Zitron: "Everyone Has Been Sold a Lie" on AI

Summary

Ed Zitron, CEO of EZ Primary Research, argues that the AI spending boom is a misallocation because cloud revenue growth at Microsoft, Google, and Amazon is driven largely by two unsustainable startups, OpenAI and Anthropic, creating a dangerous concentration risk. He warns that the buildout of AI datacenters is based on a lie of broad demand, and a cash crunch at those startups could trigger a reckoning for the hyperscaler stocks.

• Ed Zitron argues that the AI capex boom is a 'lie' because demand is concentrated in two unprofitable startups, OpenAI and Anthropic.
• UBS estimates OpenAI and Anthropic will account for 27% of Google Cloud revenue in 2025, rising to 48% in 2026.
• Without OpenAI, Microsoft's Intelligent Cloud growth would have been only 8% year-over-year.
• OpenAI lost $20.9 billion in 2025 and relies on continuous capital infusions; both startups cannot pay bills from existing cash flows.
• The hyperscalers (Microsoft, Google, Amazon) are becoming asset-heavy with datacenters for a narrow customer base, funded by their own balance sheets.
• Zitron sees OpenAI's delayed IPO to 2027 as a potential flashpoint, and any capital interruption could be lethal.
• He questions the ROI of AI spending and warns that the unsustainability could hammer the stocks that have rallied on AI hopes.