Hello, and welcome to TechScape. I’m your host, Blake Montgomery. If you like reading our newsletter, forward this email to five friends with a demand they sign up like it’s a chain letter warning of bad luck for five years. In this week’s news, AI companies hit mind-boggling financial milestones such as a $5tn valuation, a $100bn quarter, and a string of deals worth nearly $600bn.
The AI boom’s incomprehensibly vast numbers make it hard to criticize
Last week, the chipmaker Nvidia hit a valuation of $5tn. Just three months prior, it became the world’s first $4tn company. Microsoft reached a $4tn valuation last week, as did Apple. On a smaller scale, Meta, Microsoft, Amazon and Alphabet all reported their quarterly earnings. The sums were vast. Google’s parent reaped its first $100bn quarter. Amazon reported stellar growth in its cloud computing unit and added 13% to its stock price. Meta faced an unexpected tax bill of $16bn. All of the tech giants, except Apple, revised their capital expenditure figures upward, declaring to their investors that they would spend billions more on the real-world infrastructure that underpins artificial intelligence. The revisions added tens of billions to a total that’s already in the hundreds of billions. Alphabet alone estimated its capital expenditure at between $91bn and $93bn for the upcoming year. That estimate is up from an original declaration of $75bn in February and a revised figure of $85bn announced in July.
Not to be outdone by its publicly traded rivals, OpenAI, recently converted to a for-profit enterprise and mulled an initial public offering at a valuation of $1tn. The world’s most valuable startup has been on a dealmaking spree, signing agreements with Nvidia, which committed to investing $100bn in OpenAI in September; Microsoft, which signed an agreement in early October for OpenAI to spend $250bn on Azure cloud services; and Oracle, another cloud computing giant that OpenAI agreed to spend on in September, this time $300bn. On Monday, the ChatGPT-maker announced a deal with Amazon Web Services for $38bn. In total, OpenAI has promised to spend $588bn in the coming years.
Nvidia’s valuation is now larger than Germany’s entire annual economic output in 2025 ($4.66bn). Put another way, the market capitalization of Nvidia is two and a half times the market capitalization of every publicly traded company in Germany put together, roughly $2.04tn in 2024, per the World Bank. How can one company be worth more than the world’s third largest economy, a nation of 83.5 million people, a country whose economy forms the financial backstop of an entire continent?
Read more: Boom or bubble? Inside the $3tn AI datacentre spending spree | Artificial intelligence (AI) | The Guardian
The difficulty in comprehending the financials of the AI boom makes it difficult to criticize with clarity or force. What could I say to an avalanche? Even the most insightful analysis seems like it will be bowled over and crushed beneath the weight of a billion-dollar datacenter. All of these numbers buck understanding. There is nothing in your individual human life that you could compare them with. How would I spend $91bn? How would I make hundreds of billions of choices? Thinking about them feels bizarre. Describing Meta’s earnings as “mixed” is strange, though they were, by Wall Street experts’ estimates.
The circular, multibillion-dollar deals between the companies atop the boom have given rise to fears of overinflated value and financial fragility. Should one company falter, it seems the others might follow suit and bring the US economy down with them. So far, they show no signs of stopping their joint rampage.
On the more populist side of that criticism are reports that AI has yet to find an essential use case other than cheating on homework assignments. It can’t adequately replace workers, no matter how many of them a CEO might lay off. About 95% of AI pilots conducted in businesses to date have failed, MIT researchers found in August.
The financials of the AI boom are so enormous as to defy comprehension; its digital size is immense as well. Large language models such as ChatGPT, Claude Sonnet and others function in part via parameters, variables that define how the model makes predictions of what word should come next. These unseen knobs tweak the response number in the hundreds of billions, with some reports indicating GPT-5 might make use of a trillion of them.
AI’s physical imprint on the world matches the magnitude of the technology’s financial scale. Dara Kerr, one of the Guardian’s technology reporters, visited the Tahoe-Reno Industrial Center, home to the largest data center in the US and several of its smaller siblings, on a reporting trip last week. Here she describes its unbelievable scale:
The Tahoe-Reno Industrial Center stretches from Interstate 80 up into the dry Nevada desert mountains. The complex spans tens of thousands of acres and is home to nearly 200 companies, both for fulfillment and logistics operations and tech data centers. That includes Google, Microsoft and Tesla. Some businesses have several data centers, each multiple football fields long, that snake up the desert valleys. The industrial center’s landmass makes up 65% of the county’s territory. It’s so big, it’s almost hard to comprehend.
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You will be able to bet on US elections by giving money to the US president
Donald Trump’s Truth Social is partnering with Crypto.com on a feature for betting on election results, the parent company announced in a press release last week. The Trump Media and Technology group will introduce its “Truth Predict” feature, which will allow users “to trade prediction contracts related to major events and milestones, such as political elections, interest and inflation rate changes, commodity prices on gold and crude oil, events across all major sports leagues, and more” using the new product, though when it will go live is unclear.
Devin Nunes, TMTG’s head, said of the feature: “For too long, global elites have closely controlled these markets – with Truth Predict, we’re democratising information and empowering everyday Americans to harness the wisdom of the crowd, turning free speech into actionable foresight.” In classic Trumpian fashion, Nunes hypocritically gnashes his teeth at “global elites” from a perch high in the eyrie of US power.
Something feels off about this arrangement, like if the boxer in the fight was also the bookie. Trump is the president of the United States and is asking his constituents to put money on the outcome of elections that he will be campaigning in. He is in control of the policies that can determine the rates users bet on. Though he’s heading towards his two-term limit in the presidency, he has flirted with an unconstitutional third term. Would US citizens bet on whether he can make it happen?
Even the creation of the Truth Predict feature feels like inside basketball (more on that sport in the next paragraph). Crypto.com has donated $11m to Trump’s causes, the Financial Times points out. The US Securities and Exchange Commission has closed an investigation during Trump’s term, and the company has applied for a banking charter with the regulator. Trump Media and Technology group signed a deal to buy billions of dollars’ worth of Cronos, Crypto.com’s token.
Gambling pervades US society more than ever. Trading on election outcomes was legalized just last year. Betting volumes on the prediction market Kalshi have reached $1bn per week, according to another Financial Times analysis. The infection began with sports betting, which has reached a fever pitch. My colleague Bryan Armen Graham describes the implications of scandal, dubbed Operation Nothing But Bet by FBI investigators, that rocked professional basketball in the week before Halloween, with an NBA player, a head coach and 30 others arrested:
The NBA gambling scandal represents a culmination of the years-long embrace between professional leagues and the multibillion-dollar gambling industry that has now crossed the line from synergy into scandal. It’s the most significant corruption crisis to hit a major American league since betting was legalized in most US states, and the most revealing picture yet of how deeply gambling has fused itself into the bloodstream of professional sports.
When will politics face its own version of Operation Nothing But Bet?
