Elon Musk Is “Losing It On The Stand”

INTRO

You know what I thought about doing, Scott? I thought about going down to the courtroom when I was in San Francisco because I had some free time and just sitting and waving at him. Hey girls, what up?

Let’s get to the news.

FCC COMES FOR DISNEY

The FCC has ordered Disney to file early renewal applications for its ABC-owned broadcast licenses — these are affiliates in different cities — years ahead of the normal schedule. The commission is citing an ongoing investigation into Disney’s DEI practices as justification. More notably, it comes days after Trump and Melania renewed a push to take Jimmy Kimmel off the air after he made a joke about Melania being an expectant widow.

Disney is pushing back hard. The new CEO is not having it and he’s being supported by a range of companies. This is a step too far for our good friend Brendan Carr, who is just such a nakedly political person carrying water for the Trumps. Melania doing this was fascinating. But Kimmel’s just emboldened and has put out a series of responses, and no one is putting up with this. The FCC is going to lose in court. But what a harassment of a classic American company. What do you think about this?

Well, I actually saw Kimmel’s response. The reality is late night TV is dying without any help.

And in a weird way, it kind of helps him. I think Jimmy Kimmel and all the late night people are extraordinarily talented. To be quick on your feet, hardworking, come up with new material every night — they’re extraordinarily talented people, all of them across the whole spectrum. I’m actually trying to get Jimmy Kimmel to come be the interview for our Prop Markets Live in Los Angeles. Jimmy, call me. I think it would be very interesting to have him talk about it. I think he should just double down and say, “I stand by everything I said. It’s humor.” His ensuing skits are very funny — he’s done a whole series.

Okay, this is what’s going on here — fascism. Who said they’re “poisoning the blood of our country”? That was Trump. Who described political opponents as “vermin”? Who told the Squad to go back to where they come from? Who said that Adam Schiff was guilty of a crime that is punishable by death? The dehumanization, the delegitimization, the exclusion, the criminalization, the existential threat framing — no individual in public office has done more of this in the world than Donald Trump.

Can I interject? One of the things that’s incredible is that these are the free speech warriors. Where are all those folks? Where’s Elon? Comedy’s illegal! Remember that one — “Comedy should be legal again.” Where’s Elon? I know he’s busy in court losing his mind, which isn’t a very far stop.

At the same time, former FBI director James Comey has been indicted for making a threat against President Trump by photographing seashells on the beach that spelled out “86 47.” It was funny — he was just doing it. And by the way, a lot of people on the right had done the same thing to Biden. “86” is a restaurant term — when I was a waiter, if we were out of pumpkin soup we’d write “86” on the chalkboard.

His approval ratings are underwater. Turning up the volume on culture wars seems like — hey, that was last year or two years ago. That worked then, but it doesn’t work anymore. Disney’s pushing back. This is just an astonishing array of pushback. What I’m more interested in is Brendan Carr and the guy running the DOJ. I thought Pam Bondi was bad, but Todd Blanch is competing for suckiest sycophant. The enablers who just go along with this are really quite astonishing to me.

Aren’t we just disappointed? I think we always blame our political leaders and he is the culprit here. But I’m shocked there isn’t more pushback. People seem to be complacent. I think we’ve taken a lot of our norms and rights for granted. I’d like to think the midterms will show that people aren’t.

Maybe the voting rights people errantly assume things will revert back to normal at some point. Oh, I don’t think they’re complacent — there’s been a lot of pushback to the Kimmel stuff and the Comey stuff. I just think people are like, “Why is he taking up so much of our brain oxygen on this nonsense?”

It’s working, Kara. It’s working. I think it’s sent a chill across all of cable TV.

I don’t think so. Look how Disney has reacted — they’re like, “No way.” But I know firsthand from a bunch of producers that legal costs and the review of content have gone way up. Anything that feels on the edge, they say, “Can we say something else? Can we lighten the language?” I think this intimidation and this chill is working.

I don’t think it’s going to work. And you know what — Brendan, when you leave office, which you will at some point, I’m going to follow you everywhere. Everywhere you try to get a job, I’m going to bring up all your terrible things. I’m going to make sure people know what you did. There’s nothing we can do about Trump at this point. I was just thinking — he is in our heads so much, we have to remove him. Not ignore him, but stop getting sucked into their ridiculous, toxically comical drama. It’s got to be time to say, “You’re in our rearview mirror, old man” — and just move him along.

You brought up an interesting thing, and that is the media just doesn’t know how to cover Trump. Showing up dressed to the nines to have him delegitimize them in a windowless ballroom. Clearly, the media does not know how to deal with this guy. Ten years now — ten years.

The idea I like is that newspapers and cable news companies all do the following: instead of having four or five stories and a whole narrative about what he’s done — interviewing people about how ridiculous it is — I think they should have a two-minute segment and one page on the back page that says: “This is what Trump said today.” Just really quickly outline it. He said this about this person, he said these people are animals, he did the shell thing — just do it really quickly.

And sequester it, so you can get it all in one place. Because right now, 18 of the 24 minutes of actual content on TV is different stories that all involve him. He is like a Marvel comics villain — he gains power from conflict and controversy.

What I’m saying is: do the news, and just take everything Trump and go — “He said this, this, this, and this today. We’ll see you tomorrow night.” Ring-fence him, as Jennifer Welch says. I was coming back from San Francisco and I walked into a store and I bought an actual book. That’s enough. I’m going to read a book, not participate in the social media around him. Sometimes it’s fun, and I have to say Jimmy Kimmel is actually doing a great job — he said he’s finally brought Melania and Trump together. He’s using it as content, which he should do. But in a lot of ways, just laughing at this poor obese old man is the way to go. Mock him relentlessly. It’s not ignoring it — I think ignoring it is a mistake. Page three of every newspaper: “This is what Trump said today.” Just list it all. Ten minutes every night on national news — cover the actual news, then: “And this is what Trump said today.”

BIG TECH EARNINGS

Let’s do a rundown of the latest big tech earnings, which some are calling AI’s moment of reckoning.

First, Alphabet. The company reported a 22% surge in first quarter revenue, with sales reaching around $110 billion. Net income was up 81% compared to the same period a year ago. Shares are up 15% year-to-date at the time of this taping.

Microsoft beat expectations with revenues increasing 18% year-over-year. Capital spending for the company will reach $190 billion this year, a 61% increase over 2025.

Amazon beat expectations, expanding revenue in its cloud computing segment by 28% year-over-year. The company announced it expects to spend $200 billion on AI in 2026.

And finally, Meta reported lower than expected capex and missed on user growth — the first time they’ve attributed that in part to internet disruptions in Iran. Daily active people was down over 5% from the fourth quarter. In better news, revenue climbed 33% from a year earlier, making it the fastest growing quarter since 2021.

So what jumps out at you about these four companies, besides their enormous spending on AI?

I used to say this was the attention economy — now it’s the ketamine economy, where it’s dissociated from everything else but AI. I said yesterday that I thought these guys were going to blow away expectations, because what do they monetize? They monetize spending around AI. And up until AI came along, the driver was that they monetized attention. With everything going on in the world, are you less or more glued to your phone? I can’t stop looking at mine — like, “Okay, who did we bomb today?”

Let’s go through the earnings, which were nothing short of staggering.

Alphabet revenues were up 22% to $110 billion. They beat consensus — EPS consensus was $2.63, they came in at $5.11. Although some of that was an unusual equity gain, Google Cloud hit $20 billion, up 63%, with their backlog doubling. Search revenue was $46 billion — their backlog is half a trillion dollars. Search revenue, which was supposedly going away because of OpenAI, was up 19%. Gemini paid monthly active users are up 40% quarter-on-quarter. Full-year capex guidance went up, which investors don’t love. Their stock was up 8% in after-hours.

Microsoft: Azure grew faster than anyone expected. Revenue up 18% to $83 billion — beat consensus wildly. Azure grew 40%. The AI business crossed a $37 billion annual run rate, up 123% year-on-year. Their commercial backlog is up to $627 billion. Quarterly capex was $32 billion, but it’s been raised — full-year capex raised to $190 billion, well above the $155 billion they’d expected. OpenAI committed an additional quarter of a trillion dollars in Azure spend the day before the print. But the stock was down 2%.

Meta: Revenue was up 33% to $56 billion. Earnings per share of $10.44 — though a bunch of it was a tax benefit. Ad impressions were up 19% and average price per ad was up 12%. Q2 revenue guided to $60 billion, implying 25% growth. Full-year capex raised to $135 billion from $120 billion, plus higher component prices — and the stock fell 9% after hours.

Amazon: Fastest growth in 15 quarters, but free cash flow collapsed because of capex. Revenue up 17%. EPS blew away expectations, but that was partly due to recognition of a gain on their Anthropic investment. AWS hit $38 billion, up 28%. Advertising grew 24%. Q1 capex went to $44 billion; full-year at $200 billion. Free cash flow fell. OpenAI recently committed to consuming two gigawatts of Trainium capacity through AWS — so Amazon is suddenly in the chip game. Stock rose 3%.

It is living up to expectations, but the capex required to deliver against the demand is basically taking all the juice out of the earnings. The infrastructure buildout is enormous.

So when does that stop? It’s sort of like having a hot spouse that requires a lot of money to keep. Must work harder. When is the spending going to stop? When a big customer announces they’re reducing their spend, or one of these companies announces their numbers didn’t meet expectations. But the bigger players are all just on fire.

Let me note: there are internal concerns about OpenAI’s spending plans and user revenue targets. According to the Wall Street Journal, OpenAI missed an internal goal of reaching one billion weekly active ChatGPT users by the end of 2025 and has seen subscriber defections. The company is also denying there’s a rift between Sam Altman and CFO Sarah Friar over computing resources. They’re approaching their IPO, but they’re seeing a lot of bumps going into it.

Is there a reckoning moment coming? Just one big customer — by the way, I’ve started on my next book. That’s the name of it: The Reckoning.

Oh! Didn’t I use the word reckoning? I feel like I inspired that.

If the book works, if it’s a bestseller, it was your idea. I think there’s a reckoning coming in America and I think there’s a reckoning coming in the markets. AI is sucking so much oxygen out of the room. I sit in a lot of VC pitches — if you’re not an AI company, you can’t raise money right now. It’s very difficult. I’m on the board of an AI company growing 4x a year and they’re like, “That’s not enough.” Unless you’re growing 10x a year as a pure software AI company. There’s a company called Rogo — AI for financial institutions — that just closed a round at a $2 billion valuation. They raised $100 million, trading at something like 100 times revenues. If you are not an AI company growing five, seven, ten times a year, you can’t raise money.

In my opinion, all of the GDP growth is coming from capex and AI — 77% of earnings growth is coming from the Mag 10. America is becoming a giant bet on AI. I had breakfast with a big tech CEO today and people are wondering: how is the S&P hitting all-time highs with such geopolitical uncertainty and oil at $110 a barrel? The reality is America is now a giant bet on AI.

And in a weird way, the war with Iran kind of helps these guys — none of them are affected by high oil prices. They were all at the White House this week with King Charles. And the high oil prices — that money circulates within our economy, it hurts consumers, but Chevron and Halliburton are making a ton of money. So it’s oil moguls and tech moguls.

We’re a net exporter. And I’m writing something called “the ketamine economy” — the idea being that ketamine supposedly is dissociative, you can see your issues and your problems. The most dangerous thing about America right now is that if you’re in the 0.1%, you are not invested in the well-being of America. Do you care about infrastructure? You don’t care about TSA or airports — you fly your own plane. Do you care that 40% of third graders can’t read? No — you have private schools spending $75,000 per student. Do you care about policing and safety? No — you live in a doorman building in an over-policed neighborhood with cameras everywhere. Do you care about health? No — you have concierge medical services. The people who control our government or have disproportionate influence have totally dissociated from America’s interests. And even more frightening — America could be argued to have dissociated from global interests. Do we care about high oil prices? Not really. Do we care about HIV infections in Zambia? Not really.

The rich people — it’s a “Pierre Don’t Care” economy. You know the book Pierre where he always says “I don’t care”? He eventually gets eaten by a lion. That’s what these people are like.

We have to figure out economic policies that give the wealthiest people in our nation a vested interest in the success of America. There’s an anger out there — you can feel it, it’s palpable. These people have gone from heroes to villains. I get it everywhere I go, and it is deeply and profoundly angry. Even more so than at Trump — people have kind of factored him in. But there is a growing anger that they do not understand. They’re behaving like villains. We’ll see where this goes — because if they’re the only ones who benefit and all the other companies don’t, there isn’t just a reckoning — there are consequences.

“Reckoning” — it’s actually from the Middle English, meaning to settle accounts, often carrying a connotation of judgment, retribution, or facing consequences.

That’s right. It’s the act of settling accounts. Anyway, let’s take a quick break. When we come back — Elon takes the stand.

ELON TESTIFIES

We’re back. Elon Musk took the stand this week in the trial against OpenAI. Let’s go through some of the things he said. He called himself a “fool” for providing OpenAI’s early funding. He discussed his concerns about AI and not wanting a “Terminator outcome.” He accused OpenAI’s lawyer of trying to trick him. When asked why he brought the suit, Elon said “it’s not okay to steal a charity” — warning that if he loses, it would “give license to looting every charity in America.” By the way, Elon is not charitable in any meaningful way. The judge pushed back, reminding jurors that Elon’s claims and opinions have no legal value whatsoever. As I predicted, a number of prospective jurors had thoughts about Elon — some calling him a “greedy, racist, homophobic piece of garbage” and a “world-class jerk” in their questionnaires.

This has not been good for Elon. He is not used to being challenged publicly — he is losing his mind on the stand and looks terrible. He needs to control himself, which — speaking of ketamine — he cannot do.

To be fair to him: he was the first person who talked to me about the “Terminator outcome” maybe ten or fifteen years ago. He was the first person to be very worried about it. He shifted over time — first it was Terminator, then we were going to be like house cats, then we were like ants that a highway just gets built over — not maliciously, just in the way. But then he tipped out of OpenAI because he thought they couldn’t make it. These emails make that clear, and he signed away his rights. He gave them $38 million, not $100 million as he’s claimed in other depositions — he keeps changing the number, which isn’t great when you’re under oath.

What’s very clear is that he shifted to being a greedy hypocrite and started his own company — xAI — which most experts would say has the fewest guardrails of any major LLM, and which has included non-consensual intimate images and child pornography. So he’s not here to save us. He’s trying to present himself as someone worried about AI while fully participating in the damage it does.

Here’s what I’ve heard about how this went down: Sam Altman actually tried to raise $500 million for the nonprofit and was unable to. Elon showed up and said it needs to be a for-profit company and he needs to control it and own 80% of it — after he had already given the money.

Yes, that’s exactly what happened. And the people there said, “No, we’re not doing a for-profit Elon-controls situation.” He does that at every company. So he said “I’m out” and signed paperwork. This is literally the biggest example of seller’s regret in history.

And then — the narrative about him pretending to be more noble than he is, really worried about AI — who went on to develop an LLM that most experts say has the fewest guardrails? Elon, with xAI.

So the fact pattern here: my prediction is that OpenAI doesn’t want to settle. I think Elon’s either going to drop the case or lose. It’s a jury trial, and then the judge decides on remedies. He could always appeal — he has so much money. But everything I’ve seen fits this narrative: that once OpenAI became commercially viable, Elon wanted it to flip to for-profit and he wanted to own it — and he legally gave up those rights.

One of the things I love about them being under oath is I finally hear things confirmed, like that Elon got into an argument with Larry Page because Page called him a “speciesist” for being concerned about AI. And I’m like — yeah, we kind of like the human species, sorry.

I’m so pleased for people to see these figures as they are. When someone called Elon a “greedy, racist, homophobic piece of garbage” — I’m like, you see what I’m saying? They don’t care about people. And Elon wants to present himself as the savior of the world — like Thanos, who has an idea of himself as a hero when he’s actually the villain because he’s “helping humanity.” This is a textbook Messiah Complex. He’s the guy to colonize Mars, turn us into an interplanetary species — only him. He’s the one who should control AI.

I don’t think this is going well for him. This lawyer actually worked for him at one point and then worked against him — so he’s familiar with the firm, and he’s just losing it on the stand, which is exactly what he shouldn’t do. He should be calm as a cucumber and he can’t be. It’ll be interesting — the contrast with Sam, who I think will be smooth as silk. And Satya being there will help anchor OpenAI’s case.

You know what I thought about doing? I thought about going down to the courtroom when I was in San Francisco and just sitting and waving at him just to get him even more riled up. Hey girls! Does he even show up? Oh, he’s on the stand — they’re all there. I thought about just going and waving and going, “Hey girls, what up? Can we all get along?” But I didn’t. I hung out with Lily instead.

TAYLOR SWIFT FIGHTS BACK AGAINST AI

Taylor Swift has filed a new trademark application for two voice clips and one image — likely an effort to protect her voice and likeness from AI misuse. This is something a lot of celebrities are doing, but she’s probably the biggest one. The voice clips are sound trademarks — clips of her saying “Hey, it’s Taylor Swift” and “Hey, it’s Taylor.” Registering a celebrity’s spoken voice has not been tested in court. Matthew McConaughey has also trademarked his voice and image. It’s an interesting strategy.

She also did a really interesting interview with Joe Coscarelli at the New York Times for “The 30 Greatest Living American Songwriters.” Let’s listen to what she had to say:

“If there’s any way we can make confessional songwriting something that isn’t seen as people being ‘messy’ — you have to be fair to everyone. Are rap beefs messy, or are they confessional? Let’s make it a music conversation rather than just ganging up on female artists. And the more male artists that are messy or emotionally complex or confessional or upset, the happier I am.”

And thirdly, this Universal deal is going to trigger something in her contract that forces Universal to pay out all its artists, even those who received advances. She put it in to protect herself, but the way she wrote it, everyone at Universal will have to be paid out. She’s securing enormous payouts for all the artists — it’ll endear her to a lot of people.

What do you think? I know you don’t like her music—

I never said that. That’s not fair to say.

Okay, fair. I’m a fan of erring on the side of protections around people’s IP. Google crawling every media company’s content, people using someone’s likeness or voice — I agree with Jensen Huang, who said everyone should own their digital twin. Not only the physical rendering, but also your voice, your likeness. People spend a lot of time and energy developing IP they own — they should be able to decide to give it to their heirs, sell their catalog, their likeness, their image. They should own it.

And the fact that she’s doing this on behalf of other artists is really wonderful. She has enormous public affection, so she’s going to get public support for whatever she does. I’m a fan of how she’s handling it. And we need these companies held accountable. As Walt Mossberg said, these companies are “rapacious” information thieves. And now they’re stealing likeness.

I think they’ll come up with the illusion of complexity — calibrating how closely they can approximate someone’s voice without technically triggering an IP claim. But I think it’s actually pretty simple. Someone should be representing authors, artists, and past celebrities — their heirs or estates can either license into a giant pool or not, and every time an AI takes a sentence from your book or has someone speak in your voice, you’re entitled to a percentage. Music artists have been doing this for a long time. When a station plays a song, at the end of the year they send a check to the label and the artists get paid.

Speaking of which — Ann Lamott was on stage with me this week. She talked about how she had AI write something in her voice and said it was actually quite good, but it wasn’t really her — because they’d crawled so much of her material. Are they making her, or a facsimile of her?

What happened to your Google avatar thing? You took it down, right?

I started working on it about a year and a half ago with a former student of mine who’s a Google product manager. They have something called Portraits — they were doing it with doctors, with historians — where they upload everything you’ve ever written and said, and someone can come to an avatar and ask questions, and it’ll give an answer pretty resembling what you would actually say. I tested it and it worked — if you asked it whether to get an MBA, it gave a reasonable answer.

And then you — actually, you messed it up for me. You did that interview with the parents of a kid who had committed suicide. And I thought: am I going to be part of the problem, where I inadvertently sequester young men from asking their parents for advice, from finding real mentors and friends? The day it launched, I started testing it and just felt really uneasy. So I called Google and said, “I have to be honest — I feel really uncomfortable with this. I can see how it might be helpful, but I can also see some young man not asking his dad for advice and instead saying, ‘Well, Prof G said this.'” So they took it down.

But here’s the thing — you can already say “in the voice of Kara Swisher” and AI will do it. My view is that should be allowed, but only if you’ve agreed to have your stuff crawled. And the more people who ask for something “in the voice of Kara Swisher,” you should get a royalty check — similar to the way music licensing works. I did that Simpsons thing and I got an enormous check. Hollywood can do this. It goes way back — when the Google founders were stealing books, and I was like, “You’re shoplifters.” Their mentality is to take things from you.

So I’m glad someone like Taylor Swift is pushing back. And I think it will benefit all of us. In an upcoming episode of my show, I actually made one of these — a digital 3D version of me that looks and talks like me. I’m sending it to you for Christmas. I like this as long as you sign up for it — because you might decide “have at it,” or, if you’re like me and you think once you’re gone it doesn’t matter either way, you might like your heirs to get a check when someone says “in the voice of Scott Galloway, write about income inequality.” A lot of artists and writers and singers would agree to this. There’s a model for it.

PREDICTIONS

Okay, let’s hear predictions. I’ll go first.

I think The Devil Wears Prada sequel is tracking to be like a $200 million opening week. A lot of these movies — whether it’s The Devil Wears Prada or Project Hail Mary — there’s a lot of love for movies that are just well-made, good, and feel fresh. People are actually watching in theaters, not just waiting for digital. They like the community experience. A lot of the films doing well are very human-centered. I like that.

I’ll see it. So your win is The Devil Wears Prada?

No — the broader idea is that these movies are showing that real, human-made filmmaking still resonates. Prada has the same feeling as Hail Mary — it feels like real people made it who cared about standards and quality. It doesn’t feel like AI made it.

The rumors of creativity’s death at the hands of AI were greatly exaggerated. About 24 months ago, everyone thought all music would be AI-generated — that you’d just give a good prompt and it’d come up with better songs than Kanye. That didn’t happen. Human creativity still has tremendous moats around it. Even in design — look at Sora being shut down. The percentage of people in design roles at tech firms has actually gone up. No AI is going on tour right now.

Where I think you’re being a little nostalgic: The Devil Wears Prada and Hail Mary are great movies and will do well, but box office is still down 30% post-COVID. Original content that breaks through will find a way to monetize. But this collective nostalgia for the movie theater — Ipic is going bankrupt near me.

I’m not talking about movie theaters in general — I’m talking about freshness in movies. These specific films are showing big pickup in theaters. It’s really interesting.

Overall downward trend, right? It used to be that all long-form content ran through theaters. When I was a kid I went to the movies two or three times a week. That’s just what you did on a date, with your mom. Anyway, I’m glad you liked them.

My prediction is much more boring. Intel is up fivefold over the last year and I think it’s going to collapse. Amazon is now openly talking about how their own chip revenue is growing 150% every three months. If it were a standalone business, Amazon’s chip operation would be generating $50 billion in annual recurring revenue — more than AMD and about as much as Intel. OpenAI and Anthropic use Amazon chips for their workloads. Meta and Anthropic have also signed deals to use Google’s TPUs, which are two times cheaper than Nvidia’s GPUs.

Intel looks dramatically overvalued — it now has the highest forward P/E of any large cap, trading at 118 times forward earnings. AMD is at 50, Amazon at 32, Nvidia at 26. And Intel’s business is expected to grow slower than its peers. The meme is that Intel was beaten down, now it has a great story, now it has government backing — the chips are supposed to be the bottleneck in the AI boom. But they’re actually not. The real bottleneck is power. And the stock is up fivefold trading at 118 times forward earnings while growing slower than everybody else, with Amazon and Google coming for their lunch.

My prediction: Intel is going to be one of the worst performing stocks in the tech sector over the next 12 months.

That’s a good one. Intel has the look of an expectant widow.

WIN OF THE WEEK

King Charles was fantastic. No one can thread the needle of a thoughtful, intelligent stab in the heart quite like the British. When the King said: “You have often stated that without us you’d be speaking German — I’d just like to remind you that without us you’d be speaking French.” He delivered it perfectly — he actually studied drama in college. He stated what we need to know: the alliance between Britain and the US should be unshakable. And he’s been sick — it was a really nice moment for him. I like the monarchy, and I always got the sense he’s a really decent man.

And the thing is, Trump couldn’t even be insulted because he loves the monarchy — so the King insulted him and was the only one who got away with it. It was so elegant. Those tech people sucking up to the King — you guys are richer than Britain, you could get a meeting with him anytime. And I love that the Republicans even cheered the climate change stuff — because that’s King Charles’s signature issue.

That’s the show. Thanks for listening to Pivot. We’ll be back next week.