Episode summary
Compute scarcity favors Big Tech after midterms, says The Information's Jessica Lessin
Summary
Jessica Lessin says the midterm results are a short-term gift to Big Tech because they make new compute harder to get and existing compute more valuable. That scarcity, she argues, should help companies that already control data center capacity and hurt suppliers and newer infrastructure players, even if broader regulation remains a risk.
She expects Democrats to keep criticizing AI, data centers, and especially Elon Musk, but thinks the industry will still get projects approved by offering more money to cities and towns and by making local deals. Lessin says the rhetoric may stay hostile, yet the practical path for scaling existing projects is still open. She also argues that tech companies will need to prove AI products improve consumers’ lives, not just business productivity, and reduce cyberattacks if they want to build trust.
On Anthropic and OpenAI, Lessin says higher compute costs are a bad sign for margins, especially relative to OpenAI. She sees Anthropic’s planned IPO as still viable, but not immune to slower growth or valuation pressure. She also thinks OpenAI’s turnaround depends on continued enterprise sales growth and better margins, rather than just scale.
Key takeaways
- Lessin says the election outcome makes compute scarcer, which she thinks benefits Big Tech owners of existing capacity and pressures suppliers like Nvidia and neo-clouds.
- She expects Democrats to keep attacking AI and data centers rhetorically, but says projects will still get approved if companies pay more to cities and towns.
- Lessin says Elon Musk is “really in the crosshairs,” with hearings and probes more likely than sweeping new regulation.
- She says Anthropic faces a tougher margin picture if compute costs rise, and that could weigh on growth relative to OpenAI.
- Lessin argues OpenAI’s longer-term position depends on enterprise sales and margin improvement, not just scale.
Notable quotes
“THE VOTERS HANDED AT LEAST THE BIG TECH COMPANIES A GIFT BY BASICALLY SAYING, IN THE SHORT TERM, IT'S GOING TO BE HARDER TO GET NEW COMPUTE”
“IF YOU HAVE IT, IT'S WAY MORE VALUABLE AND YOUR MARGINS ARE GOING TO BE BETTER”
“I THINK THE INDUSTRY IS BIG ENOUGH NOW THAT IT'S A LOT OF DIFFERENT THINGS, RIGHT”
“I THINK IT MEANS HEARINGS. I THINK IT MEANS ALL SORTS OF PROBES”
“I DON'T THINK REBRANDS WORK. I UNDERSTAND WHY THEY'RE TRYING TO DO IT, BUT I THINK THE PROOF WILL BE IN HOW THESE COMPANIES ACT IN THEIR COMMUNITIES”
How the episode opens
Welcome back to squawk box. Stocks tumbling yesterday following the democrats midterm wins. Hyperscalers though rose the stocks moving moves highlights a renewed debate over how democrats in congress may or may not choose to scrutinize big tech, and especially ai, right now.
Joining us is I call her the queen of the valley. Jessica Lessin is here, founder and ceo of the information. Morning.
What do you think post midterms, the the implications are and what are people in the valley saying about all of this?
So people in. — The valley are calling their closest democratic vc friends and trying to make up for several years of having gone the other way. But, you know, I think the voters handed at least the big tech companies a gift by basically saying, in the short term, it's going to be harder to get new compute. If you have it, it's way more valuable and your margins are going to be better.
So you think this is for the tech industry, or at least those who have it. It's great. But if you're a supplier, for example, tough, tough. — Tough, nvidia tough. Obviously the neo cloud is tough. If sort of all your existing business is baked into your valuation tough, I should say. There are a lot of other asterisks that could be bad for the big tech companies in terms of other regulation and so forth. But on this question of data centers, which was the question, you know, I think if you've got compute, it's going to be a lot more valuable.
Any implication for this expected ipo from Anthropic that's coming? — We'll see. I mean, Anthropic is a big buyer of compute. I think the numbers are good enough for it to get out where it wants to, but I think.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- midterm elections
- democratic congress oversight
- big tech scrutiny
- ai industry ipo
- regulatory environment
Companies and tickers mentioned
- Anthropic
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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