The biggest idiot of the AI bubble

Microsoft has officially flushed over $100 billion down the drain just to keep OpenAI's compute burning right back into Azure. Yes, the recent Musk vs Altman trial was an absolute shitshow. While everyone was distracted by the billionaire mudslinging, the court documents and financial leaks quietly handed us the most hilarious reveal of the year.

We now see exactly who the biggest fool in Silicon Valley is. Microsoft executive Michael Wetter explicitly testified that they have committed a mind-numbing $100 billion to bankroll massive AI infrastructure, absorbing the costs well before seeing a single dime of return. “What was their grand reward for this historic cash drain?” I hear you asks. Well, they got a fraction of that back in a highly inflated top-line revenue.

Welcome to the circular economy:

Wall Street seems to think you can spin money in a loop and magically call it organic growth. Microsoft poured an eye-watering $100 billion into this bottomless pit, and in return, they have proudly scraped back around $30 billion in revenue between 2023 and 2025.

When you actually look at the data, the figure is embarrassingly artificial.

Here is the brutal reality of their setup:

The Azure loop: Microsoft hands OpenAI billions in funding and cloud credits. OpenAI then immediately spends that cash to buy server rentals from Azure. Microsoft turns around, winks at investors, and books it as cloud revenue.

Abysmal margins: Running AI models is notoriously expensive and low-margin. Booking $30 billion in top-line revenue means absolutely nothing when the underlying hardware depreciation and daily compute costs completely wipe out the actual profit.

Massive capital drain: They are perfectly happy to torch oceans of cash upfront on risky server builds long before ever seeing a real return on investment.

The Stargate dumpster fire:

To make matters worse, the infrastructure plan driving this cash burn is already collapsing. The infamous Stargate supercomputer project was hyped as the backbone of America's AI future. Fast forward to today, and OpenAI has already panicked and pulled the plug on massive, headline-grabbing expansions in Texas, the UK, and Norway. They suddenly realised energy grids and physical hardware actually cost money, so they dumped their direct commitments.

And who is stepping in to clean up the mess? Microsoft, of course.

When OpenAI abandoned the 230-megawatt Narvik facility in Norway, Microsoft had to awkwardly snatch up the lease and take over the capacity. When the 800-megawatt expansion in Abilene fell apart, Microsoft stepped in to catch the scraps. Microsoft is basically paying for all the starting projects, absorbing the massive capital expenditure, and then renting the servers back to OpenAI using the exact same credits they gave them in the first place.