Have you noticed how more and more people are distancing themselves from S(c)am Altman? Microsoft’s CEO, who according to his own words “bet the farm on OpenAI”, is the latest high-profile figure showing signs of frustration towards OpenAI’s CEO, despite his best efforts to hide them. Who can blame him? He bought tens of billions of GPUs at massively inflated prices, believing OpenAI was a huge goldmine and that the only thing separating him from unlimited profits was having as many tools as possible to extract that gold from the ground as quickly as possible.
Things haven’t turned out as Satya hoped. It’s undeniable that ChatGPT and other OpenAI tools are falling increasingly behind competition. Not only has the competition filled the gap at an unprecedented speed, considering how early OpenAI started developing ChatGPT, but they’ve done it with far less GPUs and computing power than what Microsoft made available to OpenAI.
Consider this: just a few months ago, semiconductor supply was perceived to be so tight that many big players were still trying to outbid each other to get their hands on the newest and more powerful (at least in theory) NVIDIA GPUs. A few days ago, the biggest buyer in the market by far declared: “I am not chip supply constrained [anymore] ” (Microsoft’s CEO may have just said something very worrying about Nvidia). Hilariously, this is exactly what I warned about 2 months ago: GPUs OVERSUPPLY IS ALREADY HERE – HOW ASML’S MISTAKE EXPOSED NVIDIA’S CASTLE OF LIES.
Unfortunately for Satya, he can’t simply stop buying GPUs and pretend everything is fine. Why? This would inevitably crash NVIDIA GPU prices, ultimately impacting the value of tens of billions of USD in CAPEX recorded on Microsoft’s balance sheet. This would inevitably cascade into the value of all AI Startup investments, particularly OpenAI, purchased using billions of Azure credits that are represented by more than 50 billion of “Unearned Revenues” in Microsoft’s liabilities (UNTANGLING THE GREAT MICROSOFT ACCOUNTING – BORDERLINE FRAUDULENT – SHENANIGANS). However, Microsoft cannot continue throwing billions of dollars into equipment that, in another incredible revelation by Satya a few days ago, faces “Power supply constraints” (which makes me wonder how many GPUs were really plugged in and operational until now). Consequently, the first move has been to cut a considerable chunk of BlackWell orders: Production Hurdles for GB200 Spark Rumors of Microsoft Cutting Orders.
This is why I believe Microsoft’s CEO is starting to prepare the ground for inevitably disclosing billions of dollars in impairment losses in the future and containing, as much as possible, the damage the AI Servers business will do to the rest of Microsoft’s operations and ultimately its incredibly inflated valuation.
What do you think will happen to Nvidia, which has already lost its third-largest customer (SMCI), once it becomes clear that it’s going to lose its largest customer that alone accounted for almost 20% of all revenues and a considerable amount of future orders recorded by the company? People will start to wonder whether someone else can fill the massive hole, but at that point, they will realize that most of Nvidia’s revenues and future demand for its GPUs were totally fabricated, as I have documented so many times.
What about Microsoft revenues’ laundromat OpenAI? Here, I believe Microsoft will take possession of all the IP it has rights to and leave other investors with a very overpriced empty box once it becomes clear the company is losing all its users to stronger and superior competitors like Grok.
In this article, I touched upon many elements I have been investigating and writing about extensively for more than a year. If you have missed the previous articles and some elements are difficult to understand (or believe), here is the full archive.
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