Posted by jatins 13 hours ago
Personally, I don't bet in rigged games, which is what all the circular financing is.
It's interesting how he has pivoted from denying that LLMs are useful to accusing frontier labs of Enron-scale fraud.
I suppose it's the natural pivot you have to make when your whole business is an anti-AI newsletter that costs $7 per month.
What event did people compare Enron to, before Enron became 'Enron'?
It's probable we're witnessing an entirely new fraud, we just don't have all of the details yet.
Suggesting that an entire industry is in cahoots to invent and participate in an entirely new fraud-like scheme, including companies that have lots of wealth and growth and much to lose from such an exposure...seems awfully conspiratorial, don't you think?
> If you are going to look at this and say “actually it didn’t” because of its Enrontastic accounting treatment, I also need to warn you — that identical guy in the bathroom is actually a thing called a “mirror,” a reflective surface that is showing you a reflection of you, not another person who is dressed like you and copies everything you do. I can’t imagine how scared you’ve been, and hope this has helped.
That’s his weird writing style, so I’m not 100% sure, but I don’t think he literally means that OpenAI is committing Enron style fraud. More of a stylistic way to say it’s a mess
>What follows may be an Enron-Lehman Brothers hybrid, one that leaves unbelievable destruction in its wake, an avoidable systemic risk empowered and enabled by a kneecapped media industry and sell-side analysts incapable of seeing further than two quarters in the future.
He also mocks the financial statements from the companies in a way that alludes to them being fraudulent (from the OP):
> February 2025: Anthropic making $34.5B in revenue 2027 is "is laughable on many levels, chief of which is that OpenAI, which made around twice as much revenue as Anthropic did in 2024, barely made a billion dollars from API calls in the same year."
Wrong (whether or not they make that in 2027, their 2026 ARR greatly exceeding that makes the 2027 estimate non-laughable)
Wrong (2025 goal exceeded, 2029 TBD but not an egregious financial crime level of implausible)
You're right that he doesn't explicitly say enron-scale fraud, that's just what I came away with from reading the article a while back.
I look at the rapid rise and decline of OpenClaw and get the impression AI has not really found any foothold among average people.
August 2024: "generative AI is a dead-end technology that has peaked”
July 2024: "Generative AI models aren’t getting more energy-efficient, nor are they getting more “powerful” in a way that would increase their functionality"
Nov 2025: "the fact we're running out of high quality training data and we're hitting the walls of scaling laws, in the training paradigm, these models aren't getting better. What we're seeing today is pretty much what they're always gonna be like"
There are other examples too from his prose of talking about how they are barely useful but I don't want to dig it up
He does say that pretty often in interviews. That doesn’t change his thesis but that‘s one reasonable reason people dismiss him, he has often said that AI is useless when considering the externalities. And he will sometimes take a shortcut and just say „it’s useless, doesn’t do anything well“, which is of course way too simplified.
Was this hit piece prompted by Zitron being mentioned in the tech scene lately?
https://lwn.net/Articles/1091245/
I don't know. If you post walls of text and ramble on like Luu, perhaps you are sitting in a glass house?
It is ironic that Zitron is accused of having a cult following whereas Luu clearly has one, here at least.
Zitron is saying that the hyperscalers had no genuine growth opportunities, so they're using the AI bubble to achieve growth. The fact that they've continued to grow for a few years doesn't contradict his point, and Meta's steadily decreasing profit margin certainly doesn't look healthy.
The current AI build and boom has done wonders to their bottom lines in the immediate, but even Wall Street has its limits, and it sounds like there’s decreasing appetite for such CAPEX builds without associated proven revenue. That might kill some companies outright, but more likely it’ll force the major CSPs into the churn cycle that much faster.
Shouldn't society have a clever name for people playing these roles by now? Something catchy, insulting and based on truth might help call this out easier. I would throw influencers in there too, they are writing/video-loggin/podcasting for the same money outcome.
Luu also fixates on Zitron mentioning Prabhakar Raghavan, but then proceeds to agree with Zitron's core point that Google has intentionally degraded it's search product to maximize revenue. Maybe Raghavan is not solely responsible, but it seems fair to hold him accountable for trends that accelerated under his leadership.
Also, Google's recent profits are boosted from including SpaceX. $94.18 billion.
https://finance.yahoo.com/markets/stocks/articles/google-par...: On Aug. 6, Alphabet filed its 13F with regulators covering its second-quarter trading activity. Given that SpaceX went public on June 12, Google's parent company is now required to include its SpaceX holdings in its quarterly 13F.
- Hyperscalers like Goog, Meta, Msft invest cash in Anthropic, OpenAI, in exchange for equity
- The ongoing investment actually boosts the valuations in the Anthr/OpenAI (new raises are done at higher valuations), so the valuation of the Hyperscaler's existing investments in Anthr/OpenAI increases, which gets recorded as Other Income in quarterly earnings
- Much of that invested cash will itself come back (circularly) to the hyperscalers as revenue since Anthropic and OpenAI spend a lot of money via datacenters etc.
On Other Income phenomenon, see for example, https://www.ft.com/content/be97df0a-76b1-4cb0-9ba4-d1117d8d1...
Also, there's apparently lots of off-balance sheet debt. For example https://www.ft.com/content/a0a07cce-6d19-4b1e-a73b-9855a06ba...
when those valuation gains are in turn the result of circular financing schemes (a bakery giving out money so that people buy bread from it), we're getting to a dangerous situation
Whether it matters we don’t know yet, but it’s a fact worth noting. A better article might have tried to argue why it doesn’t matter
https://www.acadian-asset.com/investment-insights/owenomics/...
Yes the investments do increase GAAP, but these are seperate line items from revenue which is what is listed in the article.
Alphabet is the biggest winner in this department, it's investments gain/losses for the same period as in the article was:
2023: -$1.45B
2024: +$2.24B
2025: +$24.90B
Yes thats a lot, but compared to it's seperate revenue growth of nearly $100B in the same period, it's not that much.