Prof G Markets - Big Tech’s AI Vibe Shift

Episode Date: February 2, 2026

Scott Galloway and Ed Elson break down earnings from Microsoft, Meta, Tesla, and Apple. They also weigh in on Trump’s pick of Kevin Warsh for chair of the Federal reserve. Finally, they discuss which companies are poised to go public this year — and whether retail investors should try to get in. Subscribe to the Prof G Markets newsletter  Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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CBC News. Today is number, $5,923. That's the price of the cheapest ticket to the Super Bowl this year. Ed, I don't even watch the game. My watch for the commercials. My favorite commercial, Cardi B's Wet As Pepsi. What's going on, Ed? I'm doing very well.

It's still freezing cold here. It's unbelievable. Mountains of snow on the streets of New York. It's pretty insane. How are you doing? I'm good. I'm in Jackson Hall. I spoke in one of his master,

and another Master of the Universe Conference, and decided to stay here and ski. When I say ski, I mean sit inside a beautiful room and do podcasts all fucking day long. Just to confirm, I know you already did one. Is it two in Jackson Hole, or is it just the one? And you're there for a few days? No, it's just the one.

I've done a bunch of meetings, though, because one of the great things about having the footprint that I enjoy is if you post where you are, people like, you haven't heard from like, oh, remember me? We play basketball together in the 11th grade. Do you want to have coffee? I'm like, no, but it's good to hear from you.

People, it's so funny. I was out last night, and a bunch of people came over, and the people are with, like, did people come up to you? I'm like, yeah, they come up to me a lot. And they say, why do you think that is? It's because everyone assumes I'm so fucking pathetic that they're doing me a favor coming up and saying hi. Everyone assumes that I'm so lonely and so desperate and depressed

and have so few friends that people don't come up to me and say, I mean, they come up and they're very nice, but they're more like, do you want to join us? are you okay? So it's... I highly doubt that. It's a different type of approach. But anyways, I'm here in Jackson Hall.

It is beautiful. Are you skiing? No, I'm all about entry. The only time I ski now is with my boys because I'm all about injury prevention. But I'm going to go snowshoeing. I'm officially an old man. In between World War II documentaries,

I'm going to go snowshoeing. You're not skiing because you're afraid of getting injured, really? But that's a little bit of a lame excuse. I just got to be real with you. I don't like the outdoors, and I especially hate skiing. Okay, fair.

I can't stand. The reason I ski is I want to be able to trap my boys on a mountain for four or five hours where they have to talk to me. Yes. And so I keep, I maintain, I'm also not very good at it. Are you a good skier at? I'm a decent skier, yeah. I'm not, I'm not.

And their mother is such an extraordinarily beautiful skier. I remember the first time I saw her ski. I was like, wow, that's amazing. It is very cool when people are good at skiing. And she grew up very kind of lower middle class, middle class in Poland, and said her parents just always put her on skis two or three weeks here. And I said, we got to do that for our boys. But unfortunately, when you do that, you have to actually ski with them.

So, but no, if I don't, I would much, I'm sitting in here. I'm going to go work out. I might, you know, do one of these weird, like, hot stone, recic massage treatments with some dude with beads who's going to talk to me about my chakra. And I like that shit now. I'm turning into like the white women of wine. I'm just into the spa.

And I'll just hang on. We'll go for a really nice dinner, but here I am stuck in the middle of you. Anyways, are you resisting and unsubscribing it? Isn't that next month? Next month. Bitch, do you even follow anything I do? Starting on Sunday, and I know Ed's very interested,

we're trying to engage in a targeted national economic strike against big tech and the company's enabling ICE and the Trump administration's policy of terror and anxiety come to you in your own town. And we're putting on a side listing all these companies that might move the S&P. Trump responds to markets, not to protest or to political pressure. He responds to markets. And we think we found a way to press on the soft tissue of the markets,

and that is to go after these big tech firms by just unsubscribing. We talked about this in the last one, but the site goes live on Sunday. we think we think we're on to something in terms of a low tax, low effort way to perform what is the most radical act in a capitalist society, and that is not participation. But I've been spending a lot of time on it, Ed. People have called challenge on my bullshit and said, the music needs to match the words, what are you actually doing?

Now you have to do something. I know, I hate that. I hate that. I'd rather just bitch from the. I'd rather just heckle from the cheap seats, Ed. Can we just talk about stuff? Can I just pretend. to be concerned.

This is an outrage. Off to, off to Jacksonville for skiing. Now is the time to buy. I hope you have 20 of the warehouse. Most of the magnificent seven reported earnings last week. Overall, it was a strong quarter with Microsoft Meta and Apple, all beating expectations on the top and bottom lines. however the reactions from the market have been not as consistent.

So we're going to go through all of these earnings, Scott, see what you make of them. And I think that we should probably start with meta. Fourth quarter sales rose 24% from a year earlier. Also issued stronger than expected sales guidance for the current quarter. The stock rose as much as 10%. So that has been the biggest performer. I think, you know, a few things stand out to me about the meta earnings. I mean, one is, as we'll see, the earnings were pretty similar to what Microsoft reported,

but it was a tale of two stocks here because meta rose around 10%, Microsoft fell around 10%. Microsoft wiped out nearly half a trillion dollars in value. So I think the big question here is what was different about meta. And I think the thing you have to sort of look at here is this unethical, unbelievable revenue growth of 24%, $60 billion in revenue over the year. So that is just a staggering increase from what we've seen before. And I think what Zuckerberg is basically proving is that AI is turbocharging the business.

And now investors are realizing, okay, this guy probably knows what he's doing. We could also talk about the CAPEX, which exploded, or at least the guidance exploded, $115 to $135 billion in CAPEX guidance for 2026, up 60% from last year. He's doubling down on AI. Last year, people were scared about that. Now investors decide, actually, we trust this guy. Scott, any initial reactions to META, and then we'll get into the other earnings as well? Well, it appears that it's better to be in the business of leveraging AI than in the business of

AI. And there's few companies that can boast that they have adopted to greater effectiveness AI than meta right now. The users clicked on Facebook ads, 3.5% more off in this quarter and boosted conversions on Instagram by 1%. And the number you talked about, they increased, what was it? They increased their revenues, 23%. 24%. On that number, on that top line number, what I would have loved to have seen is I don't think they did it with many more employees.

So, you know, they are kind of, I mean, quite frankly, anyone who's on Instagram or on Rails or on threads, understands the power of AI because I keep getting served with more and more relevant, I mean, almost kind of those eerie moments where I'm talking about doing a trip to, you know,

D.C. with my kids and I start getting served ads by the park high at D.C. And it's like, oh, are they, you know, it just, it's incredible how they've been leveraging AI. Microsoft, it was that, and you said this, that the new expectation is that you beat expectations

and they only met expectations. So it wasn't, you know, and they took the stock down 10%, which I'm not entirely sure I understand. Maybe it was because they just got out over their skis. But the meta one really struck me. Any thoughts on Microsoft, Ed? Yeah, Microsoft is pretty staggering. You know, $440 billion in market value just erased pretty much overnight.

After they, I mean, you say met expectations, which is more accurate. They beat by marginally. I mean, revenue was up 17%. I think saying they met expectations is the right characterization. I think two issues for Microsoft. One is that Azure, the cloud growth, this is all that investors really care about

because this is representative of how growthy is your AI business. It grew 39%. I still think that's a pretty big number. It also beat expectations. or as you say met expectations, but it's slightly lower than the previous quarter. So I think investors are kind of upset about that.

I think maybe in comparison to meta, they see the growth of that business and they don't like that. But I think the big problem I would estimate, and we'll see over the coming weeks, is their RPO number, their remaining performance obligations, their future commercial bookings, basically.

This is how much revenue they have in the pipeline, the contracts they've secured which they're going to see in the income statement in the next few quarters. It grew dramatically to $625 billion, so that's great news. However, 45% of that backlog is attributable to Open AI. I think investors have decided what we have been saying for a long time, which is you can't really trust this company. If you're making $1.5 trillion in spending commitments all over the place,

and you're only generating $13 billion in revenue and you're going out there and they're kind of struggling to raise. I'm not struggling to raise, but they're raising, they're talking about raising $100 billion, but that doesn't cut it. There's so much money they have to spend on these contracts in the next few years. And basically Microsoft is coming out there and saying,

hey, we have a bunch of growth opportunity coming down the pike, but half of it is going to come from Open AI. And it appears that investors are saying, we call bullshit. We don't think that that revenue is actually going to come in. I would guess that that is the main concern. I think there's the additional concern that compounds the mistrust in Open AI,

which is where is that revenue actually coming from? Well, it's not coming from their profits. This is not a profitable business. It's coming from Microsoft. Microsoft is the main investor in Open AI. So this is just a circular transaction happening again. Microsoft invest, and then it comes back to Microsoft

in the form of these remaining performance obligations, which makes it doubly concerning. So I think this is the investor response. People are coming around and saying, you know, this open AI thing, this has gone a little too far at this point. And so if you come out and say, yeah, we've got all this money coming in,

but most of it's open AI, we're not going to take it all too seriously. I see a theme emerging where it's better to draft off of the AI wars in terms of capital expenditure than to be on the front lines. and that is it feels like people are increasingly skeptical that Open AI is going to be able to justify an $850 billion valuation, much less the trillion or trillion and a half dollar valuation that's been floated for a public offering. And that there's only about 3 or 5 percent of its users actually upgrade to a paid subscription, and it looks like they're being vested by Anthropic in the enterprise market. So that's beginning to infect Microsoft, who, again, is looking at. to similar to the way that Tesla is claiming optimist robots are going to be their growth

vehicle being reliant or claiming that you can justify a $4 trillion valuation because of all the additional profits and revenues to your point you're going to get from your investment or your relationship with open AI that looks like there's no way it can meet its expectations is a dangerous place to be. At the same time, when you're a company like META or even I would argue a company like Waymo where you're leveraging AI, you're drafting off of, or, you're drafting off of or free-riding of other people's cheap capital and massive investments. I mean, even Apple, I think Apple will probably be a beneficiary of AI because what they'll do is similar to avoiding the search wars.

They'll stay out of it and they'll start figuring out ways to provide licensing agreements or access to the billing consumers. But it feels like the new kind of Libmus test is, all right, it's great to be in AI, but your valuations have gotten out in front of your skis, and you're spending so much money that the same. sweet spot is to leverage AI and leverage the falling price and inference and show that you know how to leverage AI, see above, you know, meta's targeting capabilities. Can we talk about Tesla for a second, Ed? Yeah, we should talk about Tesla. I mean, just before we move on to Tesla, I would just

add one caveat, which is that meta is spending like crazy on AI. I mean, that catbacks was unbelievable. But I think that to your point, what investors want to see is like, show us that you have leveraged AI, show us that there's real money coming in, meta was able to do that, which gives them the option to go out and spend like crazy. That could reverse, you know, on a dime. And we've seen this continue to happen over the past year. I think what we're increasingly seeing in the AI wars is this is a war of vibes, a narrative. This is all about like, does the market generally agree that you know what you're doing with AI? And are you associating with the right people? Last year, associations with Open AI was a vibe to the upside.

Now it's reversed. It's a vibe to the downside. I think it's highly possible that vibe could keep whipsawing back and forth. But there is no question the vibe is massively important to valuations right now. It's literally moving hundreds of billions of dollars at a time. Well, just to use an acronym here, ROI, right? It's all about ROI to some extent. And there's a raft of new unicorns, and it's an exciting part of the economy.

I mean, we got to give AI, you know, it's credit. It's created an ecosystem of companies that put a thick layer of innovation on top of inference and then sell into niche, you know, products and services into specific sectors. And they're basically free-riding off of the massive eye, right? And they get a big return because they can free ride and have small eye themselves, which makes the ROI bigger. And then there's companies that are huge on the eye, but it's not entirely clear what the R is.

I would put open AI in that bucket. It's very hard to figure out how all of this spending in these trillion-dollar commitments where the R is going to be big enough. But the sweet spot is companies that have huge R and huge I because they're seen as pulling away

from everybody else, but also are showing the massive kind of return. And right now, that's meta. Huge CapEx can make that cap-X so they can pull ahead of Pinterest didn't lay off people because of AI efficiency.

It laid off people because they can't compete with a company like meta. And in addition, it's showing huge R. So the sweet spot that creates, you know, what might be the most valuable company in the world at some point is enormous R and enormous I, so to speak. Tesla? Tesla?

Oh, my gosh. I love that he's trying to distract. Talk about weapons of mass distraction on the earnings call. I don't know if you saw this, must updated investors on Tesla's new mission, which is, open quote, to build a world of amazing abundance. We're going to build a world of amazing abundance.

I would translate that into an abundance of ketamine before the earnings call. He also focused on Tesla's humanoid robot product Optimus. Sales of the robot are expected to begin in 2027. Musk mentioned Optimus 28 times on the earnings call. I'm shocked he didn't threaten to bomb Iran at this point to distract from the fact that the cyber truck is a total fucking disaster and revenues were actually down. Automotive revenues decline 10% year on year. And their pre-tax profit margins in 2025 were about 6% less than half as much as Toyota's.

And just to give you a sense for what is, I would say, with the exception of Palantir, the most overvalued company in the world. Tesla trades now at 400 times earnings. Toyota, which in my view is the best managed automotive company in the world, trades it 10 times earnings. Your thoughts are? I would love to know if there have been companies in history and that I would go with large cap companies in history

that have traded at near 400 times earnings and yet their revenue has been in decline for not just multiple quarters, but getting on to multiple years now. I mean, that is just unbelievable. The fact that revenue, the stock actually jumped in after hours. Then it came down, people seem to kind of, I guess, come to their senses a little bit, but revenue was down 3% year over year, and yet this is

the company of the future. It's a declining business. It's a declining business trying to get 400 times earnings. And we can just go through more of the statistics. I mean, there's no question. This was a horrific year for Tesla. Operating margins down, everything. Yes. Free cash flow down 30% year of year. Net income down 61% year over year. Also, a lot of the reason why they're staying a float is because of these regulatory credits where they registered half a billion dollars because of these regulatory credits without them, profit would have fallen another 65%. And of course, the big, beautiful bill is going to get rid of those regulatory credits going forward. But the genius, and I mean, you call his bluff and so do I, and I think so do many

investors. But the market seems to believe it. The genius is Elon has been able to just launder in a new future growth project every few years to keep the multiple afloat. He's not keeping this business or this valuation up through fundamentals. He's decided he doesn't even care about that. The car sales are done, whatever. But he's laundering in his next project, which is the optimist, which, as you say, he mentioned 28 times on the earnings call. He said he's going to stop producing the model S and the model X

because he's going to increase the production capacity for these humanoid robots. So that's one piece. And then there are these rumors out, or at least Bloomberg has been reporting this, that he's considering merging Tesla with SpaceX and also merging Tesla with X-A-I and also investing, having Tesla invest $2 billion into X-A-I. So then the stock goes up again on that news. So this guy is just like a magician of, I guess, brand laundering would be perhaps, or maybe multiple laundering, valuation laundering.

I'm not sure exactly what it is. But it's working because somehow this business is in decline and yet the markets are saying, yeah, it's okay. We've got the robots coming later. We've got the AI coming later. It'll be fine. I think he's going to attach every anchor to the ship here that is SpaceX.

I think he's going to roll it all up into one kind of AI story about space, communications, connectivity, self-driving cars. robots, and talk about a world of abundance where you can get to where you need to be faster, communicate with people faster, new ideas, new communication, new means of self-expression, unlimited abundant. I think it's going to turn into this giant kind of tomorrow belongs to me narrative with all these, granted, amazing products and companies, and the ones that aren't working. he'll roll up into the ones that are working.

Right. But I think this has been his plan all along. You're right, it's a ton of jazz hands. It's trying to sell the narrative over the numbers and constantly get people to look away from the numbers. Yeah. So they're focused on the narrative. And also, the narrative is very exciting.

Space, launch capabilities, you know, huge communications platform, self-driving cars, electric, EVs. I mean, it's like every eight-year-old's dream is this company. you know, every eight-year-old boy's dream is his company, and then never lets the company settle in enough to let analysts say, okay, this is what this company is,

and this is the multiple that should be trading at, or the range of the multiple that should be trading at. I think it's so true that there's a benefit to having analysts and commentators and investors and observers, just arguing over what actually is the company. Yeah, just whipsod around. Yeah, and it gives it this air of like, it's so mysterious.

We don't even know what it is. How do you even define it? You can't even pin it down. You just described Palantir. Exactly. Palantir as well. And it's like, it's almost as if that's what you need to do

as a CEO these days. If you want to get that extraordinary multiple, you have to just sort of obfuscate around this. You can't define what our company does. Our company does so many different things. We're doing all these things out in the future. You don't even know what we're doing. And then we're all quibble in the comments about what is Tesla.

Is it a car company? Is it a car company? And ultimately, I think it translates to an extraordinary multiple. I find it ridiculous, but, I mean, I guess give the guy credit because it's working. He's selling that narrative and it's working well. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend. And please follow us if you haven't already.

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I think, you know, I think one analysis that we found kind of interesting that says something about Apple. I'm not particularly bullish on Apple, as you probably know. But this was an analysis from Sherwood that they got this data from the Consumer Intelligence Research Report, which... found that people aren't buying iPhones for the new features of the iPhone. In fact, that number is only 14%. Everyone is buying an iPhone either because their iPhone is old

or because their iPhone is lost or it's broken. And they lay out these numbers. It translates to around 70% of new iPhone purchases are for one of those two reasons. And for me, I mean, I think Apple has gotten so, entrenched in our society as a product that the iPhone has, at least. And it is impressive that they are growing sales. But in the long term, I don't think it's very exciting what they're doing. And I think the market's response kind of reflects that. It's like, yep, you did well, you're doing things right. Congrats. And we're going to reward you with, you know, a 1% bump in the stock.

I'm not going to give you a super extraordinary multiple right now, but, you know, things are going well. I mean, it seems that Apple is more and more becoming a legacy tech company, and it seems to be reflected in the numbers and also in the way they're handling the business. But any reactions from you? I think you're being a little unfair. I was actually shocked that they grew their revenue is 16%. I mean, that's on a company of this revenue base, 16% is real. Yeah. And it's actually it's fastest quarterly growth in more than four years. So it looks like growth. kind of revved up again, and its earnings per share increased 19%. I mean, that's an incredible quarter for a company this size.

And that's despite a pretty lackluster AI story, the growth came from, as you mentioned, better than expected iPhone sales and record services revenues, which have greater margins and hardware. So I would say the top line number surprised me more than any other company. 16% on this company is, I mean, basically they grew this company, kind of like the size of Procter and Gamble in one quarter. I mean, just 16%.

I mean, let me put it this way. Tim Cook would love to repeat this quarter over and over. And it just shocked me because I always get the new iPhone more signaling than anything else. It's just automatic for me to have the newest iPhone. But I don't really sense any difference. As a matter of fact, I think the operating system is a little bit confusing. I think it's sort of a step backwards. They say the camera's better, but at some point, you know, the last camera seemed

pretty incredible. But they grew their revenue's 16% top line. I just, I was quite frankly, I was really shocked to the upside by their revenue growth. Yeah, I think that the 16% I think that's a totally fair point. The 16% revenue growth is very impressive. And it's because people are buying the iPhone. And, you know, I think that that is a testament to their marketing capabilities. I don't think it's a testament to the product itself.

I think that is my point. The thing that you're saying there about the iPhone itself, I mean, I got the new iPhone. The reason I got it was because my old iPhone was the battery was kind of dying, and I figured, okay, I guess I should get the new iPhone, and it's time for an upgrade. But I'm not impressed by the new iPhone. I'm not impressed by the product.

That's what I'm hearing from most people. I don't think anyone's really impressed by the operating system, and the growth potential of AI is not really there. He was asked about how they're going to monetize AI, Tim Cook was on the call, and he didn't really have an answer to that. So I think that's true. I think it is impressive, the sales growth of the iPhone, but I just don't view it as that sustainable going forward

because I just don't see them introducing new products that people are really excited about. But, you know, perhaps I am being too harsh. Apple. Perhaps I'm upset with Tim for going on the Melania show. I think Apple is going to basically essentially create an enormous new licensing agreement with one of these LLMs that's raising ridiculous amounts of capital to be the AI LLM of choice to their billion wealthiest consumers in the world. I think they're doing the same thing. I think they're going to stay out of the AI wars and leverage

their, leverage their custody of the billion most important consumers in the world and enter into some sort of similar agreement as they have with search. You know, they never got into the search wars. They said, we can't compete. It's better to rent our consumer base than go vertical in this. I think they're doing the same thing in AI. So, anyway, we'll see. President Trump has nominated Kevin Walsh to be the next Federal Reserve Chair.

If confirmed by the Senate, Walsh would replace Jerome Powell in May. The major indices fell slightly on the news. Meanwhile, the dollar climbed and long-term bond yields rose. In a truth, social post, Trump said, quote, I have known Kevin for a long period of time. I have no doubt that he will go down as one of the great Fed chairman, maybe the best. On top of everything else, he is central casting,

and he will never let you down. We finally got our Fed chair. People thought it was going to be Kevin Hassett. People thought it might be Chris Waller. Then people thought it might be Rick Reeder, it is going to be Kevin Walsh. My initial reactions to this, the options were not that great, at least if you were to look at Kevin Walsh versus Kevin Hacett versus Chris Waller.

I don't know as much about Rick Wurter because he came onto the scene very late. What I do know is that, in my opinion, at least, Kevin Walsh is the least bad of the options. You know, he's definitely been a sycophant of late, but he could not have been more sycophantic than Hassett has been, and also then Waller has been. And what is also quite interesting is, you know, he is traditionally known as a monetary hawk. His view is, at least in his past, has been, you need to fight inflation, which means higher interest rates, which is interestingly the exact opposite of what Trump wants right now. He is, of course, changing his position a little bit lately to make Trump like him. I mean, they're all doing this. They're all playing the

sycophant role. But it will be interesting, and I could see this playing out quite similarly to the Jerome Powell situation where Trump said very similar things about Jerome Powell, and then eventually Jerome Powell held his own, and he did what he thought was right for inflation, and now they're in this war against each other, and the administration is trying to investigate him. So, I think he was the least bad of the options. So I think he was the least bad of the options. So I think this went about as well as it could have gone, given the circumstances. That feels right. I think the markets are doing a collective exhale right now. And the key term you used is hawkish. I think the fear was that he was going to put some sycophane alkali

in and the person was immediately going to cut interest rates to 1% and ignite an upward spiral, a death spiral of inflation. And that was kind of the doomsday scenario. And this guy is known as a Yeah, he likes Trump's policies, but we knew that was going to happen. Canadian Prime Minister Mark Carney, who's seen as a responsible guy, who was the first non-UK. citizen to, I think, chair of the Bank of England, called him a fantastic choice. He's also said, Warsh has also been critical to Fed for enabling too much deficit spending, which I'm a big fan of that viewpoint. So, you know, he has ties to the billionaire class.

He's a Trump fan, but he's, I think, you know, he's. You know, I think this is a good pick. We'll see. Yeah, we'll see. I thought the central casting quote was hilarious. It's possible that he meant that he has the right resume, but I think it's more likely he meant that the guy's good-looking and tall. I think he's listening to our podcast.

Out of Central casting is our term. I think he listens to Fox News and then he turns into Ed Elson. Get that young guy. What's that young guy think? That's that young guy. You know, the guy with the communist professor. Let's arrest him. Let's put him in a cell next to Don Lemon.

Yes. That's what's going to happen. By the way, just a brief note, breaking news this morning, Don Lemon was arrested, and this wasn't an arrest of, like, a bunch of people trespassing, so one by one. This was a targeted arrest by our attorney general. And when you start targeting journalists, it's not enforcing the law. It's trying to shape reality.

And just to bring this back to markets, whether it was Turkey in 2013 and Russia in the early 2000s, the moment you start policing, speech, it creates a level of self-censorship that is really bad for democracy and bad for economics, and history is brutally clear here. The moment you start censoring people and arresting journalists, markets just start to fail, and the nations become much poorer and much angrier. So distinct of what you think of First Amendment rights, targeted abuse and arrests of people who speak out against the Trump administration, be clear. It's a fast hill down and a slow hill back up to restore free speech, but the moment you put up with the arrests of journalists,

your nation is about to get much, much poor. We'll be right back. And for even more markets insights, sign up for our newsletter at profityemarkets.com slash subscribe. Everyone needs help with something. If investing is your something, we get it. Cooperators' financial representatives are here to help. With genuine advice that puts your needs first, we got you.

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to the right freelancer in under six hours. Thousands of growing businesses already trust Upwork to hire flexible, high-quality freelance talent for everything from one-off projects to ongoing support. Visit Upwork.com right now and post your job for free. That is Upwork.com to connect with top talent ready to help your business grow. That's UpWORK.com. We're back with Prof.com. Upwork.com. We're back with Profitie Markets. 2026 could be a blockbuster year for IPOs. In fact, Blackstone's president said the company had lined up, quote, one of our largest

IPO pipelines in history. SpaceX is reportedly targeting a mid-June listing, seeking to raise up to $50 billion at a roughly $1.5 trillion valuation. That would make it the largest IPO in history. Open AI, meanwhile, is reportedly. raising additional funding and evaluation of $830 billion with discussions underway about a potential IPO later this year. Anthropic and Databricks are also expected to go public this year. So, Scott, everyone said last year was going to be the year of the IPO. It was kind of the year

of the IPO, but not really. We didn't really see any huge, big splashes in the IPO market. It seems that this actually will be the year. And according to John Gray, President Blackstone, he says it's going to be the largest ever. Your thoughts? It may be the largest ever, but it'll be the largest ever by gross dollar volume raise, and unfortunately it'll be crowded into a small number of companies. We've been sort of, we keep getting hints of sunshine that the kind of the nuclear winter and the IPO market is coming to an end, and there's beginning of a thaw, and it never quite

gets its mojo. So I think they're saying this is there's so much pent up demand and these companies have, you know, have reached such exceptional valuations in the private market that they need to find, you know, the greater fool and the greater fool. I think in these instances will be taking these unbelievable brands and an unbelievable technology and giving retail investors the first shot at owning them. In terms of the companies themselves, you know, SpaceX, I think SpaceX has, as big a moat is Open AI does not. And that is SpaceX, I think it's like 80 or 90% of launch capability now. It's controlled by one company SpaceX. I think the next big, big thing in terms of a company with no revenues being worth $200 billion is going to be space defense.

All the moons are lining up around that. And the infrastructure play, the NVIDIA of space, quite frankly, is SpaceX. I just, I think, I don't, I have trouble thinking of a company that has built a wider moat than SpaceX. Open AI, I think could be, I think open AI could get pulled. I think there's a non-zero probability that Gemini and some of these open weight gained so much traction against open AI. And Anthropic is kind of beating them in the enterprise.

It's done a better job of branding instead of branding catastrophe. Anthropic has branded itself as a partner, if you will, and their ads are much clever. They're more about humans and saying this is a tool, not something that could be the end of the world. I don't think Open AI has done a good job managing the brand of late, especially the proximity between Sam Altman and the president. I think people are starting to gag on that.

And I think they're way out in front of their skis in terms of the valuation that they're anticipating. Anyways, I'm very bullish on SpaceX. I don't know from a valuation standpoint, you know, how unreasonable the valuation is going to be. But I very rarely see a company that has the kind of competitive advantage or sustainable advantage it has. And I think Open AI sustainable advantage is really, really thin. You mentioned the valuation of SpaceX. You know, the question is it unreasonable or unreasonably high? The answer is pretty much yes.

I mean, one and a half trillion, that would be a price of sales multiple of 97. And you just look at... Palantir. I mean, yeah, we're true. Palantir. But, you know, Microsoft, when Microsoft hit a trillion dollars, they had $97 billion in revenue. Google had $183. Apple had $265. SpaceX has less than $16 billion in revenue in 2025.

But, to your point, the moat of this company and the potential growth of this company is also unreasonably high. I mean, as you say, 80 to 90% of all global launches, SpaceX is responsible for them. They have and operate twice as many satellites as the rest of the world combined. Also, they're way cheaper than all of their other rivals.

And I do think it's going to be, you know, the growth potential of just space as an industry is just gigantic. I totally agree. Space defense could be a huge thing as well. So one and a half trillion dollars, I mean, it's hard to come up with a reasonable valuation for a company that is pursuing such an unreasonable and crazy and unknown business. But the number itself is staggering. One and trillion is just completely insane. By the way, if it happens at one and a half trillion, Bloomberg estimates that this will increase Elon Musk's net worth to $950 billion. And now, according to Kalshi, the probability that he will become a trillionaire next year is 64%. So it's more than likely that Elon will be a trillionaire next year.

Well, thank God he's responsible and not an addict. That could be scary, having that much power of one person's hand if that person, I don't know, had a drug addiction or was generally seen as not having a great deal of empathy for HIV positive mothers or, yeah. So, thank God. Thank God he's so stable and doesn't sleep with a loaded gun next to his bed. It is quite striking. That would mean that his net worth would be equal to 3% of America's GDP. And if you compare this to John D. Rockefeller, widely known as the richest man in the history of America, at the peak of the Gilded Age, his wealth amounted to 2% of America's GDP.

So Elon is basically the wealthiest as a percentage of the pie, the wealthiest man in the history of this country, about to get even wealthier likely because of this SpaceX IPO. I feel like there's a lot to talk about there. Yeah, and I want to be clear. I think we need billionaires. I'm not sure we need trillioners, but I think we need billionaires. One of the wonderful things about capitalism is the incentive structure to make just a crazy amount of fucking money. The thing that bums me out about that is that now that he lives in Texas, he's going to end up paying, does 1202 matter? I don't know. He's going to end up paying a tax rate probably of like 15 or 18 percent on that money. Whereas the people who work, the engineers who work at SpaceX who make $2, $300,000 a year will end up paying, especially,

the one's back in California, it will end up paying 40, 45, some will probably pay 50%. But anyways, our first, wow, wow. So Calshare Polymarket predicts it's going to be, it's more likely than not,

he'll be a trillionaire. That's just wild. By next year, if you look at by 2028 or 2029, the odds go up to above 80%. It's basically baked in to prediction markets that Elon will become a trillionaire

within the next few years, likely, more likely than not, as soon as next year. Yeah, I had to SpaceX and Elon Musk. I mean, technology is changing the world of protests. It's changing,

what would have happened? What would have the response been to the activities of ICE in Minneapolis had there not been the advent of camera phones, right? Or of cameras on phones?

It just would have been, you know, one narrative versus the other. And also, SpaceX or Starlink terminals in Iran have helped, kept a world apprised

of what's going on. So both of these technologies, and I think Elon's done a really good job of trying to ensure, I assume it's him, trying to ensure that the people of Iran have some sort of communications, hot spots. And also when I paid like $50,000 or $70,000 to have crazy high-speed internet in my home in London, and they had to run a cable across Regents Park or whatever. And of course it went out. And this guy was running around. What did he do?

I was called Starlink. And it wasn't as good as the fiber, but it was the quickest best, quick solution. It's an incredible product. I used Starlink on a plane the other day, and I could have done a podcast. It was that good. It was, anyways, I just don't think there's any denying. I think SpaceX is going to be worth more than X, worth more than Tesla, worth more. I think that's his, I don't know, his golden egg, if you will. A question about investing in IPOs. I mean, this is obviously the question. Don't. Excuse me? It's an easy one. If you have access to the IPO, absolutely. But buying on the first trade is usually a bad idea.

Right. Yeah. So we've got Canva, we've got Revolut, Stripe, Databricks, Anthropic, Open AI, SpaceX. Your view on these is don't invest. The game is fucking rigged. It's essentially either you're powerful and know the CEO or have influence, or you're an institution that gives so many fees to these investment banks that they give you an allocation,

they purposely price it 10 to 40% below what they think the market with the first trade will be. The institutions and the powerful friends of management get in, get easy money, and then the retail investors get to come in and buy the first trade, which is usually at market. So buying on the first trade of these things has not been a high return strategy

in the last couple years because these things have been so priced so aggressively. That is exactly the data I've got in front of me. Institutional investors earn about three times more than retail investors on the IPO. The reason being the institutional investors, the insider, they get early access, which gives you access to a price that is almost always discounted to what the stock goes at when after it's gone public. So we saw that with Figma as an example.

And as a reminder, again, we were saying that Figma was a good buy at 33, which was the IPO price. it gets listed on the public markets. Some people got access to that price, but if you did, and you're a retail investor, if you got access, it's most likely you only got one share, then it lists and it goes up to 120. So it's likely that the same thing is going to happen for a lot of these IPOs.

And I think because there are so much pent-up demand, because we've seen so few IPOs over the past year, it basically means that that opening price is going to be even more crazy. because everyone's going to want to get in on the OpenAI IPO and the Anthropic IPO and the SpaceX IPO. And it's going to be a completely irrational price. But what will be interesting is to see the insiders price.

What are they going to price it at for them? And I think for those guys, it's basically a given that you want to buy at that price. Because, yeah, I think it's, as you say, it's, it is a totally rigged game. I'm not sure what to do about it. from a regulatory perspective, it seems unfair that insiders just get better returns. That's just the way it is. But, yeah, I think that's, that is the truth that you highlight. One interesting idea is the tokenization of companies from a very early stage.

So everyone has access, early stage, fewer transaction fees. The thing I hate about the secondary market, I get opportunities all the time as anyone does through Setter, you know, all these secondary markets. is it's very inefficient. They want to charge you 7%. You don't have confidence to buy because it's not a liquid market with a price. But I like the idea of some sort of tokenization

where you use AI to grade the compliance of the company and the disclosures and the transparency. But from a very early stage, you can buy tokens in these startups, and they don't go public. They just have a publicly traded currency that represents ownership. The problem is that creates all sorts of disclosure

requirements, but I wonder sometimes if the SEC and these regulatory bodies want to hold on to their jobs, as opposed to acknowledge that, you know, the entire market has become very speculative. So, and there's so much opportunity for speculation that people have with their money, what exactly, who exactly are you protecting from what with these, you know, and I think AI could serve, we've talked about this as a pretty thick layer of disclosure where you buy a token and your buddy that started that company, Rogo, that has that, that, that, you know, that, you know, layer of innovation on top of AI for financial services companies, you know, should that company have tokens right now that anyone could buy? And it doesn't, it never goes public. It just keeps

increasing or decreasing in value. But there's got to be some sort of innovation here that gives retail investors access to this, access to this stuff. Yeah, I think my, my view on this is the line between private and public markets has become so blurred at this point that it should really just be eliminated. I mean, the fact that we're, we have all these investor accreditation laws that are supposed to protect people from buying shares and opening. Meanwhile, you can buy Comrocket and Pepe coin is just completely ridiculous. Or bet on the Super Bowl on like, if the next play is going to be a run or a pass. I mean, enough already. Exactly. And it's like, oh, no, we want to, we want to make sure that you're only investing in real companies. So that's why we're going to have

go through this accreditation process and you're going to have to prove to us that you've made $200,000 a year for two years in a row and then you're able to invest in these private companies. It's just completely ridiculous. So all of these private companies, everyone should be able to invest in them. If we're going to say that crypto is legal, then investing in private companies should also be legal. My only problem with the tokenization point is I feel like it assumes that it needs a crypto aspect because crypto is highly associated. with tokenization. I don't think it needs that. I think all you need to do is say anyone can invest in private companies. That's the law. And so let them invest. And then that will mean that the New York Stock

Exchange and all these public exchanges can reach out to private companies and have them list. And it basically just means that everyone can list as a public company. I don't think you necessarily need crypto or AI to enable that to happen. I take your point about, you know, getting the auditing done on some of these companies. But the reality is we're not auditing prediction markets. We're not doing any of that shit on crypto. So why are we pretending that we should be doing it with companies too? Yeah, but I was thinking about, you know, we do a plan every quarter or we get, I get all the

financials from the, I try to pretend I have a board of ProctuMedia. By the way, I love not having a board, but I try to pretend I have a board and I do kind of an internal quarterly board meeting where. Who is on the board? Oh, it's Scott Galloway and a 17 alternative personalities. It's news to me. I didn't know we had a board. I didn't know we had a pretend board. I'm going to have the second of their board members will be those two hotties from that gay hockey series. I want to put those two on my board. But what I do is I put together a board deck or something resembling a board deck.

Basically, I ask Karen and the finance team to put together all these metrics and I run it through AI where is there opportunity, where there isn't. I look at it. I've gone through a million board decks. But I was even thinking about publishing it because, Because AI, I think it's illuminating how an entrepreneur thinks about a small media business, a niche media business. It's trying to grow 20 or 30 percent a year and trying to grow its EBIT to 40 percent a year. But also, I do think that I just, I think AI could say, all right, I think there's a business in becoming an SEC, an AI version of SAC, where it says, all right, we need the following, I need the following access to the following APIs.

I need access to your company's bank account. It'll be anonymous. I'm not going to release any information. I need access to your payables. I need access to your client contracts. I need access to, and if you give me access to all of the things, I'm going to put out a rating on your company. I'm going to write fantastic analyst reports. And it'll give people the confidence to invest or not invest.

And you could create it almost like, well, if you don't have this good housekeeping seal of approval, stay away. and then you could have a much simpler, much lower cost means of buying and selling shares or tokens in that company as long as it had this AI audit on a regular basis. And it could do it every day. But just total transparency, you wouldn't have insider trading problems because everyone would kind of know everything. And if a company says, well, for strategic reasons, we don't want the AI publishing that we're in a deal. We're thinking about acquiring this company. It's like, yeah, there's certain things that are anonymized, certain things that are not disclosed publicly. but we have metrics on how well the AI in a millionth of a second says this is how good they are

return on invested capital. This is how good their turnover is or bad it is. This is how good they are managing their IP. This is how good they are managing their expenses. This is their renewal rates. And it doesn't even need to publish that. It just gives it a rating and says, oh, also on a fraud detection thing, we see almost no evidence of fraud or there's something fishy going on here or their internal checks and controls don't seem to be up to snuff. It's just, there's this gigantic administrative,

infrastructure, bureaucratic government layer in between investors and companies that is expensive, cumbersome, and I would argue, is now not probably adding the value that an AI infrastructure or AI layer could. I mean, again, it's the boring shit

that moves the needle. It doesn't sound fun, right? But I think that could be... It doesn't sound fun, but it also sounds difficult, and you better hope that AI isn't hallucinating. Current technology will not really guarantee you that at all. I mean, if it's possible for ratings agencies

and Moody's and S&P to hallucinate, as they frequently do, then think about the hallucination rates of the AIs, and then are we taking that at face value? This is the truth. This is what's going on with this company. These are the risks. Well, what's closer to an objective truth, right?

because Moody's had AAA ratings on all the bonds, the subprime bonds, before they literally folded and almost took down the global economy. What I think is important is the reason you have Moody's and Fitch is, and I forget the third one, is you benchmark them against each other. And what I was do,

I never ask one LLM a question of any importance without asking two or three, and then cross-referencing them. And I think you could do that here. I think you would run it through a variety of LLMs to say, where, because you're right, it gets it wrong all the time, but I would argue. It gets you wrong all the time.

I mean, I'll ask it a question and I'll say, this is the answer, and I'll say, no, it isn't. And they're like, oh, you're right. No, it's not there. It's this. No, it isn't. Oh, sorry, you're right. It's this. On and on and on and on.

I find the ratings agencies and those guys, I find they've been so weaponized by who their clients are. And anyways, I find it's a boring shit that moves the needle. If I were thinking about an AI startup, I would think about trying to connect a downstream with Galaxy Digital or something around tokenization and some sort of rating method. AI-driven, no mercy, no malice, can't influence it, can't bastardize it that puts out a rating on a company that you then have the opportunity to buy tokens in. Okay, let's take a look at the week ahead. We'll see job openings for December.

We'll also see ADP employment data and the employment rate for January. Meanwhile, we will get earnings from Amazon, Google, Power. Ballantyre, AMD, Disney, Uber, Pfizer, Eli, Lilly, and Novo Nordisk. Scott, any predictions? Well, I'm talking my own book here, but basically, I think these economic strikes are about to become a static part of a new arrow in citizenry quiver of pushing back on governments. And that is, and we talked a lot about this, my observation is that the current administration and also leadership around the world is now responding more to markets than they are to

citizenry or the even the Supreme Court. And that while protests are effective, I'm not suggesting they're not, they're very cinematic. But I would argue that the current administration has only responded to changes in the economy and the markets. And the greatest political movement in history in terms of action and size of action was in Q1 of 2020 with COVID. And again, it wasn't because hundreds of thousands of people started dying. It's because GDP went down 31%. And the greatest act of, again, the greatest act of radical transformation, you know, kind of radical action in a capitalist economy is non-participation. And I'm seeing a bunch of economic strikes, including the one that we're organizing, pop up. And I think that the marketplace is vulnerability

around such a huge concentration of value across a small number of companies who also happen to be the companies, many of whom who are enabling the president with their sycophantry or showing up to premieres or giving money for a new White House or whatever it is, your free gift with purchase here is that a small number of companies have a big impact on the S&P, so a small amount of action, canceling Apple TV Plus, canceling your Amazon Prime, just for the month of February, going to one streaming platform, having one LLM versus two, and being loud about it will get a lot of attention. And you're going to see national economic strikes. You're going to see a bunch of them, and they're going to, about to become a static part of the resistance. And if you like what

I'm saying, don't like and subscribe. Resist and unsubscribe. And by the way, that's our website, resistantunsubscribe.com or unsubscribe February. We have a list of the companies at Ground Zero that would have a disproportionate economic impact on the markets. And then we have something called the Blass Zone, and that's companies ranging from Home Depot to Hilton, who are kind of aiding or participating in the support of providing infrastructure to ICE. And anyways, prediction. National Economic Strikes are about to become the new technology of pushing back on what I think are fairly upsetting policies of terror and anxiety in the United States.

This episode is produced by Claire Miller and Alison Weiss. Mayor Silverio is our research leader, research associates are Isabel Kinsel, Dan Chalon, and Christian O'Donoghue. Benjamin Spencer is our engineer. Drew Burr's is our technical director and Catherine Dillard. as our executive producer. Thank you for listening to Profi Markets from Profugee Media. Tune in tomorrow

for a fresh take on the markets.