MSFT AI revenue is primarily from OpenAI/Anthropic; organic demand for MSFT AI products is weak relative to $260B+ capex.

How much does Microsoft? They're spending billions of dollars on capex. How much does this make?

I think Microsoft's OPEX is like 150 billion Microsoft, Google, Amazon, Meta, cranked up prices, changed ad auction stuff.

Analyst expectations uh from like UBS, Barkclays and uh Wells Fargo have $440 billion of cloud revenue across Google, Amazon and Microsoft coming just from open air and anthropic to unprofitable startups who need to constantly raise money

in fiscal year 26 Microsoft they made corn to Bloomberg about $ 34.33 billion on AI $24.1 billion of that is open AI which means that open uh Microsoft software and GPU rental services are singledigit billion dollar businesses and they have 260 plus billion in capex in this.

But I just the point I made about Microsoft's AI revenue is where this comes in. So fiscal 26 which just ended $ 34.33 billion of AI revenue $24.1 billion of that is open AI that means that selling GPUs to anyone else other than their large fail son is a singledigit billion business

it's Microsoft is the apex predator of software sales they have hundreds of thousands of resellers they have tens of thousands of salespeople and they can't scrape together more than singledigit billion dollars of sales for co-pilot and all the stuff

billion dollars of sales for co-pilot and all the stuff and this is on top of the fact that GitHub copilot But one of their only successful AI products has now gone tokenbased billing, which means people were before able to spend 40 bucks a month, spend $5,000 of tokens.

Now the token based billing, >> now it's usage gone. That business is dead.

and this is on top of the fact that GitHub copilot But one of their only successful AI products has now gone tokenbased billing, which means people were before able to spend 40 bucks a month, spend $5,000 of tokens.

Now the token based billing, now it's usage gone. That business is dead.

And on top of all of that, wow, $260 billion in capex and all of that Fortune 500 demand drew on like whatever it may be is single is what $10 billion a year.

Adela would say, G, give us a couple of years. Why do I have to give sorry I'm but the point is is like we've given him a few years and this is the best he's got for us.

We have a li open AI is a liability now like that's they are material enough that Microsoft actually has to I think what's like 27% they own of them it's actually a deeply low bearing

they have to consolidate their financials onto their their own income statement. The other thing is is Microsoft's only getting paid if OpenAI can keep raising money.

So, Microsoft's growth is dependent on OpenAI and now anthropic spending. Outside of that, they don't have significant demand. This isn't even an opinion. This is a Bloomberg article that spelled this out.

This isn't even an opinion. This is a Bloomberg article that spelled this out. Microsoft doesn't have the demand for its own AI native products from its own customers at the scale that they would need to justify like I'm not saying there's zero demand they have found but this is also after them harassing their customers and massive sale

I must be clear Microsoft sales teams are there's only one level higher of more annoying and that's Oracle and Oracle is a whole other problem

if this was a case where 30% of their revenue was open AI I would be like all right maybe my kind of falling But 70% of their AI revenue being open AI is existentially bad. They have $250 billion of Azure spend committed to that's so much that's

They have $250 billion of Azure spend committed to that's so much that's Microsoft was uh 331 billion I think last fiscal year but now they've divorced themselves from the exclusivity agreement with open AAI which only makes it worse because now OpenAI needs to spend 138 billion over eight years with Amazon 20 billion with Cabus 22.4 4 billion with core. We have 300 billion plus with Oracle.

To be clear, I was wrong back in 2024. And why? Cuz I was naive. I was like, the market's a sensible place. Microsoft and Google, Amazon, Meta wouldn't spend hundreds of billions of dollars for no goddamn reason.

Other than Microsoft at this point, they're all having to take on debt.

It doesn't fix the fact that it's very clear that Microsoft, Google, Meta, and Amazon, their overall growth is slowing. Otherwise, they would have never done this. They are slowing down. and m 7% of Microsoft's fiscal year 26 revenue was from OpenAI.

Their cloud revenues are accelerating this quarter based on anthropic and OpenAI spend.

The reason I brought up meta was not not to be argumentative is you'll notice that Meta didn't grow like gang busters. Oracle did, open AI, um Microsoft did.

the point I'm making around cloud growth, which is most of the growth for Amazon, Google, and Microsoft, though Amazon has a surprisingly good ad business comes from cloud and most of that growth comes from anthropic and open AI.

Without that, their growth story ends and they I actually think will eventually

And Microsoft,

that's why Microsoft has done multiple price increases the last few years. Same with Google, Meta.

GitHub Copilot had two million customers and on June 1st of this year, Microsoft just went pulled the rug out from under them. That is an insane thing to do to customers.

Amazon, Google, maybe Microsoft, definitely Meta are going to have to take out a bunch of debt.