You know what I thought about doing, Scott?
I thought about going down to the courtroom when I was in San Francisco because I had some free time and just sitting and waving at him. Hey girls, what up?
Let's get to the news. The FCC, this story, Scott, has ordered Disney to file early renewal applications for its ABC-owned broadcast licenses. These are affiliates in different cities, years ahead of the normal schedule. The commission is citing an ongoing investigation into Disney's DEI practices as justification. More notably, it comes days after Trump and Melania renewed a push to take Jimmy Kimmel off the air after he made a joke about Melania being an expectant widow. Disney is pushing back hard. The new CEO is not having it, and he's being supported by a range of companies and everything else. This is a step too far for our good friend Brent Carr. I'm calling him Brent. He's just such a nakedly political person, although I wouldn't want to say him naked, a political person who is just carrying water for the Trumps. Melania doing this was, you know, fascinating.
But, you know, Kimmel's just emboldened and has put out a series of things, and no one is putting up with this, and they're going to lose. The FCC is going to lose in court. But what a harassment of an American company, a classic American company. What do you think about this?
Well, I actually saw Kimmel's response. I mean, the reality is late night TV is dying without the help of...
And in a weird way, it kind of helps. I think Jimmy Kimmel, all the late night people are extraordinarily talented. That is to be quick on your feet, hardworking, come up with new material every night. They're extraordinarily talented people, all of them across the whole spectrum, right? And I'm actually trying to get Jimmy Kimmel to come be the interview for our Propy Markets Live in Los Angeles. Anyways, Jimmy, call me. So I think it'd be very interesting to have him talk about it. I don't think Jimmy should have... I watched it where he addressed it and said, 'Of course.' I think he should just double down and say, 'I stand by everything I said.'
It's humor. He hasn't... ensuing skits are very funny.
He did. He's done a series.
Okay, this is what's going on here. Fascism. So, who said they're poisoning the blood of our country? Oh, that was Trump.
Who described political opponents as vermin?
Yeah, they... Oh, come on.
Who told the squad to go back to where they come from? Who said that Adam Schiff was guilty of a crime that is punishable by death? That's treason. The dehumanization, the delegitimization, the exclusion, the criminalization, the existential threat framing. No individual in public office has done more of this in the world than Donald Trump.
Can I interject? One of the things that's incredible is that these are the free speech warriors, right? And I'm like, where are all those folk? Where's the folk at the free press? Where's the folk? Where's Elon?
Comedy's illegal. Remember that one. Comedy should be legal again.
Where's Elon? I know he's busy in court losing his mind, but...
Which isn't a very far stop. But at the same time, former FBI director James Comey has been indicted yet again for making a threat against President Trump by photographing seashells on the beach that said, I think it's 86, 46, 47, whatever, whichever president he is. It was funny and he was just doing it. And by the way, a lot of the right had done it to Biden, like 86, whatever number he is, 46.
I was a waiter. 86 men were out of pumpkin soup. We would write... we had a chalkboard that said claims it's a mob kill.
He claims it's a mob kill name because he lives in the 70s of New York, you know, but this is like his approval ratings are underwater. It doesn't work because everyone's heard him talk. And then the culture wars turning up the volume seems like, hey dude, that was last year or two years ago that worked and doesn't work anymore because I think everyone's... I mean, Disney's pushing back. This is just like an astonishing array of... What I'm more interested in is like Brent and this guy who's running the DOJ. I thought Pam Bondi was bad, but Todd Blanche is competing for suckiest sucker. A suckocrat, if you will. The enablers of this guy that go for it are really quite astonishing to me. Even...
Yeah. But aren't we just disappointed? I think we always blame our political leaders and he is the culprit here. But I'm shocked there isn't more pushback. I just... people seem to be...
I think we've become complacent. I think we've taken a lot of our norms and our rights for granted and that people... I think people are complacent and I'd like to think that the midterms will show maybe that they're not.
Yeah. Well, maybe the voting rights... people maybe errantly assume that things will revert back to normal at some point and...
Oh, I don't think they're complacent. There's been a lot of pushback to the Kimmel stuff and the Comey stuff. I just think people are like, you know, enough of this. Why is he taking up so much of our brain oxygen on this nonsense? I think people are...
It's working. I think it's sent a chill across all of cable TV.
I don't think so. You look how Disney has reacted. They're like, 'No way.' Before it was a little bit...
I know firsthand from a bunch of producers that the legal cost in the review of stuff has gone way up. And anything that feels on the edge, they say, 'Can we say something else or can we lighten the language?' I think this intimidation and this chill is working.
Well, I don't know. I don't think it is. I don't think it's going to work and I don't think it works. And you know these people like... Let me just tell you, Brent, when you leave office, which you will at some point, I'm going to follow you everywhere. Everywhere you try to get a job, I'm going to bring up all your terrible things. I'm going to make sure people know what you did. I'm going to make sure people understand who Brent is because there's nothing we can do about Trump at this point. I was just thinking that he is in our head so much we have to like remove him from our head, but it doesn't mean ignoring him. It means removing... we get so sucked into their ridiculous comical, toxically comical drama. It's got to be time to say, 'You're in our rearview mirror, old man. Old cankle, you know, man of cognitive questionability,' and move him along, you know, just move him along.
You brought up an interesting thing, and that is the media just doesn't know how to cover Trump. Showing up dressed to the nines to have him say he's illegitimate in a windowless ballroom. Okay. Clearly, the media does not know how to deal with this guy. The idea I like...
The idea I like is newspapers and cable news companies all do the following. Instead of having four or five stories in a narrative about what he's done and interviewing people about how ridiculous it is, I think they should have a two-minute segment and one page on the back page that are the following. This is what Trump said today. And just really quickly outline it. Today he accused... he brought up, he said this about this person. He said these people are animals. He said the shell thing and just do it really quickly. This is what Trump said today. And sequester it and you can get it all in one place because what happens now is 22 of the 27 minutes, or I'm sorry, 18 of the 24 minutes, whatever the actual content load is on TV is different stories that involve him. I agree. And he is like a Star Wars character or a villain, a Marvel comics character. He gains power from conflict. And from controversy. And what I'm saying is I think they should do the news and they should just take everything Trump and go, he said this, this, this and this today. We'll see you tomorrow night.
Yeah. They make segments about it. Yeah, they do. We got to like... as Jennifer Welch calls him, ring fence it.
Ring fence him and be like he...
I was, you know what I did when I was coming back from San Francisco? I walked into a store and I bought an actual book and I was like, that's enough. I was like, I'm going to read a book, not participate in the social media around him. I mean, sometimes it's fun and I really have to say Jimmy Kimmel's actually doing a great job about... he said he's finally brought Melania and Trump together. He's using it as content, which he should do. But in a lot of ways just laughing at this poor obese old man is, I think, the way to go here. Mock him relentlessly on all manner of things. And then it's not ignoring it because I think that's a mistake. There's a lot of people telling me I'm just not reading it at all, which could come off as I'm not engaged. But...
You know how on page three of the Sun they used to have a naked hot woman? Yeah. Page three of every newspaper. This is the... Trump said. This is what Trump said today. Just list it all 10 minutes every night. National news cover the news. Try not talk about what's going on in Iran. Da da da. And then...
This is what Trump said today.
And that just go through it all because he is totally dominating the news cycle. He gets energy from conflict. People see it as authentic and leadership. And he like...
There's so many idiot characters like that smug piece and that smug deflection of Pete Hegseth is smirky. Like literally that's his like hearings. He's so smirky and stupid. It's really kind of like I don't like these characters anymore.
Representative Molton was good. Representative... there was some really good... I'm actually... I feel bad. I'm actually consistently impressed with some of our elected representatives. Oh, I meant to tell you before I forgot. I went and did something you would love. Have you heard of...
It's this advanced preventive healthcare concept from the founders of Spotify. No.
So, I just want to disclose. I got no compensation for this. This is not... It's going to sound like an ad.
You go into this place and they basically take your blood, put all sorts of cuffs on you for blood pressure and measurement. They have all these lasers and scans and then they take you go into this tube and they take 2400 pictures of you. Okay, but here's the thing. It's amazing. And then they do it all immediately. Give you, put you in a room with a doctor and they go through everything visually in a very user-friendly way. It was like something out of the movie Gattaca. And I thought, okay, how much... I said, I need to pay because I don't want to be seen as... I don't like the whole influencer thing. I'm like, I need to pay. I have the money.
Do you know how much it was?
Oh. Oh, they... Oh, in...
I thought it was going to be 3,000 pounds.
And you get a baseline of all your good cholesterols, your bad cholesterols, your circulatory health, everything about it did change my behavior. You know, I have one of these ridiculously expensive concierge things. This thing and there was a line out the door to get into.
That's a great... This is what they do in Korea for everybody. Everybody gets these tests once a year. And it's the guys from Spotify and they're... I'm such a huge... They're trying to democratize advanced preventive medicine. It's called Neco.
And you get a baseline that I mean... they did this thing with 2400 pictures of, you know, basically you're naked to look at. I'm very fair and I'm prone to skin cancers. And they said, 'All right, you have 2200 marks. All of them are fine except for these 12, 300 lb.' Anyways, I was blown away. We should have filmed at this thing. And also, you and I have discovered by watching your show and going to Neco.
I try to run once or twice a week and I was always... I rode crew and one time I was in very good cardiovascular health. I push myself running. That's just the way I run. And I time myself and I try and lower my times and I row and I try and get my...
100%. I just figured that out. They're like, 'No, what's it called? Zone two or level two where you supposedly can have a conversation but you can't sing.'
So last night I ran, slowly jogged for 40 minutes and that's supposed to be the way to do it. But anyways, and unfortunately they say the same thing to me. I'm like, how do I change my diet? And Dr. Pramla, and I asked her if I could use her name. She said the same thing. They're like, well, they're all so polite. They're like, you may want to consider drinking a little bit less.
Yes. I think you may want to do that. I think you may want to...
You may want to consider drinking a little less. This is so great. By the way, this week's episode is about loneliness and connection. You'll like it. All right. Now, we got to get to a rundown of latest big tech earnings are all over the place, which some are calling AI's moment of reckoning. First up, Alphabet. The company reported a 22% surge in first quarter revenue with sales reaching around 110 billion. What a number. Net income was up 81% compared to the same period a year ago. Shares for Alphabet are up 15% year-to-date at the time of this taping. Microsoft, the company, beat expectations with revenues increasing 18% year-over-year for the quarter. Capital spending for the company will reach 190 billion this year, a 61% increase over 2025. Amazon beat expectations, expanding revenue in its cloud computing segment by 28% year-over-year. The company announced it expects to spend 200 billion on AI in 2026. And finally, Meta reported lower than expected capex, missed on user growth, which is interesting. This is the first time, which attributed in part to internet disruptions in Iran. They're blaming Iran. I don't think so. Daily active people was down over 5% over the fourth quarter. In better news, revenue climbed 33% from a year earlier, making it the fastest growing quarter since 2021. So what jumps out at you about these four companies besides their enormous spending on AI obviously, but what jumps out?
AI. I used to say this, the attention economy. It's now the ketamine economy where it's dissociated from everything else but AI. And I said yesterday on Propy Markets that I thought these guys were going to blow away their expectations because what do they monetize? They monetize spending around AI. And up until today, or until AI came on, the driver was they monetized attention with everything that's going on in the world. Are you less or more glued to your phone? I can't stop looking at my phone like, okay, who did we bomb today or what? So let's just go through the earnings which were nothing short of staggering. Alphabet's revenues were up 22% to 110 billion. They beat consensus. Their consensus was 263. They came in at 511. And although some of that was an unnatural equity gain, Google Cloud hit 20 billion, up 63% with their backlog doubling. Search revenue 460 billion. Jesus Christ, their backlog's a half a trillion dollars. Search revenue, which was supposedly going away because of OpenAI, was up 19%. Gemini paid monthly active users is up 40% quarter on quarter.
Gemini is doing well, I would say. But go ahead.
Full-year capex guidance went up. The investors don't like that because as strong as their topline is, everyone's saying we need to spend more money. Their stock was up 8% in after hours. Let's talk about Microsoft. Azure grew faster than anyone expected. But they had to boost their capex guidance, which investors don't like. Revenue up 18% to $83 billion. They also beat consensus wildly. Azure grew 40%. The AI business crossed 37 billion annual run rate. That's up 123% year-on-year. Their commercial backlog is up to 2/3 of a trillion, 627. Their Q1 capex was 32 billion, but it's been raised. Their full-year capex, they've raised 190 billion, well above the 155 they'd expected. OpenAI committed an additional quarter of a trillion dollars in Azure spend the day before the print, but the stock was down 2%. Meta... Jesus Christ, Kara. Meta revenue was up 33% to $56 billion.
Efficiencies of AI. This is...
Earnings of $10.44. Although a bunch of it was a tax benefit. Ad impressions were up 19% and their average price per ad was up 12%. Q2 revenue guided to 60 billion which implies 25% growth. Full-year capex again, this is what investors don't like. They raised to 135 billion from 120 and then also higher component prices and the stock fell 9% after hours. Last one, Amazon. Fastest growth in 15 quarters, but free cash flow collapsed because of their capex. Again, good. What the analysts love, they're blowing away their top line. What the analysts hate is they're all saying we need to spend more money. Revenue was up 17%. EPS blew away but unfortunately that was because of a recognition of a gain in Anthropic stock from their investment there. AWS hit 38 billion up 28%. Advertising grew 24%. Q1 capex again, what the analysts don't like, went from 44 billion... I'm sorry, capex 44 billion, full year at 200 billion. Free cash flow fell, see above, they're increasing their capex. OpenAI recently committed to consume two gigawatts of Tranium capacity through AWS. So all of a sudden they're getting into the chip game and the stock rose 3% after hours. It is literally... I sit in a lot of... What does this say to you?
Oh my gosh. AI beating the world.
It is living up to its expectations, but the capex required to live up to those expectations, to deliver against the demand is basically taking all the juice out of the earnings. The capex requirement to live up to the demand, the infrastructure buildout.
So when does that stop? It's sort of like having a hot spouse that requires a lot of money for you to stay.
Yeah. Trust me, I know that feeling. What does it require?
What does it require for that to not...
Must work hard. That's what I would say to myself. Must work harder.
Well, they're doing that.
Must work harder. What does it require?
When is the spending going to stop? Well, when a big customer announces they're reducing their spend on AI or one of these companies announces... OpenAI basically said that they kind of [__] the bed, that their numbers didn't meet expectations, but the bigger guys, these players are all just on fire. I don't see...
Can I note the OpenAI thing you just referenced? There are internal concerns about the company's spending plans and its user revenue targets. According to the Wall Street Journal, OpenAI missed internal goal of reaching 1 billion weekly active ChatGPT users by the end of 2025, has seen subscriber defections. I think that's all due to you. The company is also denying there's a rift between Sam Altman and CFO Sarah Friar over computing resources and they're of course approaching their IPO although we'll get to their trial with Elon, which is also another distraction. But they're seeing a lot of bumps as they go into it. So, is there like a reckoning moment or what? How do you look at it? Just one big customer.
By the way, I started on my next book. That's the name of it. The Reckoning.
Oh, The Reckoning. Oh, didn't I use the word reckoning? I feel like I inspired that. You liked when I said reckoning last week.
If the book works, if it's a bestseller, it was your idea.
I think there's a reckoning coming in America and I think there's a reckoning coming in the markets. But keep in mind that this AI is now sucking so much oxygen out of the room. I sit in a lot of VC pitches. If you're not an AI company, you can't raise money right now. I mean, it is very difficult. And by the way, I'm on the board of an AI company that's growing 4x a year. And they're like, that's not enough. Unless you're growing 10x a year as an AI company that's purely software. This company called Rogo that is a great little company that is basically AI for financial institutions. They just closed a round at $2 billion, right? No, it's nuts. On, I think it's trading at 100 times revenues or something insane and they're going to get... they raised $100 million. You literally, if you are not an AI right now and growing, you know, five, seven, 10x a year, you can't raise money. And this is... in my opinion it's a kind of... all of the GDP growth is coming from the capex and AI. All of the earnings growth, 77% of the earnings growth is coming from the MAG 10, right? We are becoming... said this before, yeah, the price of gas... America is a giant bet on AI and people are wondering... and breakfast with a big tech CEO today, they kept... people are really... how is the S&P hitting all-time highs with such geopolitical uncertainty and oil at 110 bucks a barrel? And the reality is America is now a giant bet on AI. And in a weird way, the war in Iran kind of helps these guys. First off, none of these guys are affected by high oil prices. They were all at the White House this week with King Charles. Every one of them was there. Again, by the way, all of them. And then, by the way, the high oil prices, that money, the additional cost circulates within our economy. It hurts consumers. But Chevron and Halliburton are making a ton of money, right? So, it's oil moguls and tech moguls. We're a net... That's right. We're a net exporter. And there's a very unhealthy thing... And I'm writing a thing called the ketamine economy. And that is... ketamine supposedly is... dissociate and you can see your issues and your addictions and your problems and forgive yourself and have a better handle on stuff. And people say it's a world breakthrough. The most dangerous thing I think about the world we live in in America right now is that if you live in America and you're in the 0.1%, you are not invested in the well-being of America. Why? Do you care about infrastructure? You don't care about TSA. You don't care about airports. You go to Teterboro and you're flying your own plane. Do you care about the fact that 40% of third graders can't read? No. You have your own private schools where they spend $75,000 per student. Do you care about policing and safety? No. You live in a doorman building in a neighborhood that is so overpoliced and has so many cameras. You're just fine. Do you care about the health of America? No. You have concierge medical services that give you everything you need. The wealth... the people who control our government or have a disproportionate influence have totally disassociated from America's interests. And even more frightening is that America, you could argue, has disassociated from the global interest. Do we care about high oil prices? Not really. Do we care about HIV infections in Zambia? Not really. We have two oceans protecting us from chaos, disease. You could argue eventually it hits our shores, but right now the markets...
No, the market... the rich people. I get it. It's a Pierre Doesn't Care economy. Do you know the book Pierre Doesn't Care? I don't care. It's a wonderful children's thing where he eventually gets eaten by a lion because he doesn't care. He always says I don't care. But that's what they're like. It's a Pierre Doesn't Care group of people.
We have to figure out economic policies that give the wealthiest people in our nation a vested interest in the success of America.
Yes. The people... I'm telling you there's an anger. You can feel it. It's palpable that they do not hear.
Hope so. They have gone from... they have literally gone from heroes to villains. And let me say I get it everywhere I go. Everywhere from... and it's not, you know, like oh it's the people, you know, the working class. It's everybody who's not like them and it is angry. It is deeply and profoundly angry. And even more so than at Trump, they sort of have it all figured in. He's a terrible person or if they don't like him. And even there was just a really interesting story about all the people that voted for him are like we're very disappointed and we now regret our vote which is sort of like okay or fine whatever. But there is a growing anger that I think they do not understand of them being villains and they're behaving like villains.
We have to move on but we'll see where this goes because if they're the only ones that benefit and all the other companies don't, there isn't, as you say, a reckoning. It's a great word. It actually is from the Middle English. I'll just read this to you from narration account, settling accounts, and it's about the act of calculating, estimating or settling accounts, often carrying a connotation of judgment, retribution or facing consequences. Reckoning.
Yeah, it's the act of settling accounts and consequences.
That's right. Scott's going to have to give you a reckoning. Anyway, let's take a quick break. Speaking of reckoning, when we come back, Elon takes the stand. Support for this podcast and the following message is brought to you by E*TRADE from Morgan Stanley. Now that E*TRADE is part of Morgan Stanley, there's even more to love. Get the freedom to invest on your own with $0 commissions on stocks, options, ETFs, and mutual funds, plus account types for every investor. And when you're ready, speak with a pro to help guide you on your financial journey. Discover more ways to make the most of your money and get up to $1,000 when you open a brokerage account with a qualifying deposit today. Learn more at etrade.com/offer. Terms and fees apply. Investing involves risks. Morgan Stanley Smith Barney LLC, member SIPC. E*TRADE is a business of Morgan Stanley.
Scott, we're back. Elon Musk took the stand this week in a trial against OpenAI. Let's go through some of the things he said. He was a quote fool to provide OpenAI's early funding. He discussed his concerns about AI and not wanting to have a Terminator outcome. He accused OpenAI's lawyer of trying to trick him. When asked why he brought the suit, Elon said it's not okay to steal a charity, warning if he loses it, it would give license to looting every charity in America. By the way, Elon is not charitable at all in any way, FYI. The judge pushed back, reminding juries that Elon's claims and his opinions have no legal value whatsoever. As I predicted, a number of prospective jurors had thoughts about Elon, with some calling him a greedy, racist, homophobic piece of garbage and a world-class jerk in questionnaires. I think this has not been good for Elon. One of the things that Ellie said is they're not used to being... when he gave us that video last week was that they're not used to being challenged publicly and he is losing his brain on... he looks terrible and he needs to control himself, which he, speaking of ketamine, he cannot, he has no ability to do so. I'm going to be fair to him. He was the first person who did talk about this Terminator outcome 15 years ago to me or something, maybe 10. And he was the first person to be very worried about it. He shifted...
Becoming less worried over the various interviews. At first it was Terminator, then you were a house cat, and then we were like ants that are just going to get covered by a highway, which isn't mean or anything. But one of the things I would say is he started off that way, and then he immediately lost his mind because he tipped out of OpenAI because he thought they couldn't make it. And these emails talk about that, and he signed away his rights. He did give them 38 million, not 100 as he's claimed in other depositions. So he keeps changing the number, which isn't good when you're under oath. But one of the things that is very clear here is that he shifted to being a greedy hypocrite and started his own company that includes non-consensual sexual images and child pornography. So it's not like he's here to save us, and he's trying to put himself off as someone who's worried about AI and is fully participating in the damage it does. Your thoughts?
So what I have heard how this went down, and very broad-brush actions that kind of give a sense of what went down here, and tell me if you've heard different, is that Sam actually tried to raise $500 million when it was a nonprofit for the nonprofit and was unable to do that. Elon showed up and said this needs to be a for-profit company and I need to control it and own 80% of it.
