On OpenAI's IPO delay: This is good and bad simultaneously.
Good: their current IPO timeline is far too compressed and they're racing to do so much in a short period of time, it buys them time to try and improve financials - valuation, profitability, etc - before finally releasing their S-1.
Bad: they need the money now because of the cash they're burning and IPOs are the final frontier for a company with OpenAI’s valuation to do that, their financials weren't good + attracts more public scrutiny from investors (they can hide a little longer), SpaceX's IPO may have sucked the oxygen (liquidity) out of the markets for now, hence Google frontrunning them with the $85bn equity raise. Also Anthropic have better numbers + a non-zero chance of reaching profitability, even if it’s small.
Sarah Friar was ultimately right with wanting to float OpenAI in 2027, but she can’t walk back that “looking for a government backstop” comment back in Nov ‘25.
As SpaceX lockup periods expire, SpaceX price could collapse. That will make an OpenAI IPO less attractive, because investors will see what happened to SpaceX stock post-IPO and wonder if the same could happen to OpenAI.
The Chinese models stop improving if they can’t distill the frontier labs, no? Very amusing - frontier labs stole knowledge - Chinese labs cribbed from what they stole - frontier labs can’t charge as much as it costs to maintain the theft algorithm, collapse? - Chinese models can’t distill anymore.
On device small models or some such survives. People in Memphis stop having to breathe nasty data center air.
QUOTE:The company's VP of vehicle hardware engineering, Charles Poon said that leaders overlooked the deep experience of veterans who survived many product cycles. Poon admitted that simply replacing them with AI was a huge mistake, and that while AI is "a fantastic tool," it remains "only as good as the information you use to train it."
END QUOTE
QUOTE:
Ford's realization that AI cannot magically design and test quality vehicles without senior human oversight is just the tip of the iceberg. When Careerminds looked at companies that conducted AI-driven layoffs, researchers found out that 35.6% of those companies had to rehire more than half of the employees they previously fired. Another 32.7% had to rehire between 25% and 50% of them.
In 2024, Sebastian Siemiatkowski, CEO of Klarna, proudly announced that its new chatbot was doing the work of 700 full-time customer service agents. As a result, the fintech company froze hiring and cut hundreds of positions. But by mid 2025, and into 2026, Klarna was scrambling to recruit human agents again because customer satisfaction had plummeted. It turns out, while AI is very good at answering basic questions like how to check an account balance, when faced with complex customer issues that require nuance, the thing usually resorts to the unhelpful, robotic corporate jargon we all know and love.
Some good points here and I don’t dismiss them all. But one is just silly: the specter of useless/out-of-date GPUs. 6-7 year old GPUs are still humming day and night; and there’s still a very active market for them. Such is the undersupply at the moment. Yes someday that may level off, but that point is not in sight. “Obsolete” vs the best, is one thing. ‘Obsolete’ for doing useful work is vey different, and thus far very resilient.
I didn't think I'd find myself supporting anything this 2nd Trump administration did, but I have to admit I am loving this new turn toward treating AI companies as though their CEOs' cynical apocalyptic "OMG IT'S GETTING TOO POWERFUL EVERYONE BE CAREFUL (and also pls purchase a subscription)!!!!!" marketing schtick was serious. Altman and Amodei been pulling this shit the entire time and only just now has the government decided to show them what playing along looks like. Chef's kiss.
Hahahahaha. Azeem is a perma AI bull (just like he was/is wrt crypto).
The fact it took his TEAM "several months to construct" that data, in world replete with AI productivity sales pitches (of which he engages in), is somewhat ironic... It's not like he was constructing a regional climate model (extremely complex), but... basic revenue data? He is extremely well connected, so if it took so long because his connections were holding out on him... also does not bode well.
There is nothing in LLMs highly commoditized- better opensource/weight models available for ~90+ tasks available at a fraction of the costs. Scaling plateaus/ faux reasoning/agentic illusion with more memory , zero fluid intelligence/ adaptive learning, AGI long gone....
Seems like every day another Marcus GenAI prediction becomes undeniable fact. Shoulda listened to Gary, Sama, Musk and all the rest of you grifters who harassed, lied about, and dissed him.
Mark Zandi, chief economist at Moody’s Analytics, went on CNBC this morning with a take that should land uncomfortably for anyone betting on rate cuts before year-end. The headline number is bad enough. May PCE inflation came in at 4.07% year over year, the hottest reading since April 2023, with core PCE at 3.41%. Zandi thinks the top-line number has probably peaked. The reason he thinks that should worry you more than the report itself.
Why energy is driving the headline lower, and why that relief is temporary
Zandi’s read on the headline number was straightforward. “I think it’s the peak. Oil prices are way in and gasoline prices are coming in… that 4% plus is probably the peak,” he said. You can see why he says it. Energy prices jumped 24.26% year over year in May, with a 4.03% monthly move on top of an 11.58% spike in March. That kind of volatility burns off. Gasoline rolls over, the headline rolls with it.
END QUOTE
QUOTE:
The AI inflation channel nobody priced in
This is where Zandi got specific, and where the framing differs from the consensus narrative that AI is a deflationary force. “Broadly artificial intelligence, AI is juicing up inflation, and you can see it in the higher cost for chips… prices for almost all consumer products are going to go up,” he told CNBC.
END QUOTE
My note: Oh, yeah! Checked out the price of RAM, SSDs, and hard drives lately? A hard drive that cost $300 last year now costs $700-800 - if you can find one to buy that's not "renewed" or "used".
QUOTE:
Bulls on AI generally argue that the technology will eventually be net deflationary, with productivity gains crushing input costs. Zandi agrees with the destination. He disputes the timeline. “One of those productivity gains actually kick in from AI. They haven’t so far… underlying productivity growth is 2%-ish… the average… since World War II,” he said. AI productivity gains are expected to materialize over the next 5 to 10 years, on his read. Until then, you get the cost side without the offset.
The sectoral data backs the wait-and-see view. Information sector growth decelerated to 1.5% in Q1 2026 from 3.2% in Q3 2025, and manufacturing slowed to 1.3% from 3.2% over the same window. If AI were already lifting output per hour broadly, those lines would not be sliding.
END QUOTE
And then we have this:
Moody's Recession Model Is Just 1 Percentage Point Away From a Signal That Has Never Been Wrong.
The Iran War could push Moody's AI recession model over the edge
Here's what makes this especially concerning for investors: That 49% figure is based on February data, meaning it doesn't account for the U.S.-Iran War -- a war that has knocked out roughly 20% of global crude oil production, pushing oil prices well above $100 a barrel...
Now, with a conflict-driven oil shock, the odds are very good that Moody's model will soon tip above the 50% threshold. After all, every U.S. recession since World War II, aside from the one due to COVID-19, was preceded by a spike in oil prices.
END QUOTE
As I've been saying: the Iran war is not over and the oil price shock has NOT HIT YET. And Moody's is undoubtedly assuming the Iran war will not continue for months, whereas there is every reason to believe it will not only continue but go back to kinetic at any moment.
And given that Iran just hit another ship and the Trump administration is using this to declare a "violation" of the ceasefire - despite Israel still conducting air strikes and offensive operations in Lebanon in violation of Article 1 of the MoU, without any push back from the US - it's clear the Iran war is not over.
The Iran war remains the number one reason we can expect a stock market collapse - and a collapse of the trillion-dollar valuations of AI companies - by end of the year.
If Zandi thinks the energy relief lowering the headline is temporary, the oil math backs him up. The Strait of Hormuz isn't reopening with a signature: the Pentagon puts mine clearing alone at six months, and roughly 20% of the world's oil supply runs through it. Pair that with AI capex landing on payrolls (Meta weighing 20% cuts to offset a $50B infrastructure bill) and you get inflation pushing up while employment softens. Not a combination the rate-cut crowd has priced.
And the US Navy won't be doing the mine-clearing. Actually it's still not clear whether Iran has actually laid any mines, except in the southwestern route near Oman. Either way, Iran will have to do it on its own time table. They won't allow any military vessels in the Persian Gulf after this war, especially US ships.
As an aside, the ship that was hit today by Iran was apparently being "coaxed" out of the Strait by the US. What this means is the US attempted to get a ship to run the Iranian control of the Strait, expecting that Iran would hit the ship, thus "justifying" a "retaliatory strike" based on Iran "violating the ceasefire."
This shows the basic duplicity of the US with regard to the negotiations - as if the Lebanon situation didn't already prove the US has no intent of making an actual deal with Iran to end the war. Like Ukraine, the US is just kicking the can down the road with the negotiations. This is because the US is using this war to try to damage China and improve its own energy market position while simultaneously damaging the rest of the world's economy to halt multipolarism.
Funny, just this morning someone said the Iran scene would be the excuse used for the market crash of the clearly overinflated tech bubble/biggest money scam in the history of the planet. By the way, the many experts inhabiting "business" media of all kind could be reasonably described as press-titutes... not looking out for the little guy (rather leading him often astray) or mom and pops retirement funds, which will be harvested for the printed billions/trillions that make up the manipulated markets..
Yup. That's just icing on the cake for the US which is trying to wreck China and multipolarism - like most recessions/depressions the rich buy up everything at fire sale prices.
And given our current rich have $24 trillion in CASH - not counting stocks, bond, mansions, yachts, airplanes, etc. - they will make a killing.
Sharp, thanks for sharing this.
On OpenAI's IPO delay: This is good and bad simultaneously.
Good: their current IPO timeline is far too compressed and they're racing to do so much in a short period of time, it buys them time to try and improve financials - valuation, profitability, etc - before finally releasing their S-1.
Bad: they need the money now because of the cash they're burning and IPOs are the final frontier for a company with OpenAI’s valuation to do that, their financials weren't good + attracts more public scrutiny from investors (they can hide a little longer), SpaceX's IPO may have sucked the oxygen (liquidity) out of the markets for now, hence Google frontrunning them with the $85bn equity raise. Also Anthropic have better numbers + a non-zero chance of reaching profitability, even if it’s small.
Sarah Friar was ultimately right with wanting to float OpenAI in 2027, but she can’t walk back that “looking for a government backstop” comment back in Nov ‘25.
As SpaceX lockup periods expire, SpaceX price could collapse. That will make an OpenAI IPO less attractive, because investors will see what happened to SpaceX stock post-IPO and wonder if the same could happen to OpenAI.
Even if OpenAI was a good bet financially, I personally am a little uncomfortable investing in human extinction: https://www.youtube.com/watch?v=_eYTkvZqbnQ
The Chinese models stop improving if they can’t distill the frontier labs, no? Very amusing - frontier labs stole knowledge - Chinese labs cribbed from what they stole - frontier labs can’t charge as much as it costs to maintain the theft algorithm, collapse? - Chinese models can’t distill anymore.
On device small models or some such survives. People in Memphis stop having to breathe nasty data center air.
I've yet to see any evidence of Chinese "stealing" from US models.
ALL of this "distilling" stuff comes from Anthropic - with zero public evidence - who have long since destroyed their credibility about anything.
Another example of where industry is not getting the benefits;
Ford admits AI couldn't replace experienced engineers, rehiring veterans to improve quality and cut recall costs.
https://www.neowin.net/news/ford-execs-say-they-made-a-mistake-when-they-replaced-human-engineers-with-ai/
QUOTE:The company's VP of vehicle hardware engineering, Charles Poon said that leaders overlooked the deep experience of veterans who survived many product cycles. Poon admitted that simply replacing them with AI was a huge mistake, and that while AI is "a fantastic tool," it remains "only as good as the information you use to train it."
END QUOTE
QUOTE:
Ford's realization that AI cannot magically design and test quality vehicles without senior human oversight is just the tip of the iceberg. When Careerminds looked at companies that conducted AI-driven layoffs, researchers found out that 35.6% of those companies had to rehire more than half of the employees they previously fired. Another 32.7% had to rehire between 25% and 50% of them.
In 2024, Sebastian Siemiatkowski, CEO of Klarna, proudly announced that its new chatbot was doing the work of 700 full-time customer service agents. As a result, the fintech company froze hiring and cut hundreds of positions. But by mid 2025, and into 2026, Klarna was scrambling to recruit human agents again because customer satisfaction had plummeted. It turns out, while AI is very good at answering basic questions like how to check an account balance, when faced with complex customer issues that require nuance, the thing usually resorts to the unhelpful, robotic corporate jargon we all know and love.
END QUOTE
This is classic hubris—overconfidence in one's course of action leading to self-inflicted pain and agony.
(But maybe frog with a box cutter scratching the chips is the real problem.)
Some good points here and I don’t dismiss them all. But one is just silly: the specter of useless/out-of-date GPUs. 6-7 year old GPUs are still humming day and night; and there’s still a very active market for them. Such is the undersupply at the moment. Yes someday that may level off, but that point is not in sight. “Obsolete” vs the best, is one thing. ‘Obsolete’ for doing useful work is vey different, and thus far very resilient.
He ain't never had Noahopinion worth listening to.
I didn't think I'd find myself supporting anything this 2nd Trump administration did, but I have to admit I am loving this new turn toward treating AI companies as though their CEOs' cynical apocalyptic "OMG IT'S GETTING TOO POWERFUL EVERYONE BE CAREFUL (and also pls purchase a subscription)!!!!!" marketing schtick was serious. Altman and Amodei been pulling this shit the entire time and only just now has the government decided to show them what playing along looks like. Chef's kiss.
Hahahahaha. Azeem is a perma AI bull (just like he was/is wrt crypto).
The fact it took his TEAM "several months to construct" that data, in world replete with AI productivity sales pitches (of which he engages in), is somewhat ironic... It's not like he was constructing a regional climate model (extremely complex), but... basic revenue data? He is extremely well connected, so if it took so long because his connections were holding out on him... also does not bode well.
There is nothing in LLMs highly commoditized- better opensource/weight models available for ~90+ tasks available at a fraction of the costs. Scaling plateaus/ faux reasoning/agentic illusion with more memory , zero fluid intelligence/ adaptive learning, AGI long gone....
One of the best articles so far. Thanks!
I haven't heard any mention in the past few years of Moore's Law. Is it still holding?
Yesterday articles described an IBM announcement that was presented as indicating that Moore's law is being extended, but it seems a bit murky, https://www.nytimes.com/2026/06/25/technology/ibm-technology-tinier-chips.htm
Sam Altman probably just figures he needs time to find another gig before OpenAI IPOs (and potential investors open a eye.)
Seems like every day another Marcus GenAI prediction becomes undeniable fact. Shoulda listened to Gary, Sama, Musk and all the rest of you grifters who harassed, lied about, and dissed him.
Can they delay until next year? Part of Amazon funding stipulated AGI or IPO by Q4 - any reasonable person knows AGI is not possible
Ant/ floats at the largess of Musk and his glut of hardware w/o other buyers for his compute
The frontier models may just die on the vine. I’ll shed a tear
Adding to Eric Topol's report (which should have been obvious in the first place), from September of last year:
The Illusion of Readiness in Health AI
https://arxiv.org/pdf/2509.18234
Then we have Moody's evaluation of the AI situation:
Moody’s Top Economist Warns AI Is ‘Juicing Up’ Inflation, and It’s Not Going Away
https://247wallst.com/investing/2026/06/25/moodys-top-economist-warns-ai-is-juicing-up-inflation-and-its-not-going-away/
QUOTE:
Mark Zandi, chief economist at Moody’s Analytics, went on CNBC this morning with a take that should land uncomfortably for anyone betting on rate cuts before year-end. The headline number is bad enough. May PCE inflation came in at 4.07% year over year, the hottest reading since April 2023, with core PCE at 3.41%. Zandi thinks the top-line number has probably peaked. The reason he thinks that should worry you more than the report itself.
Why energy is driving the headline lower, and why that relief is temporary
Zandi’s read on the headline number was straightforward. “I think it’s the peak. Oil prices are way in and gasoline prices are coming in… that 4% plus is probably the peak,” he said. You can see why he says it. Energy prices jumped 24.26% year over year in May, with a 4.03% monthly move on top of an 11.58% spike in March. That kind of volatility burns off. Gasoline rolls over, the headline rolls with it.
END QUOTE
QUOTE:
The AI inflation channel nobody priced in
This is where Zandi got specific, and where the framing differs from the consensus narrative that AI is a deflationary force. “Broadly artificial intelligence, AI is juicing up inflation, and you can see it in the higher cost for chips… prices for almost all consumer products are going to go up,” he told CNBC.
END QUOTE
My note: Oh, yeah! Checked out the price of RAM, SSDs, and hard drives lately? A hard drive that cost $300 last year now costs $700-800 - if you can find one to buy that's not "renewed" or "used".
QUOTE:
Bulls on AI generally argue that the technology will eventually be net deflationary, with productivity gains crushing input costs. Zandi agrees with the destination. He disputes the timeline. “One of those productivity gains actually kick in from AI. They haven’t so far… underlying productivity growth is 2%-ish… the average… since World War II,” he said. AI productivity gains are expected to materialize over the next 5 to 10 years, on his read. Until then, you get the cost side without the offset.
The sectoral data backs the wait-and-see view. Information sector growth decelerated to 1.5% in Q1 2026 from 3.2% in Q3 2025, and manufacturing slowed to 1.3% from 3.2% over the same window. If AI were already lifting output per hour broadly, those lines would not be sliding.
END QUOTE
And then we have this:
Moody's Recession Model Is Just 1 Percentage Point Away From a Signal That Has Never Been Wrong.
https://finance.yahoo.com/economy/policy/articles/moodys-recession-model-just-1-145000183.html
QUOTE:
The Iran War could push Moody's AI recession model over the edge
Here's what makes this especially concerning for investors: That 49% figure is based on February data, meaning it doesn't account for the U.S.-Iran War -- a war that has knocked out roughly 20% of global crude oil production, pushing oil prices well above $100 a barrel...
Now, with a conflict-driven oil shock, the odds are very good that Moody's model will soon tip above the 50% threshold. After all, every U.S. recession since World War II, aside from the one due to COVID-19, was preceded by a spike in oil prices.
END QUOTE
As I've been saying: the Iran war is not over and the oil price shock has NOT HIT YET. And Moody's is undoubtedly assuming the Iran war will not continue for months, whereas there is every reason to believe it will not only continue but go back to kinetic at any moment.
And given that Iran just hit another ship and the Trump administration is using this to declare a "violation" of the ceasefire - despite Israel still conducting air strikes and offensive operations in Lebanon in violation of Article 1 of the MoU, without any push back from the US - it's clear the Iran war is not over.
The Iran war remains the number one reason we can expect a stock market collapse - and a collapse of the trillion-dollar valuations of AI companies - by end of the year.
If Zandi thinks the energy relief lowering the headline is temporary, the oil math backs him up. The Strait of Hormuz isn't reopening with a signature: the Pentagon puts mine clearing alone at six months, and roughly 20% of the world's oil supply runs through it. Pair that with AI capex landing on payrolls (Meta weighing 20% cuts to offset a $50B infrastructure bill) and you get inflation pushing up while employment softens. Not a combination the rate-cut crowd has priced.
Yup.
And the US Navy won't be doing the mine-clearing. Actually it's still not clear whether Iran has actually laid any mines, except in the southwestern route near Oman. Either way, Iran will have to do it on its own time table. They won't allow any military vessels in the Persian Gulf after this war, especially US ships.
As an aside, the ship that was hit today by Iran was apparently being "coaxed" out of the Strait by the US. What this means is the US attempted to get a ship to run the Iranian control of the Strait, expecting that Iran would hit the ship, thus "justifying" a "retaliatory strike" based on Iran "violating the ceasefire."
This shows the basic duplicity of the US with regard to the negotiations - as if the Lebanon situation didn't already prove the US has no intent of making an actual deal with Iran to end the war. Like Ukraine, the US is just kicking the can down the road with the negotiations. This is because the US is using this war to try to damage China and improve its own energy market position while simultaneously damaging the rest of the world's economy to halt multipolarism.
Funny, just this morning someone said the Iran scene would be the excuse used for the market crash of the clearly overinflated tech bubble/biggest money scam in the history of the planet. By the way, the many experts inhabiting "business" media of all kind could be reasonably described as press-titutes... not looking out for the little guy (rather leading him often astray) or mom and pops retirement funds, which will be harvested for the printed billions/trillions that make up the manipulated markets..
Yup. That's just icing on the cake for the US which is trying to wreck China and multipolarism - like most recessions/depressions the rich buy up everything at fire sale prices.
And given our current rich have $24 trillion in CASH - not counting stocks, bond, mansions, yachts, airplanes, etc. - they will make a killing.