Better Offline - Monologue: Concentration Risk

Episode Date: September 4, 2026

In this week's Better Offline monologue, Ed Zitron runs through how 80% of Anthropic and OpenAI’s enterprise revenues come from the top 1% of its customers, and how the entire AI bubble is a series of different concentration risks supported by venture capital and debt.Newsletter: https://www.wheresyoured.at/hyperscale-normalization/Ramp Data: https://www.reddit.com/r/BetterOffline/comments/1w5i9t4/ramp_80_of_openai_and_anthropics_enterprise/Terrible Groundbreaker piece: https://www.groundbrkr.com/p/the-teaser-period-why-the-ai-boom - please note that many of the numbers in this piece are wrong and it’s written by Claude, but the overall thesis is useful.Save $10 off a year of my premium newsletter: https://edzitronswheresyouredatghostio.outpost.pub/public/promo-subscription/gzqwkv54e1 YOU CAN NOW BUY BETTER OFFLINE MERCH! Go to https://cottonbureau.com/people/better-offline and use code FREE99 for free shipping on orders of $99 or more. --- LINKS: https://www.tinyurl.com/betterofflinelinks Newsletter: https://www.wheresyoured.at/ Reddit: https://www.reddit.com/r/BetterOffline/  Discord: chat.wheresyoured.at Ed's Socials: https://twitter.com/edzitron https://www.instagram.com/edzitron https://bsky.app/profile/edzitron.com https://www.threads.net/@edzitron Email Me: [e-mail] omnystudio.com/listener for privacy information.

This is an IHeart podcast. Guaranteed Human. Didn't catch the latest Roland Martin unfiltered podcast? Here's what you missed. People wake up and go, oh, damn, wait a hold up. They change all of that. Yes. It's real.

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Hey, it's Bobby Bones. Join me and former NFL quarterback Matt Castle. Every Wednesday on our podcast, lots to say with me, Bobby Bones and Matt Castle. You're in training camp, and the rookie quarterback has one good throwing session in front of the media. Suddenly, everybody online says he should start over you week one.

How do you handle this? You just go back out to practice the next day. I'll wait for them to mess up. Listen to lots to say with Bobby Bones and Matt Castle on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Also Media. Today in sentences that are not in the Bible, YouTuber Mark Plyer bought a major stake in camera maker GoPro,

and then GoPro turned into an AI data center, NeoCloud. I'm sick and tired of the goddamn AI bubble, I swear to Christ. That's all my. Bird up, this is Better Offline and I'm your host Ed Zittron. So today we're going to talk through a term you may or may not have heard before, concentration risk. It's a term that refers to having all your eggs in one or a few baskets, becoming overly reliant on a few investments, customers, or particular business lines,

to the point that without them, your business or portfolio would suffer massive harms or just explode. In banking specifically, to quote the National Credit Union Administration, it refers to any single exposure or group of exposures with the potential to produce losses large enough relative to capital, total assets or overall risk level, to threaten a financial institution's health or ability to maintain its core operations. I bring this all up because you're going to hear this term or variations of this term a lot in the next few months and years as the AI bubble unravels, because just about every part of the industry involves its own flavor of concentration risk. Let's start at the top. Per data from FinTech firm Ramp, 80% of OpenAI and Anthropics Enterprise revenues come from 1% of their customers,

a number that hasn't improved over the last three years. Ramp's lead economist Arakarzian notes that the top 1% skews heavily towards the tech sector and AI products and services, and that this was a level of concentration risk unseen in any other software category they tracked. The dataset, which includes big companies like Visa and Cursor, as well as a great deal of startup, and regular-sized companies is very indicative of the overall spend of the AI industry, with the caveat that it doesn't include massive players like Microsoft or major banks. To be clear, I'm guessing about Visa and Cursor, any customer on Ramp can opt out of research. I have no idea, but I'm going to assume that there are big companies in there.

I also want to be specific that when Ramp says AI products and services, that includes AI startups that sell subscriptions with subsidized token spend, meaning that users can burn far more than their subscription price and tokens. So on a 20 buck a month subscription, you can burn 30, 40, 100. This means that the money made by Anthropical Open AI from an AI startup in that 1% spend is contingent on their continued ability to raise venture capital dollars. To simmer all this down, it means that the vast majority of enterprises, which is where the real money is in software and the real growth is, just don't spend that much money on AI. Those that do spend the most on it are heavily concentrated in either AI companies that either use a lot of tokens internally because they're bankrolled by venture

capital, AI companies that allow their users to blow unsustainable amounts of money on tokens, bankrolled by venture capital, tech companies that are currently under heavy pressure to spend money on AI tokens, and I assume a few whale customers of some sort. This means that 80% of OpenAI and Anthropics Enterprise revenues, which make up the vast majority of their total revenues, are dependent on what are likely hundreds of customers spending outsized amounts of money on AI tokens, with an indeterminately large chunk of them being AI startups that can only do so as long as venture capital allows them to. I also, and this is a gut feeling, wouldn't be surprised if the AI startup spend way more on tokens for writing LLM code internally, considering how every

time I see somebody going nuts on AI and Twitter, it's usually a VC-backed startup. It also means, as I've hinted, that outside of the tech and AI world, very few companies are willing to pay very much for AI, which is catastrophic on just about every level, with no clear sign as to how you reverse that trend. AI has been in every media outland discussed in every boardroom and company for the last three years. Every single company has on some level dabbled in using AI. Most businesses have been given the green light to spend a bunch of money on AI, and in the end, it seems that the only people the tech industry can get to spend money on AI is the tech industry itself. This is open AI and Anthropics' underlying exposure, because these customers are also prime targets to move to either cheaper models

that they train themselves, because they're open source, or eventually on device models. Even if these customers choose to stay with Anthropic and Open AI, a chunk of this spend is contingent on venture capital funding, like I've said, and the rest is contingent on where tech firms continue to be willing to spend money at scale. 80% of the revenue concentration depends on spending and capital that varies from unreliable to actively unstable. Meanwhile, these two AI labs represent a massive concentration risk for Microsoft, Google, Amazon, Oracle, CallWeave, and anyone else that sells compute to them, with Anthropic and Open AI signing over $1.1 trillion worth of compute commitments based on demand that's mostly coming from a very small subset of customers. These are, from what I can tell, take-or-pay agreements where they agree to buy that compute capacity, regardless of how much capacity they actually end up using and how much revenue they actually bring in. As a reminder, both Anthropos Anthropic and Open AI are woefully unprofitable to lose tens of billions of dollars a year. To give you an idea of the concentration risk, OpenAI's compute spend and revenue share

represent about 70% of Microsoft's AI revenues in fiscal year 26, which just ended in June, or a little over 7% of Microsoft's entire fiscal year revenue that year. And UBS estimates that OpenAI and Anthropics compute spend will account for 48% of Google Cloud's entire revenues next year, or somewhere between 84 billion. and $100 billion in 2027. That's on top of, per Barclays, OpenAI and Anthropics estimated $40 billion spent on Amazon Web Services and at least $50 billion that both of them will spend on Microsoft Azure in calendar year 2017, which I note because of Microsoft's old fiscal year system. On the low end, that means that Anthropic and Open AI account for over $174 billion worth of

expected revenues from Microsoft, Google, and Amazon in 2007, which is contingent on their ability to raise venture capital or debt, which is contingent on the continued growth of their businesses, which is contingent on growing AI spend from a small subset of customers, many of whom are funded by venture capital. The reason this hasn't been a problem yet is that when you sign these contracts, you tend to pay a little upfront fee and the capacity in question is yet to come online. That's going to start happening next year and get dramatically worse, month after month, this capacity starts powering up, and they start actually having to pay for it. A really shittily written piece from an outlet called Groundbreaker that people keep emailing me did make a good point about this.

Comparing it to when the rates on millions of mortgages exploded as they hit a reset wall in 2027, where the low teaser interest rates ended, so when you signed a mortgage, you would get like one, two, three percent very low, exploding the monthly mortgage payments to one sustainable highs with customers assuming when they signed it incorrectly, that their houses would keep appreciating, they'd be able to refinance, or they could simply sell the bloody thing, which they obviously could not do when everyone was trying to do the same thing. In other words, OpenAI and Anthropics' massive compute commitments are the subprime mortgages of the AI bubble. They signed big, beautiful deals that helped hyperscalers and neoclouds post massive revenue backlogs under the belief that nothing bad would ever happen.

That growth would happen unabated, and of course the money would always be available for everyone involved. Finally, at the top of the pile sits Invidia, whose concentration risk lies with the hypers and neoclodes themselves. who justify buying further GPUs based on demand, and I put that in air quotes, from OpenAI and Anthropic with said demand for services contingent on whether they can have continued to raise money. Even those buying GPUs to build AI data centers

for other customers are doing so because they believe there's some sort of crazy demand for AI compute, with their reference point being the massive revenue backlogs for Callway, Viren, Nebius, and other neoclounds, who primarily sell compute to either OpenAI Anthropic or one of the hyperscalers backing them. Oh, and Nvidia's customers are no longer able to buy its GPUs through cash flow alone, so all of those purchases are contingent on the constantly availability of debt.

None of this is very good at all. I should also add the Broadcom added on the latest earnings that Anthropic and OpenAI are going to be their top two customers. It's all very good. It's all very normal, very good. Everything's fine here, okay? Nobody freak out. Even when you put it all in the line, it all sounds.

really fucking bad. I'm sorry, I'm not trying to be alarmist, but even at the end of my own monologue, I'm kind of like, anyone else fucking think about this? Anyone else worried? No, the answer is no. If you ask most sell-side analysts or financial journalists, they'll tell you that all of this is totally fine and it's nothing to worry about. They will assure you that these are the smartest people in the world, the most powerful companies, that they wouldn't spend all this money for no reason, that the demand for both AI compute and AI itself is real, and that the AI skeptics are cherry-picking data. Well, we're going to fucking find out, aren't we?

And when we find out, I think it's going to be the thing I've been warning about. And when that happens, I've been keeping really detailed notes about all the people that tried to hand wave this away. Because I think this is a catastrophic misallocation of capital. But also just the largest miss in journalism history. Just unbelievable to me that when this eventually falls apart. and I am literally looking at my fucking Bloomberg terminal and what just popped up says Crusoe signs roughly $13 billion Jane Street deal

for cloud computing. Now you may think, wow, that's a different customer, Jane Street, a hedge fund. How could they possibly be involved in this? Well, you never guess what. Jane Street's a major customer of Corweeve and an investor in Corweeve. I bet they fucking invest in Anthropic at some point.

Jesus fucking, did they invest in Anthropic? All right, no, I got to end this. I got to end this goddamn monologue. Look, I'll be back next week. I still have yet to come up with what I'm going to do, but it's going to be great. My cat just knocked over an empty diet Coke can, and that's very annoying. But nevertheless, I will be back. I love you all.

I appreciate you listening. I'm Ed Zetron, and this has been better offline. Didn't catch the latest Roland Martin unfiltered podcast? Here's what you missed. People wake up and go, oh, damn, wait a hold up. They change all of that. Yes. It's real.

This is a wholesale. attack. It is targeting black people in every federal agency. It's raw. White folks have never allowed that reckoning to last more than a decade. Catch Roland Martin's daily commentary on the Black Information Network. And download Roland Martin unfiltered

on the Iheart radio app, Apple Podcasts. Wherever you get your podcasts. College football will hijack your weekend, ruin your sleep, and break your heart. And that's why we make the Solid Verbal College Football Show. I'm Ty Hildenbrand. He's Dan Rubinstein. Every week, we

preview the games that matter and the storylines that are going to ignite your group chat. And you can join us in the aftermath as we react to what happened, why it matters, and how the sport went completely bonkers yet again. Listen to the Solid Verbal College Football Show on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Whether you're a seasoned NFL fan or new to the game, there's one place to keep up with all of it, the league's newest podcast, the NFL report, hosted by me, Andrew Cecil,

Liliano, it is your home for everything football, breaking news, expert analysis, game picks, and hear from your favorite players too. Join me at an all-star cast of experts for everything you need to know from around the league. Get new episodes to the NFL Report Monday through Friday all season long. Listen to the NFL Report podcast on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Hey, it's Bobby Bones. Join me and former NFL quarterback Matt Castle every Wednesday on our podcast, Lots to say with me Bobby Bones and Matt Castle.

You're in training camp and the rookie quarterback has one good throwing session in front of the media. Suddenly everybody online says he should start over you week one. How do you handle this? You just go back out to practice the next day and wait for him to mess up. Listen to lots to say with Bobby Bones and Matt Castle on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This is an IHeart podcast. Guaranteed human.