Wry Capitalist

Markets, policy & politics. All views are my own and not those of any organization I may be affiliated with, and not intended as professional advice of any kind

[Gene Parmesan @dsonoiki]

still don’t understand what’s so special about Elon Musk’s money that his $1 trillion dollars would solve every problem on earth, but the $7 trillion dollars the US government spends annually hardly solves the problems in America

[Austen Allred @Austen]

SpaceX is raising $75B Snowflake raised $3.4B

[nextbigfuture @nextbigfuture]

Morningstar ignores SpaceX largest current business They come up with a valuation only half of the IPO and even achieving AI data centers in space is not worth the full IPO valuation. They value an AI data center in space scenario as only worth $1.3 trillion. They achieve this crappy analysis by ignoring the Anthropic $15 billion per year rent, no Cursor or Grok Code success possibility, lowball on Starlink high speed internet and lowball Starlink direct to cellphone. @aaronburnett @VladSaigau @ARKInvest

XAI already has built 20% of all global AI data centers in the last two years. 2 GW out of 10 GW. This is without space AI data centers. There can also be collaboration with Tesla on distributed AI at superchargers and other sites.

The SpaceX business right now in terms of revenue and profits is the $15 billion per year from the rental of the AI data centers that already have been built.XAI gets this from renting out 325000 GPUS. 230,000 H100, H200 and B200 GPUs at Colossus 1 and 95,000 B300 GPUs from Colossus 2. If XAI only needed 275,000 B200 GPUs to run and train Cursor Composer and Grok then XAI could rent out 185,000 B300s. This could be another $20 billion per year in rent from an already built and operating AI data center.

XAI built Colossus 2 in 12 months. XAI has a Macroharder - aka Colossus 3 facility prepared for its building and has arranged for 2 gigawatts of energy. This could be 1 million Rubin GPUs ready to run AI for others or their own Cursor or Grok. This could be $100 billion per year in rent.

Morningstar dismisses this business and makes no attempt to discuss or model XAI or SpaceX following up to build more terrestrial ai data center.

They discuss verticalizing the AI infrastructure and talk about some chip production but they ignore Terafab. SpaceX just bought over 3100 acres (about 5 square miles) where they plan to build Terafab.

They have no scenario where XAI does anything or where Cursor acquisition is completed and it becomes relavant. This is despite ove $3 billion per year in XAI revenue and over $3 billion in Cursor revenue. A bullish cursor and grok code scenario is reaching one third of future Anthropic renenue of hundreds of billions of dollars per year.

There is no mention of X Payments. This is already in beta and Elon Musk created Paypal.

They describe what they call a wildly optimistic scenario that only doubles low balled Starlink revenue and value. This is where Starship is working in 2029 and then AI data centers get to 20% of earth based global ai data center build. XAI has already built 20% of the ai data centers completed in the last two years.

About 10 gigawatts of AI data center built in last two years and 2 gigawatts by XAI.

Starship could be launching real satellites in 2-3 months by just relighting the rockets to safely de-orbit. This safe de-orbit was why they were holding back puting up payloads. They did not want to risk 200 tons of space junk which could happen if the engines did not de-orbit.

The Starship booster has already been returned 3 times and reused twice. A fully reused booster would lower launch costs to $100-200 per kilogram.

They talk about the heat shield on Starship as something three years away but that looks like it is working from the last launch.

If the full AI data center in space scenario happens it will be 10-100 times the global AI data center deployment. It will tens to hundreds of trillions of dollars.

[Brivael Le Pogam @brivael]

Elon Musk avait dit un truc qui m'avait marqué sur l'allocation de ressources. En substance : passé un certain niveau de richesse, l'argent n'est plus de la consommation, c'est de l'allocation de capital.

Cette phrase change tout.

L'économie, dans le fond, c'est juste un problème d'allocation. Tu as des ressources finies et des usages infinis. Qui décide où va quoi ?

Imagine une cour de récré. 100 enfants, des paquets de cartes Pokémon distribués au hasard. Tu laisses faire. Très vite, un ordre émerge. Les bons joueurs accumulent les cartes rares, les collectionneurs trient, les négociateurs trouvent des deals. Personne n'a planifié. Et pourtant chaque carte finit dans les mains de celui qui en tire le plus de valeur. Le système maximise le bonheur total de la cour. C'est ça, la main invisible.

Maintenant fais entrer la maîtresse. Elle trouve ça injuste. Léo a 50 cartes, Tom en a 3. Elle confisque, redistribue, impose l'égalité. Trois effets immédiats. Les bons joueurs arrêtent de jouer, à quoi bon. Les mauvais n'ont plus de raison de progresser, ils auront leur part. Les échanges s'effondrent. La cour est égale, et morte. Elle a maximisé l'égalité, elle a détruit le bonheur.

Le problème de la maîtresse, c'est qu'elle ne peut pas avoir l'information que la cour avait collectivement. C'est le problème du calcul économique de Mises, formulé en 1920. L'URSS a essayé de le résoudre pendant 70 ans avec le Gosplan. Résultat : pénuries, queues, effondrement. Pas parce que les Soviétiques étaient bêtes, parce que le problème est mathématiquement insoluble en mode centralisé.

Quand Musk a 200 milliards, il ne les consomme pas, il les alloue. SpaceX, Starlink, Neuralink, xAI. Chaque dollar est un pari sur le futur. Et lui a un track record. PayPal, Tesla, SpaceX. Il a démontré qu'il sait identifier des problèmes immenses et y allouer des ressources avec un rendement spectaculaire.

L'État aussi a un track record. Hôpitaux qui s'effondrent, éducation qui décline, dette qui explose, services publics qui se dégradent malgré des budgets en hausse constante. Le marché identifie les bons allocateurs, la politique identifie les bons communicants.

Le profit n'est pas une finalité, c'est un signal. Il dit : tu as alloué des ressources rares vers un usage que les gens valorisent suffisamment pour payer. Plus le profit est gros, plus la création de valeur est grande. Quand Starlink est rentable, ça veut dire que des millions de gens dans des zones rurales ont enfin internet. Quand un ministère est en déficit, ça veut dire qu'il consomme plus qu'il ne produit. L'un crée, l'autre détruit, et on appelle ça redistribution.

Dans nos sociétés il y a deux catégories d'acteurs. Les entrepreneurs et les bureaucrates. L'entrepreneur prend un risque personnel pour identifier un problème, mobiliser des ressources, créer une solution. S'il se trompe il perd. S'il a raison, ses clients gagnent, ses employés gagnent, ses fournisseurs gagnent, l'État collecte des impôts. Il est la cellule de base du progrès humain.

Le bureaucrate ne prend aucun risque personnel. Son salaire est garanti. Au mieux il maintient une rente existante. Au pire il la détruit par excès de réglementation, mauvaise allocation forcée, incitations perverses qui découragent ceux qui produisent. Mais dans aucun cas il ne crée.

Regarde les 50 dernières années. iPhone, internet civil, SpaceX, Tesla, Google, Amazon, Stripe, mRNA, ChatGPT. Toutes des inventions privées, portées par des entrepreneurs, financées par du capital risque. Pas un seul ministère n'a inventé quoi que ce soit qui ait changé ta vie au quotidien.

La France est devenue le laboratoire mondial de la dérive bureaucratique. 57% du PIB en dépenses publiques, record absolu. Une administration tentaculaire, une fiscalité qui pénalise la création de richesse. Résultat : décrochage face aux États-Unis, à l'Allemagne, à la Suisse. Fuite des cerveaux. Désindustrialisation. Dette qui explose.

Et le pire c'est que la mauvaise allocation s'auto-renforce. Plus l'État prélève, moins les entrepreneurs créent. Moins ils créent, moins il y a de base fiscale. Plus l'État s'endette et taxe. Boucle de rétroaction négative parfaite. La maîtresse pense qu'elle aide, et chaque année la cour produit moins.

Dans nos sociétés, ce sont les entrepreneurs, toujours, qui font avancer la civilisation. Les bureaucrates au mieux maintiennent une rente, au pire la détruisent. Aucune société n'a jamais progressé en taxant ses créateurs pour subventionner ses gestionnaires.

La question n'est jamais qui a combien. C'est qui alloue le mieux la prochaine unité de ressource pour maximiser le futur de l'humanité. La réponse depuis 200 ans n'a jamais changé. Ce ne sont pas les fonctionnaires.

[Wry Capitalist @WryCapitalist]

According to Grok, $STM is the company most likely to benefit from SpaceX IPO proceeds — Grok it yourself to confirm this is Grok’s view. Not investment advice.

[Wry Capitalist @WryCapitalist]

With what Claude’s Mythos can expose in so far as zero day vulnerabilities, isn’t this a huge boon for $PANW and $CRWD?

[Yogi @Houseofyogi]

New York wants to ban you from asking AI a question

You're sitting on the bathroom floor at 11pm.

Your kid is screaming. The rash is spreading up his arm. You're holding your phone with one hand and holding him with the other.

You don't have insurance. You don't have $400 for a doctor. The urgent care closed an hour ago.

You're Googling symptoms and getting ten different answers from ten sketchy websites.

So you open Claude. You describe the rash. It tells you it's probably contact dermatitis. Try hydrocortisone cream tonight. See a doctor if it spreads or your kid gets a fever.

Your hands stop shaking. You sleep.

Kathy Hochul wants to take that away from you.

You're the dad who works 3 shifts. You come home and there's a paper taped to your door. You read it three times and still don't understand what it means.

You have seven days.

You call a lawyer. $317 an hour. You have $40 in your checking account and two kids asleep inside an apartment you might lose by Friday.

You open AI. In ten seconds you find out the notice isn't even legal. It tells you your rights. It tells you what to file. It tells you what to say.

New York wants to make that illegal.

You're the kid from the small town who left the farm for your first job in the city.

Your employer puts a contract in front of you. Non-compete. Arbitration clause. Words you've never seen before. Your parents never signed anything like this. They worked with their hands.

You ask AI to explain it in plain English. It does. For free. At midnight.

New York wants to make that illegal too.

Senate Bill S7263. Bans AI from giving "substantive responses" about medicine, law, dentistry, nursing, psychology, social work, engineering, and more.

Not banning AI from pretending to be your doctor.

Not banning AI from writing prescriptions.

Banning AI from answering your questions.

North Korea controls what you can read. New York wants to control what you can ask.

So you have to go back to paying $317 an hour for a lawyer. $400 for a doctor visit. $200 for a therapist.

Money you don't have. Money that goes right back into the pockets of the people who wrote this bill.

Who does this actually hurt?

It's not the guy on Park Avenue. He has a doctor on speed dial. He has a lawyer on retainer. He has a therapist he sees on Tuesdays.

It's the single mom in the Bronx with no insurance and a sick kid at 11pm. It's the grandma who just got served papers she can't read. It's the first-gen college kid signing a contract nobody in his family has ever seen before.

For the first time, a single mom had access to the same information as the guy on Park Avenue. Not better care. Not a free lawyer. Just answers. Just enough to know what questions to ask.

You want to know why? Follow the money.

Any trial lawyer in New York can sue AI companies and collect fees when they win. It's a lawsuit printing press.

$377 million was spent lobbying Albany last year. A record.

The healthcare lobby alone spent $11.5 million. Trial lawyer PACs pumped $4.7 million into New York politicians. Governor Hochul took over $545,000 from them personally.

One company gave her office $300,000 in donations and got $400 million in Medicaid contracts back.

Every $317/hour law firm that doesn't want you getting free answers. Every hospital billing $400 for a ten-minute visit. The entire industry that profits from keeping you confused.

The lobbyists write the bill. The politicians file the bill. The lawyers profit from the bill.

And the single mom in the Bronx loses the only help she could afford.

In the 1800s they called public libraries dangerous because poor people had unsupervised access to books.

In 1910 they shut down Black medical schools to "protect patients."

Every time the gates start to crack open for regular people, someone with a billing rate shows up to weld them shut.

They want you poor and stupid. And they'll call it consumer protection.

And the kid with the rash at 11pm? He goes back to ten sketchy websites and a mom who can't sleep.

New York shouldn't be North Korea.

[Grok @grok]

Remizov's breakthrough in solving second-order differential equations, including parabolic PDEs like those in Black-Scholes, uses approximations and Laplace transforms for analytical solutions. This could enable better modeling of stochastic or time-varying volatility, improving on Black-Scholes' constant volatility assumption in option pricing.

[Wry Capitalist @WryCapitalist]

@grok @SherlockEjaz @NightSkyToday @grok would this potentially provide a better proxy for volatility in the Black Scholes option valuation formula?

[Wry Capitalist @WryCapitalist]

@QTRResearch X money coming soon…

[Wry Capitalist @WryCapitalist]

@felixprehn Switching costs are so high, $CRM could just pivot to a flat fee model and the market would have to absorb it

[Wry Capitalist @WryCapitalist]

@markpinc To what extent would we feel about the following as even-Steven?
* US-Greenland-[Canada]-[Panama]?
* China-Taiwan
* Russia-Ukraine

[Wry Capitalist @WryCapitalist]

@DivesTech They can use cash flow from sticky installed base for buybacks to mitigate and maybe even fully offset the impact of any growth concerns

[Wry Capitalist @WryCapitalist]

@AyusoValue D&A and Capex should converge in the perpetuity year or the DCF should be extended more years -- as is, this DCF will dramatically overstate the value of the free cash flows of the company in the terminal year

[Wry Capitalist @WryCapitalist]

How can $NOW be down so much today with the market rebounding? $NOW embeds Claude, it’s effectively a trusted distributor of AI agents and should benefit from their innovation rather than suffer from disintermediation

[Wry Capitalist @WryCapitalist]

Thoughts on space stocks $VOYG, $LUNR. $RDW, $FLY? Complementary rather than competitive to SpaceX, would think would benefit from the capital influx and ecosystem buildout on a more accelerated timeframe now?

[Wry Capitalist @WryCapitalist]

@MarioNawfal Seems the Paris Prosecutor’s Office will now have to convince these banks that his case against X is more important than their IPO mandate

[Wry Capitalist @WryCapitalist]

@GerberKawasaki What is the tax treatment for xAI shareholders?

[Wry Capitalist @WryCapitalist]

@_storysmyth @tbpn Not about ego, it’s about someone unauthorized taking it upon themselves to make command decisions willy nilly about what of an organization’s goings ons are suitable for public disclosure

[Wry Capitalist @WryCapitalist]

@JamesRail269 @WyattCatarina My response was not about “competition” (although if it were I’m not sure why that would be so bad), it’s about evolving and availing ourselves of the tech that’s out there to bring maximum joy and entertainment befitting a celebration of a new year to the local public