceasefire, contingent on Iran reopening the strait.

In response, U.S. crude plunged 16% and the Dow had its best day in a year. But within 24 hours, the strait remained effectively closed, and the deal unraveled over a dispute about scope — specifically whether the ceasefire applied to Lebanon, where Israel had continued to strike Hezbollah. By the following day, stocks were retreating, and oil was climbing again.

Throughout this entire conflict, there’s been one consistent dynamic: Trump promises to end the war and the market rallies, only to fall when his promises don’t materialize.

In fact, since Trump took office last year, nine of the S&P 500’s 10 biggest gains have had to do with Iran or tariff relief. If one were able to perfectly time these nine occasions, they would have earned a 52% return compared with 12% for buying and holding an index fund throughout.

Last week ended with news that the Consumer Price Index, a key measure of inflation, rose 3.3% year over year in March — the largest increase since 2022. The increase was driven by a 12.5% year-over-year rise in energy prices.

Meanwhile, consumer sentiment has dropped to its lowest level ever. In other words, consumers feel worse about the economy now than they did during the depths of the Great Recession.

Josh Brown is the CEO and co-founder of Ritholtz Wealth Management

Paradoxically, the investor who looks least equipped to trade a market like this, the normal guy with a brokerage account, is actually in the best position. A professional hedge fund manager charging two and twenty has made an explicit promise to outperform the market for a significant fee. In normal times, that’s a hard promise to keep. In an environment where markets swing violently on a presidential tweet and reverse just as violently two hours later, it’s close to impossible.

Arguably, the market is less risky now than it was three months ago. I know that sounds insane, but valuations have compressed and earnings are growing across most S&P 500 sectors.

The war — whether it lasts three weeks or three years — will resolve itself. You can’t speed it up, and you can’t fully understand its depth or duration. But if you have earnings growth, which we do, and interest rates that aren’t rising, history says stocks resume their upward trend once the conflict ends.

Now step back and look at a global portfolio. On a rolling one-year basis, developed markets ex-US are up 46%, emerging markets up 55%, and the U.S. is up 27%. The U.S. underperformance reflects political instability and uncertainty around Trump.

But for investors with global portfolios, the answer to how you navigate an environment like this is: You already did.

”Two and Twenty”?

Two and twenty is the standard fee structure that hedge funds charge their clients. Two refers to a 2% annual fee on everything you invest, regardless of performance. Twenty refers to the 20% cut that hedge funds take of any profits above a certain benchmark.

Even if you had perfect insight into the geopolitical situation, it might not help you. Trump’s decision-making is genuinely opaque and erratic.

What does help, though, is access. In the prediction markets, three accounts made over $600,000 betting correctly on the ceasefire timing. These were the very same accounts that had already nailed the date and timing of the initial U.S. strikes on Iran.

SEC Enforcement Division Director Margaret Ryan was investigating this but abruptly resigned last month. Apparently she clashed with agency leaders over how to handle cases tied to President Trump and his family.

Markets function because participants believe prices reflect publicly available information. When that faith erodes, and when a generation of investors concludes the game is rigged, they leave. It happened after 2008, and the damage was lasting.

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Is the Tech Sell-Off Creating the Trade of the Year?

Since the start of the year, the Magnificent 7 have lost nearly $2 trillion in market cap. Goldman Sachs told investors in a note last week that this has been one ‌of the weakest periods of relative returns for technology over the past 50 years.

Globally, the technology sector now has a price-to-earnings ratio lower than that of the consumer staples and industrials sectors. Microsoft now trades at a lower forward price-to-earnings ratio than the broader S&P 500.

The tech sector has gotten hammered over fears that AI will disrupt traditional software workflows. Concerns over skyrocketing capex spending and broader macroeconomic uncertainty have pushed investors toward “safer” sectors like industrials, utilities, and materials.

However, earnings projections for the upcoming quarter paint the tech sector in a different light. According to Goldman Sachs, the market consensus is for IT earnings per share to grow by 44%, accounting for 87% of index earnings-per-share growth in the first quarter.

Investors are punishing Big Tech companies for overspending on capex, for plowing money into AI infrastructure with no clear path to profitability.

But here’s what doesn’t make sense: Anthropic and OpenAI are doing the exact same thing, just without the scrutiny. They’re spending enormous amounts with unit economics that don’t add up. If the market is punishing Microsoft for overspending, why aren’t OpenAI and Anthropic facing the same reckoning? Probably because they’re not public yet.

The market has been indiscriminately selling software for months — Salesforce, Microsoft, Palantir, CrowdStrike, Palo Alto. These are some of the best companies in the world, down anywhere from 25% to 50%. And yes, some face real AI disruption risk. But it’s gone too far.

The moment I decided to step in was when I saw a story claiming Anthropic was about to disrupt all of cybersecurity — that companies would rip out their Palo Alto infrastructure and just vibe-code something with Claude.

There’s no board of directors at any public company anywhere in the world that would sign off on that kind of cybersecurity plan. It’ll never happen.

I run a business. I’m a Salesforce customer. I’d love to cut that six-figure expense. But it’s a system of record. It’s the operating system of the firm. Any AI-driven alternative is going to cost money too — it’s not free just because it runs on AI.

The deeper story here is a revaluation that I flagged on February 9: The market has been overpaying for asset-light SaaS companies and underpaying for companies with real, heavy assets. Here’s what that correction looks like year to date — energy up 36%, materials up 10%, utilities up 9%, staples up 7%, industrials up 6%, real estate up 5%. Every one of those sectors owns things a chatbot cannot replace. Metal, steel, timber, bricks. That’s the adjustment we’re watching play out.

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Is NASA the Last Bastion of American Pride?

On Friday, four astronauts returned to Earth after venturing deeper into space than anyone has gone before. The mission, Artemis II, sent a rocket weighing 5.7 million pounds around the moon and back, setting the stage for a future lunar landing. This incredible feat is a timely reminder that American excellence still exists — if only under the NASA logo.

NASA is a point of national pride, a driver of technological progress, and a reason for top minds around the world to choose America. It is one of the most underrated brands in the world.

What unites humanity more than space exploration? Passion for sport? Love for our families? The list is short. A fifth of the world’s population — 650 million people — watched Neil Armstrong and Buzz Aldrin walk on the moon in 1969. Five decades later, Americans are still excited about it.

• In 2019, 45% of Americans said there hadn’t yet been any other national accomplishment that gave them as much pride in the U.S. as the moon landing.

The NASA website gets more site visits than The Economist, twice as many as SpaceX, and almost as many as Tesla. Of all traffic, less than half is from the U.S.

Today, NASA is the most popular federal institution, ahead of the U.S. Postal Service and the Department of Veteran Affairs. That is despite the fact that NASA is vastly less efficient than the privately run SpaceX. Over 118 space missions, NASA saw an average cost overrun of 90%. Over 16 missions, SpaceX saw an average cost overrun of 1.1%.

Yet, as recently as last week, 80% of Americans hold a favorable view of NASA. What other seemingly inefficient government agency do 80% of Americans like?

The NASA logo is so broadly admired that it has become a status symbol. Coach, Balenciaga, Kith, Estée Lauder, Nike, Adidas, and Vans have all collaborated with NASA or used its iconic red branding. Ariana Grande named a song after the agency, and NASA has been mentioned more than 230 times in rap lyrics since the 1990s. How many other icons can claim that kind of cachet?

ROI

NASA may look inefficient compared with SpaceX, but be clear: Its second-order effects on innovation and America’s reputation make it one of the most valuable U.S. assets. President George H.W. Bush reportedly called the Apollo program “the best return on investment since Leonardo da Vinci bought himself a sketchpad.”

For each dollar invested in the Apollo program, the U.S. got $7 back. Today, NASA creates more jobs per million dollars in budget than federal spending on defense, healthcare, or infrastructure.

It is also the launchpad for crucial American innovations. NASA calls the commercial products and services that have emerged from its research “spinoffs.” Most notably, NASA funding kick-started microchip and computer innovation in the 1960s. It is estimated that the Apollo program accelerated computer technology by 10 to 15 years.

Other spinoffs include products as impressive as precision GPS, solar panels, satellite TV, implantable heart monitors, and LASIK surgery, and as mundane as memory foam, golf ball dimples, and invisible braces.

Even more importantly, NASA’s achievements have inspired students and innovators. In the decade following the 1961 launch of the Apollo program, the rate of doctoral degrees in physics conferred in the U.S. tripled. Even as late as 2009, 50% of high-profile scientists named the Apollo missions as a major reason they pursued science.

Elon Musk, one of the most gifted entrepreneurs of this century said, “Landing on the moon was probably the most inspiring thing in history. It certainly inspired me. I’m not sure SpaceX would exist if not for Apollo 11.”

Vivek Ranadivé, a tech entrepreneur and billionaire, decided he wanted to study in the U.S. after hearing the moon landing broadcast on a transistor radio in Bombay. He now owns the Sacramento Kings.

NASA’s future

​​In many ways, space is Trumpian. It’s full of superlative opportunities — the farthest flight, the most powerful engine, the biggest rocket, etc. Space also provides another frontier — a key ingredient in America’s manifest destiny ideology. Last December, Trump signed an executive order calling for the U.S. to return to the moon by 2028, and establish a permanent lunar base by 2030. (Prediction: Trump names a moon crater after himself.)

Future lunar missions depend on SpaceX’s Starship to transport astronauts to the moon. NASA’s reliance on SpaceX makes the American space program vulnerable to Elon Musk’s whims — but that’s a separate post.

Another motivating factor behind our return to the moon is that China is trying to beat us there. Since 2015, China has increased funding for its space program by over 1,000%, and its robotic space missions have already retrieved samples from the far side of the moon — a feat the U.S. has not achieved.

National treasure

When Americans were asked what our country’s greatest achievement of the 20th century was, the most common answer was our space program. That sentiment doesn’t seem to have faded. Today, nearly 70% of Americans say it is “essential” that the U.S. continue to be a leader in space exploration.

We may be more divided than ever, we may be at war, and the American brand may be tarnished — but the American spirit is alive and well in NASA. In fact, NASA might be the last bastion of American patriotism, and it is undoubtedly a timely reminder of human unity.

Children in Juárez, Mexico, watched the launch livestream of NASA’s Artemis II mission. Source: Jose Luis Gonzalez/Reuters

Birth rates are falling across the developed world, but the usual explanations miss the point. In this Prof G+ exclusive video, Scott explains why the real drivers are economic: housing costs, stagnant wages, and fewer stable partnerships.

Instead of bonus reads this week, please enjoy a collection of the best X posts about Artemis II.

$23 million

That’s how much the toilet in NASA’s Artemis II spaceship cost to develop.

1. Is SpaceX really worth $2 trillion?

2. Nike’s struggle continues, and Allbirds is closing all its U.S. stores

3. The most underrated lesson from the OpenAI-TBPN deal

4. Newsletter Exclusive: Why is America turning away doctors when there’s about to be a shortage?

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SpaceX’s IPO Could Make Musk the World’s First Trillionaire

SpaceX has confidentially filed with the SEC for what could be the largest IPO ever. The company is targeting a $2 trillion valuation and could raise up to $75 billion in the offering, which could come as soon as June.

If the IPO prices are as expected, Elon Musk’s 40% stake in SpaceX, in addition to his other holdings, will make him the world’s first trillionaire.

SpaceX is by far the most dominant player in the largest ever addressable market: the cosmos. It controls two-thirds of the satellites orbiting Earth, accounted for 85% of all U.S. space launches last year, and operates at one-fifth the cost of its closest domestic competitor.

Some perspective: NASA’s Space Launch System rocket that jettisoned astronauts on a path around the moon last week has launched twice since its development in 2011; SpaceX’s Falcon 9 rocket has launched more than 640 times. The Falcon also cost half as much to develop.

SpaceX generated $8 billion in profits in 2025 off of roughly $16 billion in revenues, and analysts expect sales to increase 25% this year. A $2 trillion valuation would imply a 125x price-to-sales multiple.

SpaceX’s out-of-this world valuation sent ripple effects through the broader space economy. These only intensified when, on Thursday, the FT reported that Amazon is in advanced talks to acquire the satellite telecom group Globalstar for roughly $9 billion. Satellite services stocks Planet Lab, Viasat, EchoStar, and Rocket Lab closed the week up 29%, 22%, 18%, and 15%, respectively.

Is this an amazing company or is it ridiculously overvalued? The answer is yes.

This man of the people bullsh*t where Elon is reserving 30% of the shares for the retail investors? He’s doing that because retail investors are the only ones stupid enough to pay this price. Institutions weren’t going to cover the allotment here.

Research shows that IPOs that allocate directly to retail investors lose over 60% of their value, on average, within a year, underperforming their peers by about 20%. Why? They’re priced more aggressively, and retail trading platforms push shares and hype companies up, leading to big IPO spikes.

If this thing gets out anywhere near a $2 trillion valuation, you do not want to be in this stock three, six months out. Even Musk and his jazz hands can’t figure out a way to justify anything resembling this valuation.

This company bundles SpaceX, Starlink, xAI, and X. It’s very hard to understand what the right valuation is because there’s a lot of bullsh*t — but also a lot of substance.

That complexity is by design. Musk bundles enough ambitious far-horizon narratives such that investors cannot build a clean model and they just have to trust him. This valuation requires you to believe his whole pitch perfectly, across the longest possible timeline.

When Google went public, it was trading at 10x trailing revenue with revenue growth of 240%. SpaceX is going public at 125x trailing revenue, with revenue growth of 25%. So SpaceX’s revenue growth is almost 10 times lower than Google’s was, and yet its valuation is more than 10 times higher.

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Nike Lost Hundreds of Billions. Allbirds Lost Everything

Two sneaker brands at opposite ends of the market are both running into trouble.

Nike stock tumbled 16% last week after reporting earnings. Net income fell 35%, gross margins compressed on the back of tariff pressure in North America, and management warned that revenue will decline for the rest of the year. Sales in China, one of its most critical markets accounting for 15% of global revenue, will fall 20% next quarter alone.

Investors are disappointed, and so is Nike’s CEO, Elliott Hill. Brought back 18 months ago to turn Nike around, Hill told employees in an all-hands meeting he is “so tired of talking about fixing this business.”

He still has a long way to go. Nike is valued at 1.4x sales — roughly the multiple it was trading at in 2009. Its market cap has fallen from almost $300 billion in 2021 to $65 billion today; Nike is now worth a third of what discount retailer TJ Maxx is.

Meanwhile, Allbirds, the wool sneaker brand that went public in 2021 at a $4 billion valuation, sold off its remaining intellectual property last week for $39 million to a brand management firm. The buzzy company, whose shoes were once deemed part of the Silicon Valley uniform, never turned a profit.

Allbirds was always a bad business. The VC community embraced it, which should have been the tell. It had a fashionable product, expensive retail leases it could never sustain on unit economics, no wholesale infrastructure, and no brand loyalty. When the hype faded, there was nothing underneath it.

Nike is a completely different conversation. This is still one of the greatest consumer brands in the world. Whether you are watching football in Ghana or badminton in the U.K., that Swoosh means something.

Elliott Hill has only been back 18 months, and he should be given three years. But I think he’s got the wrong strategy. Something that Aswath Damodaran told me that always struck me is that we’re obsessed with youth, and growth companies never want to accept that they’re aging into mature companies.

Nike has not recognized that it’s a mature, low-growth company. It’s time to cut costs. For every dollar in expenses you cut, it has the same impact on the bottom line as $5 to $6 in incremental revenue.

Which do you think is easier right now? What investors need to hear is a margin story: flat revenues, costs cut 4% to 6% a year for three years, low-double-digit EBITDA growth. That almost certainly means 10,000 to 20,000 layoffs are coming, and an activist will show up and force this if leadership will not. This is a $70 to $80 stock — if there is an adult in the room.

One thing that has always struck me on Nike’s investor relations homepage is that the first thing you see is “Nike is a growth company” in huge letters. It’s been that way for years. That’s like their main pitch to investors: We’re a growth company. And, well, definitionally, you’re not because your revenue has fallen every quarter for more than a year.

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Can TBPN Make OpenAI Cool?

In its buzziest acquisition to date, OpenAI acquired tech-industry talk show TBPN last week. According to a source familiar with the transaction, the acquisition was valued at approximately $200 million.

Founded just 18 months ago by entrepreneurs John Coogan and Jordi Hays, TBPN has become a media staple for fans of the tech industry, and a platform for CEOs like Mark Zuckerberg, Satya Nadella, and Alex Karp.

The caliber of TBPN’s guests creates a flywheel effect: High-profile guests attract other high-profile guests, which attracts high-profile viewership.

This in turn attracts premium advertising dollars. With only 11 employees, TBPN generated $5 million in ad revenue in 2025 and was on track to exceed $30 million in 2026. They will no longer run ads, but as a house publication for OpenAI, they effectively become a marketing platform.

• TBPN’s revenue per employee, assuming $30 million in sales, is greater than Apple’s.

TBPN livestreams from YouTube and X for three hours a day, five days a week. Most episodes get between 4,000 and 10,000 live viewers. Most of its influence stems from clips on X. It’s both a reinforcement of X’s continued cultural gravitas and a reminder that clips are no longer just a marketing requirement. The clips are the content.

OpenAI’s decision to purchase a media company isn’t entirely surprising. There is a long history of tech companies buying or starting media firms as a marketing and customer acquisition strategy. Microsoft and NBC started MSNBC in 1996 to drive traffic to Microsoft’s internet portal, MSN. Bloomberg launched Bloomberg News to sell its terminals, and retail trading platform Robinhood acquired MarketSnacks and launched Sherwood News, a tech-focused media outlet.

OpenAI’s move follows an old strategy, but there is a new lesson we can learn from this deal.

Read the rest on Mia's Substack

America Is Running Out of Doctors. It’s Also Turning Them Away

The richest country on the planet has a problem: It’s running out of doctors.

More than 80% of U.S. counties are medical deserts, meaning areas with too few physicians to meet demand. By 2037, the U.S. will have a shortfall of 87,000 primary care providers. In other words, between 130 and 175 million Americans — almost half the country — could lack a primary care doctor.

But here’s the confusing part: We have no shortage of people who want to become doctors. Every year, medical schools turn away roughly 30,000 applicants, some exceptionally qualified.

• Last year, American medical schools rejected about 25% of applicants who scored in the top-10th percentile.

Today, the chance of a premed freshman becoming a doctor is just 6%.

First, Medical School

Before a medical student spends a dollar on tuition, they’ve already spent $7,400 on preparation and admission expenses. Most apply to 16 to 18 schools; some apply to as many as 30. Ambitious students have to, because the most competitive programs’ acceptance rates range from 2% to 10%. Some are even lower. Stanford admitted 1.0% of applicants. NYU? 0.5%.

After four grueling years of medical school, graduates have to apply for residency. Residency is a mandatory, post-graduate training period that lasts between three and seven years. During this period, they work 80-hour weeks and make, on average, $62,200.

The Residency Bottleneck

Over the past three decades, the federal government has increased the number of residency spots by only roughly 1%, while the U.S. population has increased nearly 30%.

Seventy percent of teaching hospitals fund their own residency slots, but they can’t keep up with demand — and disproportionately fund spots for lucrative specialities where they can recoup the cost through billing, not where the shortage is worst (primary care and rural medicine).

This has created a bottleneck where medical schools are reluctant to increase enrollment because there aren’t enough residency slots. It’s not a good look for very expensive schools to be graduating lots of unemployed MDs. The consequence is that they reject thousands of qualified applicants.

Shaheen Lakhan, M.D., Ph.D., explained that this residency gridlock is a policy choice, not an inevitability. “We have, in effect, added more cars to the on-ramp without building new lanes on the highway.”

It’s Expensive to Save Lives

The average medical school graduate has paid more than $370,000 for their undergraduate and doctoral degrees. More than 70% of graduates carry debt; the average owes $223,130. It takes most of them two decades to be debt-free.

On July 4, 2025, President Trump signed the “One, Big, Beautiful Bill Act” into law, enacting sweeping changes to federal loan programs that will impact who can afford to pursue medicine.

Starting July 1, 2026, professional degree students (including medical, dental, and law students) will be limited to borrowing $50,000 per year and $200,000 over a lifetime. Grad PLUS loans — which allow grad students to borrow up to the entire cost of attendance minus federal aid — will be eliminated entirely.

As a result, many students will be forced to bridge the gap with private loans, or not finish at all.

The Surplus That Never Materialized

How did we get here? It all started back in the 1980s, when people weren’t concerned about a shortage of doctors. In fact, they were concerned about a surplus. The Graduate Medical Education National Advisory Committee report projected in 1980 that the U.S. would have 70,000 more physicians than it needed by 1990.

Policymakers responded accordingly: Scholarships were scaled back, residency training requirements were tightened, and medical schools agreed to a voluntary moratorium on new institutions that lasted from 1980 to 2005.

The most consequential legislation came in 1997: Congress passed the Balanced Budget Act, which capped the number of residency slots that Medicare would fund, freezing support at 1996 levels.

The surplus never materialized. The models failed to account for demand driven by population growth, aging, and expanded insurance coverage. By 2005, the Association of American Medical Colleges had reversed course entirely, acknowledging that the U.S. was now in shortage territory.