You sound smarter when you catastrophize. It sounds scarier and more interesting. And you put some bar charts around you talking about the zombie apocalypse in a downward spiral doom loop.
Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
Why don't you give us an update because February is coming to an end. You've had over 20 million views across social media and over 1.5 million site visits. Obviously has a lot of momentum. People mention it to me all the time. Your website touts $242 million loss in market cap. Talk a little bit about how it's gone because we have something to announce. But first, give me a little update and then you can do the big announcement.
Yeah, look, the honest truth is I'm struggling because it's taken a lot of time and a lot of effort and it feels as if the momentum is actually cumulative and building. And I've had a lot of different kind of smaller, I don't know, resistance programs reach out and say, what are we going to do in March? Should March be, should we met March where we focus on one company or focus on OpenAI? Should it right so and how do we keep it going because it does feel like it's building momentum and to just shut it down at the end of the month feels like a loss of effort and momentum. So, I'm quite frankly, Kara, and I want your advice. I'm trying to figure out what to do with it going into March.
Well, as I said, first of all, let me, well, before I say what we're going to do in March, is I think you should hire someone specifically, not part of your team, but hire someone to really keep it going. And someone who wears Birkenstocks, lives in Brooklyn, a lesbian, someone with rich parents putting them through nonprofit. Whatever it takes, Scott, whatever it takes, but I think it's important to have someone at Do you drive a Subaru?
No, my son does. Um, so your son would be great at this. What's Louis doing?
He's in San Francisco working for Oh, perfect. No, you're not. No, I don't know if you've heard, but I pay really well.
I know. Well, we have a lot of dick jokes, but I compensate 50 to 100% of market. True story. The dick jokes and the compensation.
Wants to help. You know who you want is Alex, but he wouldn't do it. Alex is so like he would engineer this out of Michigan. He's taking like organic chemistry and computer science. He's working for and working out and like lifting lifting buildings. And this the title that he has for this summer where he's working his advanced manufacturing product integration engineering intern.
That rolls right off the tongue.
Can he just say pole dancer?
Pole dancer. Advanced manufacturing product integration engineering intern. That is what my second son is doing. Did I tell you when I was on the college tour with my son Alec, the first thing, literally the first thing, the first impression we got of Michigan was Alex's fraternity and we were both like just scared.
Scared as he's leaving the floors were sticky.
Sticky. I lived in a fraternity and I don't, I don't, it like brought back, I'm like, was it this bad?
Yes. And it smells like beer. Old beer.
Oh yeah. A beer. Deer and semen. Um, yeah, I know. But yeah, it just uh Yeah. Yeah. He's he's going to live in an apartment for his senior year. But so he's leaving the frat finally. And my little boy is Yeah. And the house was clearly built like 200 years ago. He looked like Gulliver roaming around.
Yeah. Yeah. You want to go back? I feel like you want to go back for a party. But speaking of, I'm in.
Okay. All right. I'm definitely that pathetic guy that shows up at the fraternity party when he's invited.
Yes. No. That's so sad. Um, that there was there was a shot there was a Seth Rogen movie like that. Anyway, listen, we are going back to the Midwest. Let me just say this is not ending. I think you should hire someone. I think you should keep going. But we are going back to the Midwest. We're not going to Ann Arbor, but we um uh Scott and I are coming to Minneapolis. We talked about it on the show and then we made it so along with our great team here. And you can see us live. We're going to celebrate, resist, and unsubscribe and keep the momentum going. We're going to do a live show at the Is it the Pantages Theater?
Pantages. I've been Pantages Theater on Sunday, March 8th. We will be there.
I want to meet Rhoda from Mary Tyler Moore. That's why I'm going. That's And you know what? I hope she's wearing a raspberry beret. Get it? Get it, Kara. Little local. Little local humor there.
Talk about the tickets. They're not available yet, right?
They go on sale. I think by the time this airs, they're on sale. Yeah, we're going to be donating all proceeds to the Minneapolis Immigration Center, I believe it's called.
But we want to do something. Well, a very supportive and we've decided I won't say we wait. I've decided I want a fra I want my efforts off the keyboard and off my to be a fraction of the virtue signaling and action I claim I claim to, you know, want to have. And so I pitched you on this idea and we thought, let's go to Minneapolis. We want to bring some economic activity. We want to salute them. We want to basically say over and over that they with the wrong cowboy when they came to Minneapolis. It's going to be a nice event. You, of course, are totally wellconed. We're going to have a bunch of fun and famous surprise guests.
And we're going to do we're going to do a live show and basically nod to the to the incredible Americans known as Minneapolis.
We love the Minneapolis. And the the if you jump straight to the website the the you can find a link to buy them when the tickets are available. We think they're going to be available on Friday uh at resistandunsubscribe.com. We've got a thousand tickets. Uh again, the money goes straight to charity. We will do we're going to run this show on Pivot too. So we'll talk about some current events, but we're going to focus on what's happening here with Resistant Unsubscribe. And we know we have a lot of fans there and we love Minneapolis. We love what the city has done and we want to give back in some way. And this is one of the many ways because what happened to you was heinous and at the same time tech companies have a lot to do with this like let's be clear. Um and so we really what Scott is doing here is giving you guys have resisted and we are going to do our little part and it's a little part compared to what Minneapolis has done. But tech is not not it's not the only reason obviously but it's played a part in where we are today. And so um we're going to resist and unsubscribe and everyone's going to unsubscribe. Speaking of unsubscribed, Scott, I unsubscribed from One Medical, which is an Amazon uh product. Um, did you have the 99 a year or 199 a year?
I a little bit. Yeah, absolutely. And I love I love the service. I just hadn't used it in several years.
Yeah, I I I use it when I get like an ear in every time I get an ear infection or something like that or clean out my ears or a cold or a flu.
That's a little too much information. Tell us about the ear cleaning.
Tell us about the ear. wax in my ears and so I've unsubscribed our entire family from it could be less attractive to a heterosexual.
Um anyway I'm I'm doing just fine by the way. Anyway, we've got a lot to get to today but March 8th Minneapolis tickets will be on sale soon. Please come. Um and we're super excited to see you. We've got a lot to get to today. So we're going to dig in. First, President Trump delivered the longest State of the Union ever on Tuesday, 1 hour and 48 minutes, where he of course said Americans were telling him, "We're winning too much." Uh, did you watch Scott thoughts?
It was on too late. I watched I did what I did with almost all media broadcast on traditional cable. And as I watched it in bits and pieces on, you know, TikTok and reels the next day, I felt like for Republicans, I felt as if they were attending their ex-wife's wedding when you're still on her health insurance and but he but she controls the military. It felt like dear leader in the Duma where they thought I better stand and applaud or I risk execution.
So, I found it I don't know. I I quite frankly I thought it was a bit of a nothing burger. He didn't he didn't say a hell of a lot. I thought he came across as quite robust to be fair.
He came across as robust, but he moved very quickly by the end into very deflated. Like it was really, if you watch the whole thing, he started off real like energetic and then he got mean. He was normalish for him and that's a that's a very low bar, but he as you as the night progressed, he got super mean calling the Democrats crazy. And then that idiot in the back, JD Vance, was like like he looked like such a dope. He has he has no right being to be president. Sorry, I'm going to He's just such a dope. Um the Supreme Court went and stonyfaced and every time Trump did something like the Democrats are crazy. The Republicans, as you said, jumped up like a bunch of like like dancing monkeys essentially. The Supreme Court sat down, the military looked straight ahead, which was really interesting. And of course, the Democrats sat down and they wanted the Democrat to have photos of the Democrats not agreeing with immigrants shouldn't kill American citizens. They wanted photos like that. I thought it was mendacious and if you look at any of the lie stuff, there's a lot of it. I thought it was it veered into cruel as usual. And then the worst part was it was dull. It was actually dull. And that's to me the worst part. And of course the numbers show much less people watch it. 28 million versus 36. It's like um doesn't have any staying power and he denied Americans were suffering. That's one of the things which I thought was a mistake. So I thought from a political standpoint, is it Abby Spanberger? Is that her name?
Yeah, Abigail Spanberger.
Uh Abigail, governor of Virginia. I thought her rebuttal was outstanding. And I I came up with an idea. I want to pitch you and I'm serious now. And I actually called one of our favorite senators and I said, "I have an idea. Uh, I think they should hire, if you think about essentially the Democratic response should turn into what the halftime show is to the Super Bowl. And that is a halftime show had almost no relevance 40 years ago. Now it's bigger than the Super Bowl. I said, "Hire Jay-Z's Roc Nation." Oh, fill a stadium with 10,000 rabid Democrats. Yeah. And then you get all excited. Music, cool, cool intro. amazing artists, uh, graphics, visuals, great lighting, because the problem is the followup, whether it's Marco Rubio responding, the response always comes across as flat because it lacks the sex and the majesty of the jazzed up. I agree. The lighting wasn't good. Let's sex it the up because if you listen to what she said, if you read her response, yeah, it was good. It was outstanding. The lighting was bad. This the setting was bad. It's just they can't compare. It's like going from the Greek theater to you're, you know, you're watching something on laser disc. Yeah. It reminds me of you, I think you'll appreciate this. myself for thinking that, but I'm like, the lighting's bad and the setting is bad. It's um away and it was too close. When I was renovating a house in the Hamptons, let's bring this back to me. Um, I used to go to the 7-Eleven and a bunch of guys uh uh would roll up and I'd say, "Okay, I need some guys to do stunt studing or something like this in my general contract. I would just sit in the passenger seat with a bunch of cash." And I had no less than 12 or 15 workers at any time at my house doing And at night I'd roll in and they'd all be in the kitchen with a VCR and a big like four pizzas and like 24 um it was either a Modelo or something else and they'd have this bad black and white TV and all these guys would just be sitting around watching porn. Oh yeah. And I remember thinking this is odd. This is odd. Story is odd. But go ahead. This is odd. No, that's it. That's the whole story. Okay. Okay. That's the whole story. Don't do that. Democrats do not have Modelo pizzas in Pol. I had a This is what a douchebag I was. I had a sand beach volleyball court. Okay. Okay. You're losing the resistance. Optimized for the ladies. All right. Okay. Let's move. You have progressed to a better person and now you're a lesbian going to Minneapolis. I'd like you to wear Birkenstocks, by the way. I think that would be great. Anyway, it was a nothing burger and he looked mean and I I thought he got he real got and and started doing the blah at the he didn't say anything and he didn't outline he teased tax cuts which I was interesting to see. Okay. He didn't talk about AI much. She didn't do anything forward. He didn't really He didn't really talk about Iran much. He didn't The show is The show is winding down. That's what I thought. It reminded me at the end of The Apprentice. It wound down. It suddenly wasn't interesting. It was mendacious and cruel, but that that's sort of table stakes with him. Dull is what I thought. Hi everyone. Scott and I just recorded earlier today, but I'm jumping on because a major story just broke. After a long battle, Paramount has won the Warner Brothers Discovery Bidding War. or at least for now. Netflix has released a statement saying the deal is quote no longer financially attractive. It never was. And it was quote always nice to have at the right price, not a mustave at any price. Paramount had upped its offer to buy all of the company for $31 a share and added all kinds of bells and whistles. And Warner determined the offer was superior to Netflix because it was actually. So I'm joined now by Puck's Bill Cohan to break this all down. Bill, we you and I have been texting about this for a long time. You thought it would be quick and Paramount would get away. I said this was going to go on on and on and it has. It's really been like since December I think we've been whenever it sort of broke but talk a little bit about your overarching things and we'll talk about a few other things.
Oh look, I think this Kara is the outcome that had to happen. You know, whereas Netflix was saying it was nice to have at the right price, it was getting to be nosebleed territory. Paramount, this is existential. I mean, without this, they're just like an 11 billion company, which once upon a time would be nothing to sneeze at. But now was a pipsqueak in this landscape. If if they hadn't done this, then their their original premise for the Paramount deal wouldn't have made much sense, and their equity wouldn't do anything. So, this was kind of existential for them. They had to pay up. They had to win. And kudos to David Zaslav for running one of the best M&A processes I've seen in a long time. people who forget. Um, yesterday was I had tweeted that Netflix had to walk away from this because it was just ridiculous. It was an insane price and Warner was at uh was at $10 a share recently and it popped to 31. Was there $21 of of excellence that had been created? Not at all. From nothing, right? It's like whipped cream or something.
Well, it it it actually got as low as $7 a share. And remember, right, I do remember um I was recommending people, you know, buy at that price, but cuz I thought they would pay down the debt and make something of it. But, you know, he's, you know, ever since September 11th when Paramount first began to hint that it was interested in buying this and it offered $19 a share, uh, we've gone from 7 to 31 and and it's, uh, and what not not because the companies have, uh, performed, uh, particularly that much better. I mean, they've performed fine and and Warner Brothers had some hit movies, but it's just because of the scarcity value. The fact that he ran an Zaslav ran an incredible auction process, kept them on both sides on their toes the whole way. And uh especially this last bit of uh of of jiu-jitsu was just beautiful to watch.
Yeah. Yeah. I I said he won the Jeff Bewkes award for turning chicken into chicken salad and feeding it to a Nepo billionaire. like that's, you know, Jeff Bewkes was the last guy at uh Warner Brothers to, you know, make a fortune selling the company to AT&T and now Zaz has done it again, been sold again. So, let's break it apart a little bit because one of the things that had begun to dawn on me and you and I I always thought Netflix was the better owner in terms of taking these assets and doing something significant with them. I felt like the purchase the Paramount is not as good going to be as good as owner. still too small. Instead of a leaking lumbering media ship, it's a bigger leap, you know, lumbering ship. I don't see how they're going to just cuz they're slightly larger, be that much better unless they are run by someone who's more experienced. It's like I think David Ellison should get out of the way and you know I know they have Jeff Shell very talented George Cheeks many others but they really they they don't have the executive fortitude I think to do much with this and Netflix later can come swooping in and take off parts. How do you look at it?
Look, I know they're very excited over at Paramount about winning. I know they're very excited about their business plan and what they think they're going to do with this. You know, they're going to have to combine CBS and CNN. I can only imagine what the feelings are over there. Uh yeah, probably not great. Uh you know, there's a lot of bloat probably on the CNN side that's going to once again come under the come under the axe. Um you know, as we've discussed many times, G, I think that, you know, David Ellison has blundered a few times already out of the gate. U Sheridan losing that. you know, that was a big big loss, you know, bigger than the CBS disasters, which are not nothing either. Uh, you know, overpaying for, you know, UFC or whatever it is. I mean, uh, you know, so I think there's, you know, they've got a lot to prove is, but nevertheless, uh, they've got a lot to prove, but they also had, this was existential for them. They had to, they had to win. And for Larry Ellison, I mean, if if it weren't for Larry Ellison, we wouldn't be here. We wouldn't be talking about this. We wouldn't have this discussion. They would never have been taken seriously. They never could have done the deal. So, it's Larry's unbelievable amount of equity that that he's willing to step up. is something like $45 billion of equity, 25 billion from Middle Eastern private uh sovereign wealth funds and the rest from Larry and and you know Jerry Cardell at Redbird Capital uh with most of it coming from Larry. I mean this is an unbelievable amount of equity, an unbelievable amount of debt. It's probably going to be like the largest LBO kind of in history except they're not taking the company private. uh there, you know, was remaining.
Let me ask you in that regard, you know, would you compare it to what Elon did at Twitter like that? I don't know. Someone was like, well, can't they do what Elon did, meaning the the bankers sort of gave up and he managed to get his money back cuz he squeezed it into a different company. I don't think they have that choice here. This is they're just have the media company. Correct. Hey, well, you know, if they want to create P AI and create a AI company and have everybody go crazy for it and then have the AI company buy the media company and then, you know, merge it with SpaceX. Okay. I mean, you can do you want to go do all those crazy things. Maybe they can uh uh pass it off onto somebody else. Maybe Elon will buy it. You know, Elon could buy it out of petty cash. He could. He could. Why did Larry Ellison do this? because he seems to me he's a smart customer about a lot of things. This seems like buying a yacht or something. Well, he has a yacht. What am I talking about? But you know what I mean? It seems so unlike him. Perhaps he's old. Perhaps he wants to leave a legacy for his son who likes to make movies. What What is Cuz from a financial point of view, this is not a Larry Ellison move to me in my mind.
No, this is you know they're going to have 70 plus billion of debt here. Kara, it's a lot of debt. you know, maybe they have 11 or 12 billion of cash flow. Maybe um it's a lot of debt. Uh they're going to have to make a lot of cuts. Uh they, you know, they believe they're going to delever quickly. You know, every buyer, every buyer who puts together a leverage company thinks they're going to delever quickly. Uh sometimes they do, sometimes they don't. Maybe Netflix will get another chance at this when the thing flounders. But why did Larry do this? I think it's edible. I mean, I think he wanted to do this for his son and he started down the path to do it. It, you know, it went it went from 19 was their first bid to 31. Uh, I think he felt like, you know, this ego was involved if he didn't do it that that, you know, he'd have egg on his face kind of thing. And he's got now Trump expecting him to, you know, change the dynamic of the two companies in terms of the politics. And so, I think he felt like he had to do it. once he'd started it and you know he basically caved and gave Zaz everything he wanted every little which is so unlike Larry Ellison I was like sort of like what a chump I never called Larry Ellison a chump before but I feel chump that that Zaslav ran circles around them completely got into deal heat and gave Zaslav everything he wanted I mean they're happy over there I know cuz they're like they're like you know they're pumping fists but honestly I was like oh dear oh oh dear that's what I there's going to be a hangover for this there's definitely So, two more questions. You mentioned Trump. One of the things that everyone's worried about, of course, is Larry Ellison owning TikTok. He does. And Oracle owns 15% of TikTok, which isn't a huge amount. It's it's a significant amount, but it's not the most amount. Um, and owning CBS, which I think was a falling knife. So, I'm not really clear why everyone's they're obsessed with it because it's a good story, but it's not a I would say, you know, we just did an analysis of Pivot and we have more people in the demo advertising than see, you know, all of these companies do, all these cable companies. So, it's not that it's the news organization and CNN has been declining. Like, let's be clear, like the numbers have been declining. All of cable has, not just CNN. Um, what do you think it's a political thing or or what? Or or and also lastly, Trump's running out of time, right? Trump is absolutely running out of time. So, look at address the political issue. And then secondly, the regulatory issue could still get very ugly with Democrats attacking this if they get back in the in control of the legislature. Correct. Presumably.
Well, let's take the regulatory uh you know, first they uh made a big deal of them getting through Hart Scott Rodino that which meant that there there wasn't going to be a deep dive into this by the DOJ. Although they could still come back and take another look at this now that it's a kind of a different deal, a new deal. They could. They probably won't, but they could. They got the EU. They were definitely working the EU. You know, David and Jerry Cardell were over there working the EU. They think they're in good shape with the EU. So they think between uh the DOJ, the EU, and Trump being on their side because he's going to you know give them the political uh you know format that he wants and be supportive of him which you know whatever. Uh it's ridiculous if you ask me but um um you know that they they think they've got the regulatory situation in hand. Um, you know, politicians make a lot of noise about these mergers, but they have no say in the approval of them. Um, so even if the Democrats take the House in uh uh uh you know, November, I'm not sure what what this you know, this is going to be this could very well be over by then. You know, they put in the so-called ticking fee. if it's not over by the end of September, which is obviously before the elections, they're going to owe uh uh Warner Brothers shareholders another 50 cents a share or $650 million. So, um they think the impetus is to do something quick to get it quickly done. They some things they can't control, but I mean, uh they obviously are very con they're highly confident, Kara, they're going to get this through the regulators and uh you know, they'll give Trump what he wants. And I'm not sure the Democrats, even if they take the House, can do anything about what CBS and CNN broadcast at all. It's up to the FCC and that's still in Trump's pocket. And, you know, Trump blithering away, you know, asking for them to give him favors and get rid of Jake Tapper or whoever they want, whoever he's mad at might be part of it. When you think about where Netflix goes from here, I think it was the smartest move. The stock is going to soar. They have plenty of money to do things. They're so innovative. They're such great operators, right? They're sort of It's not a bad thing. They could do a distribution deal for some of this content and then later just wait until the knife falls, right? Presumably, what would you do if you were I thought this is exactly what he was going to do? Right. And this is what I wrote that exactly he should do yesterday and then I don't know whether he reads it or listens to me or whatever, but he he did exactly the right thing. Um he he he looks smart. Stock is going to move up after moving down like 30%. He takes this $2.8 billion breakup fee and uh builds out his new movie studio in New Jersey and gets content deals and you know looks smart and disciplined and that's what investors like. Looks like the good guy. He does. He looks like the He looks like the good guy and he can move on from this. It was going to be a headache for him if he got this. Sometimes the smartest thing you can do in a deal Kara is to walk away and he did the smartest thing. So he's going to get plaudits all around. He, you know, he could read the tea leaves. He wasn't, it was going to be a regulatory nightmare for him to get this through. Trump was not going to make it easy for him. He already bloviated about firing Susan Rice and Ted didn't do it. And so, you know, who knows what was going to be in store for Ted, but uh he he did the smart thing here. So, very last question. When you think about what happens next for for consolidation, this is it's obviously Comcast has got to be like going what do we do? Disney's got to go, what do we do? Netflix now looks like it's willing to play at least because it wasn't an acquire very much like Apple but it is they're very opportunistic now um and in good now they've had this they've never done this before now they know right they've done they've worked on a big deal what do you see next if you could make a prediction well I mean it's it's quite you know a lot of people have been thinking that um Comcast would you know uh spin-off NBCU and maybe you know Netflix and NBCU get together. Um, but you know, I don't really think Netflix needs to do any of that. You know, now they got a little taste of it. Maybe they thought, well, they walked around the, you know, the Warner Brothers lot. That was kind of fun. And now I guess maybe they could walk around the Universal lot. They're building their own lot. I'm not sure they need to do it, but if they want to do it, I think there would be opportunities. You know, there's Amazon Prime. There's uh I'm not going to do anything with Disney, I don't think. But NBCU, there are some smaller studios they could, you know, get their hands on. They, you know, AMC and things like that. I I I don't really see that they have to. I think Ted sort of had fun here. He showed his medal. He showed he can be a dealmaker. He got a merger agreement. Uh and he showed himself to be disciplined. And he comes out is he's the big winner in all this. And him and Zaz, of course, right? Absolutely. Zaz is the $600 million winner. I swear this guy this guy Mr. Discovery. Yeah. Mr. Mr. Diner. He ran the M&A deal of the century. I I got to give it to him. I got to give it to him. I always run him down when I see him. I joke with him. I say he looks like a lesbian. But he I have to say he he did a great job here for his shareholders, right? For the I mean literally seven. Amazing amazing deal. And good luck Ellison's good luck on catching the car. Good luck. We'll wait for the sequel. All right. The other winner here um is you. You've done an amazing job in covering this and I like debating with you and uh it's really helpful because it's smart and it's clear and uh and you're you're non-romantic about any of this. Anyway, uh I appreciate it. Go to Puck to check out Bill Cohan's reporting and we'll take a quick break and Scott and I will be back with Nvidia's earnings.
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Scott, we're back with more news. Nvidia reported better than expected fourth quarter earnings with a profit hitting 120 billion. Only a handful theirs was revenue. Only a handful of other companies including Alphabet, Microsoft, and Apple have made over hundred billion in profit in a in a year. Uh net income for the company doubled to $43 billion. Revenue in the data center business rose 75%. um uh talk about that because Wall Street was also rattled this week by a viral memo from market an analysis firm Citrini Research very good research group the memo laid out a scenario where the AI systems trigger mass white collar layoffs push unemployment above 10% and ultimately lead to a stock market crashi said the post was designed to prepare investors for potential uh left tailed risks as AI makes the economy increasingly weird stressing that it's a scenario not a prediction even so the S&P drops up 1% on Monday, though some of it was over concerns about tariffs. But companies specifically named in the memo included Uber, Door Dash, American Express, IBM, all saw steep declines. Um, it was an interesting memo, a thought, it was a thought experience, and the markets were already rattled by Blue Owl Capital, a major private credit lender, announced its halting of quarterly redemption for one of its funds and selling uh $1.4 billion in loan ads as the company's stock fell. We'll get to that in a second. And I'll talk a little bit about more but stick with the first the first with with the Citrini and um and the Nvidia earns.
Well, I'll talk about Nvidia before I talk about Citrini. Revenue uh 68 billion versus 66 expected up 73% year-on-year up 20% quarter-on-quarter. Non-GAAP earnings buck 62 versus A$153 up 82% year-on-year. Data center revenue 62 billion up 75% year-on-year. The gross margins 75%. Yeah, their fiscal 2026 revenues margins were crazy. 216 billion up 65%. I think that's that may be more revenue than like every streaming media company and movie studio combined. Yeah. Since the launch of ChatGPT, Nvidia has grown its data center business roughly 13-fold. And this quarter marked the best revenue growth rate of the entire fiscal year. So, it's revenue growth on the law of big numbers. It seems to be more like network effects. It keeps getting better at scaling. Q4 73% year-on-year growth. Beat Q3 at 62, Q2 at 56, and Q1. As they get bigger, they're growing faster. They're literally defying, you know, gravity. Uh, notably they're leaving out China from its future guidance. According to the CFO, while small amounts of H200 products for China based customers were approved by the US government, we have yet to generate any revenue, and we do not know whether any imports will be allowed into China. China was previously 20 almost a quarter of Nvidia's data center revenue, but that's now gone. It doesn't seem to have hurt them. And the thing is, it's still not expensive. It trades at roughly 24 times forward earnings, which is only slightly higher than the S&P. So you have a company that's the most do arguably the most dominant company in history at at that moment is trading what the S&P is trading at and because of the fears around AI and maybe because of the stock acceleration it's only up it's basically flat it's up 4% this year that and then you have all these companies announcing they're spending 2/3 or 3/4 of a trillion dollars on capex this year and most of it's or a lot of it is going to Nvidia Alphabet is flat Amazon's down 7% year-to date. Meta is flat. Microsoft is down 15% year to date. But big tech is getting punished uh for spending money and Nvidia is getting punished uh for collecting it or Nvidia's on the right side of that capex. So, one of those one of those must be wrong. Either these companies are making good investments um or I guess maybe the thesis is they're overspending and it'll slow down. Yeah. Should we talk about Citrini? Yeah, Citrini was interesting. I I you know, there was the other one a couple weeks ago that was another thing like everything's going to change. That one Schumer, Matt Schumer, whatever his name is. Um there's been a couple of these that have actually had real impact um as they've been written. So because they're thought experiments in many ways, um but
They're interesting, but go ahead, Satrini.
Well, essentially, I would describe it as an A+ creative writing project from a super bright high school student. And it is really — it's written in the past tense. It says, 'Okay, this is how we hit this massive recession and the market lost a third of its value.' And I think it's a really interesting thought experiment. What they're essentially saying is that AI is going to create this negative feedback loop where it makes white collar workers so much more productive so quickly that companies can do layoffs and hire fewer workers, which results in an unemployment spike, less consumer spending, and because companies fall under revenue pressure, they're forced to cut costs. And how do they cut costs? More AI. And it creates this downward doom loop. Now, you could make the same argument for any technology, right? At one point, 90% of us were working in agriculture. Now it's less than 2%. But that happened over 200 years. These guys are saying this is going to happen over 24 months.
And what's happened is it's really cut. Obviously, we talked about last week, it's gone after the SaaS companies, the software companies who they believe you'll be able to replace Adobe, Figma, or Salesforce just with thoughtful internal prompts.
And it's really well written and it's got great branding. They coined the term ghost GDP, and that is economic output can grow while the benefits of that growth never actually reach most people. And then the other surprising victims here — and this will come back to my prediction — is a lot of publicly traded PE or private credit companies, whether it's Apollo or TPG or Blackstone, have been — their stocks are down 20, 30% because they own a lot of software companies. And there's a fear that as private credit lenders, basically they act like banks to companies who are non-traditional borrowers, that a lot of those companies might not be able to make good on the money they borrowed.
Let me just throw in some stats. You're talking about Blue Owl, which is a major private credit lender. The company's stock fell 10% on the news last week because of these sell-offs. Shares are at a 52-week low. The sell-off then rippled across the whole private credit sector, which probably wasn't fair. Apollo, Ares, Blackstone, and others sliding. Blue Owl said it is not halting investor liquidity. It's accelerating the return of capital. I love how they do that. Mohamed El-Erian, former CEO of Pimco, suggested this could be a canary in a coal mine moment, comparing it to the early warning signs for the 2008 financial crisis. So this is all linked together. This idea of worry for all of these things, especially private credit lenders. Some are not as concerned, some are more concerned. We've got a lot of letters from people saying what should they be concerned of and what's going on here. But they are, as you're noting, they're linked. Correct. All this is linked to this spending, this massive spending by the tech companies.
The way I would try and describe the dynamic here, and to understand if you're at risk and where you want to think about investing your own human capital, your own financial capital, is the following. My mom used to run the secretarial pool at Southwestern University School of Law in downtown Los Angeles, where I actually worked in the mail room in high school. And she oversaw 20 secretaries who would write up the exams and the legal research of all the professors. That's gone. Word processing has taken that away. At the same time, my mom then became an executive assistant because she has good EQ and she's smart and reliable and can write well. If you look at truckers, AI will be a substitute for truckers. Truck drivers via autonomous are in real trouble. At the same time, accountants — you're going to see a lot of their rote accounting work go away, but there are now more accountants than ever because they move upstream into things like tax, wealth planning, and estate planning.
So the question is, which presumably AI will eventually be able to help you with that. I don't have to. I call my accountant my amazing all the time for little and big things, right? So presumably at some day I won't be talking to anybody but... Yeah, I don't... It seems very artisanal on my part. It seems like a lot of work by Caros. It's like pumping gas. I kind of like...
That's the right example. I use a lot of lawyers. Right. I used to send every agreement I did — you know, advertising contract, whatever it was, an employment contract — I sent to our lawyers. They charge me $1,000, $2,000, $3,000 to have an associate review it. Now I say to our chief growth officer, 'No, use AI, review it, and you do it. I trust you more than with AI. You're smart as a low-level lawyer.' At the same time, I'm spending dramatically more on a very talented lawyer at a firm that's actually called Citroen, on this incredibly smart woman named Lucy Lee who figures out everything from immigration to tax strategies to my estate plan because that [__] is complicated.
Because you want her to be using AI on your behalf, right? Because presumably she's also...
Yeah. But she can call me and say, 'Scott, have you thought about turning this company into an S-corp?' So you can in five years qualify for 1202. She's incredibly strategic and smart and charges 1,500 bucks an hour. So the bottom line is, wherever you are in the world, do you have an opportunity to use AI to go upstream, or is AI basically going to take everything you're doing and you have nowhere to go upstream? But the story of technology disruption is the same, and I don't think it's any different here, in that it will take out the boring rote work, and you either take that additional margin and go upstream and invent new jobs, new higher-paying jobs, or you get outsourced. The V here, or the correction, might be more severe, and America is bad at taking care of those people. Again, we spend 0.2% on retraining. Denmark spends 2% of GDP on retraining.
We don't do it well when we try to do it. It doesn't quite work right.
But look at what we're in the business of. I would have thought — so for example, I've been writing books, and I thought in my latest book, I'm starting my newest book, I thought, oh, AI is going to play a huge role. It plays a role in research, in improving, and in fact...
But the writing is still... Yeah, I agree. You know, I've been trying to make it — this fetch is not happening for me on AI and writing. It's not. It just isn't.
But even look at our business. I would have thought, okay, AI can produce the scripts. AI could edit...
Edit, and it doesn't. We're hiring — I know you are at Profit Media — we're hiring more people. So I don't... And we use AI. What we might do, we might launch two podcasts instead of one because AI will help us produce more, produce more data sets that we can talk about.
We've got to figure out — one of the things I was talking about this morning — we've got to figure out how to make fetch happen with it, right? And that's sort of a slower process, as you know. One of the things someone was like, 'Oh, is it all going to be over?' I'm like, imagine in 2000 I went to see a Hollywood executive, big name, and when the thing crash happened, he goes, 'I'm glad that's over.' And I'm like, 'What? You have no idea what's coming, right?' So I think we're in the... It doesn't mean that all of them are going to survive, but several will. And it is a significant change. And the question is, was it fair for Apollo to get dragged down in this Blue Owl thing? Probably not. But that's how Wall Street reacts. So you may see an enormous decline in Nvidia or any of these tech companies, but are they really going away? Is this really going to decimate them? What it's going to do is have every company refigure where this cost structure is. That's what it's doing. You're going, 'Do I need all these lower-level lawyers?' And that is a significant problem. And one of the things that it creates is if we throw all these people out of work, they're going to be mad. And there's all kinds of social issues there and political issues. And the question is, what do we do about it? And that's hard because we've tried retraining and it hasn't — listen, it hasn't always worked. Then we spent a lot of money on retraining. It can get sucked up into political [__], which is, 'Let's give everybody jobs.' Then other times it works, like during the Depression. We have wonderful things that they did during — high-speed rail up and down the West and Eastern seaboard. There's a lot of infrastructure. But both Andrew Ross Sorkin and Josh Brown, who I've had on Profit Markets a lot, said something that really impacted the way I process and how I approach markets, and it's the following, and they're right: the optimists have beaten the [__] out of the pessimists. So the key question you've got to ask yourself in something like this with respect to the markets is ask yourself...
Because there's a temptation by academics and thought leaders to catastrophize because you sound too...
Well, you sound smarter when you catastrophize.
It sounds scarier and more interesting, and you put some bar charts around you talking about the zombie apocalypse and a downward spiral doom loop. Well, okay, the doom loop around moving from agricultural to manufacturing to service — it wasn't a doom loop. It was a job creator. So let's talk about what could go right here. And this is from a guy named — I think his name is Ze Mashowitz — in open quote: 'Actually, the scenario does involve massive job creation. Starting a new business, creating a new product, or providing a service is now a turnkey thing you can launch with an agent. All sorts of barriers and costs involved are gone. Marketing costs drop almost to zero because their agent finds you. Logistic costs are almost zero. Transaction costs are almost zero. Wages for anyone you hire are down and their productivity is way up. The cost of living is weighed down, which creates more margin, more opportunities for new businesses.' When I got out of business school in 1992, there were two people that started a business, and the other was my business partner. There was only two of us. Now, I would bet a third of the grads from Stern are going to try and start some sort of AI company.
Same with the media people. Same thing with the media people. I started off having to work for a big firm. I don't need to. Anyway, we have to move on. But it's a really — we should keep this discussion going because it's very important because I think you're right. It's easy to catastrophize, and you should be thinking about those things. It's just a question of what's the other side of that? Where are the opportunities? Just like we were talking about Netflix. We do have to go, though. We're going to go to a quick break. When we come back, we have to talk about Pete Hegseth threatening Anthropic. We'll do that briefly. And also, of course, the Epstein files.
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Scott, we're back. Anthropic has rejected the Pentagon's demands for unfettered access to Claude, as we thought they might. Defense Secretary Pete Hegseth had given the company a deadline to roll back certain safeguards or risk losing a $200 million Pentagon contract. Anthropic CEO Dario Amodei said in a blog post that the quote, 'threats do not change our position,' and that the company quote, 'cannot in good conscience accede to the request.' Good for you, Dario. Not to a [__]. On the other hand, the AI company that's been all about safety is dropping his core safety pledge too. It announced this week that it won't stop training potentially dangerous AI models if a competitor releases something terrible or more advanced. They're doing other things, but they say the move reflects the speed of AI progress and the lack of federal regulation, not of political pressure. Thoughts?
The best performing organization in history is the US military. At close second is the US corporation. It's created more wealth in the last — in the last 17 years, US corporations have created more shareholder value than all of Europe since probably the '60s. Well, one company, Nvidia, is worth more than every publicly traded company in Germany and Spain. Now, why is that? One, we have incredible research universities. We have a very risk-aggressive culture. And we have the deepest pools of capital in the world. We have $5 million per startup versus 1 million per startup in Europe. And why do we have such deep pools of capital? Because when people invest here, they know the rules that that company will have to play by. And when governments start interfering and picking winners and losers and saying, 'Oh, the rules have changed,' you're going to have an absence or a flight of capital, which by the way has happened. And this [__] sclerotic blood sugar level socialism where the government is deciding who should get to acquire Warner Brothers or that we should own a share, a golden share in a steel company or which microchip companies the government's going to invest in because a failed casino owner and talk show or reality show host seems to believe he understands business better than the private sector. And we are already — this isn't a theoretical lesson in why I hate Trump reflecting my biases. This has already happened. They point to year over the last year the S&P is up 14%, but it's not on a dollar-adjusted basis. The dollar has weakened so much it's more up mid-single digits. And by the way, every single...
Is up more, as you noted.
Every single major market from South Korea to Germany to the FTSE to the Kospi in South Korea has massively outperformed the S&P. And one of the reasons is when you now invest in a US company, there's unnecessary risk from the government if, for whatever reason, the Pentagon decides that we don't like you. And guess what? Anduril and Palantir are working very closely with the government to help them track down spies, to maybe even track down immigrants using social media. A lot of people would say that's a violation of privacy rights. A lot of people don't want to work for a weapons company. Well, guess what? I love your saying. You don't like Chick-fil-A. You don't have to eat at Chick-fil-A. Maybe you don't work there. Maybe you don't invest there. But guess what? They get to do what they want. Regulated competition.
And you get to decide what business you're in or not in. Just as Anthropic might decide that we are not comfortable working and providing data and computing power to help surveil US citizens. They get to make that decision.
That's right. And they get to make — by the way, I think they'll do better. Like everyone's like, 'Oh, they're going to get like blacklisted.' I'm like, 'I think this is good for them.'
It might be good branding.
