Episode summary
Google Raises $85 Billion and the Market Finally Wakes Up | The Weekly Wrap
The Real Eisman Playbook
· · 23 min · Hosts: Steve Eisman
Summary
Steve Eisman argued that the recent market correction was driven by stronger-than-expected employment data, sticky inflation, and a higher 10-year Treasury yield, with the Fed now unlikely to cut rates this year and not impossible to raise them. He said the 4.5% area on the 10-year remains an important threshold for risk assets and that further rate pressure could mean more correction.
The bigger story, in his view, is that AI has turned major tech companies from capital-light software businesses into capital-intensive hardware-like businesses. He pointed to Google raising $85 billion, Oracle adding to capital plans, and Super Micro seeking $7 billion as signs that equity markets are being asked to fund a growing share of AI spending. He also highlighted SoftBank’s difficulty borrowing against its OpenAI stake as evidence that even lenders are uneasy about current valuations.
Eisman also said AI is becoming more commoditized, with no clear moat and signs of price competition, including OpenAI considering lower token pricing. Beyond tech, he discussed addiction-style business models in social media, gaming, and consumer products, while warning that private equity and private credit are increasingly illiquid, opaque, and hard to exit.
Key takeaways
- Eisman said the probability of a Fed rate cut this year is near zero, and a hike is not impossible, after strong jobs and inflation data.
- He argued Google’s $85 billion capital raise shows AI is forcing large software firms to behave like capital-intensive hardware businesses.
- He said Oracle’s backlog is strong, but its rising capex and new capital plans reinforce the broader AI funding strain.
- He views AI as increasingly commoditized, citing OpenAI’s reported willingness to lower token prices as a warning sign for margins.
- He said private equity technology deal value plunged 70% in the first quarter, and holding periods are stretching to seven years or more.
Notable quotes
“Given the strong employment numbers and the inflation numbers as well, the probability that the Fed will cut rates this year is near zero”
“Google announced that it was raising $80 billion since upsized to 85 billion in new capital all from equity”
“These hyperscalers are not going to stop and investors are starting to lose their taste for it”
“This year, they will spend close to 1 trillion. What are they getting for that spend”
“The value of private equity technology deals plunged 70% in the first quarter to only 20 billion”
How the episode opens
Given the strong employment numbers and the inflation numbers as well, the probability that the Fed will cut rates this year is near zero. The probability that the Fed will raise rates this year is not zero. In private equity news, the decline in public software stocks continues to have an impact.
The value of private equity technology deals plunged 70%. Last year, hyperscalers spent around 400 billion on AI capex. This year, they will spend close to 1 trillion.
What are they getting for that spend? Participating in the LLM agentic AI game is now incredibly capital inensive. These hyperscalers are not going to stop and investors are starting to lose their taste for it.
Hi, this is Steve Eisman and this is the weekly rap. This is for the week ending Friday, June 12th, but recorded Thursday night, June 11th. Before we get to the rap, let me address an issue.
We record the weekly rap Thursday night and post it Friday after the close. Now, some viewers have asked us to record the rap Friday and post it Saturday. And we've thought a lot about that, but we feel it's more important to get the rap out after the close Friday.
And to do that, we need to record it Thursday night because it takes time to edit. Of course, that means we miss what happens Friday. However, I think I can then deal with that the following week.
On this week's rap, we will discuss one, current market correction. Two, AI capex is too thirsty for capital for markets to satiate comfortably and news from Google, Soft Bank, and Super Micro is transformative. Oracle's earnings also did not help.
Three, inflation news is bad. Four, earnings expectations show problems under the hood. Five, the war in Iran, of course.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market correction
- ai capex
- inflation
- google funding
- private equity and private credit
Companies and tickers mentioned
- GOOGL
- GOOG
- ORCL
- AAPL
- C
- SMCI
- OpenAI
- Oracle
- SoftBank
- Apple
- Citigroup
- Anthropic
- SpaceX
- Supermicro
Watch the episode
Watch “Google Raises $85 Billion and the Market Finally Wakes Up | The Weekly Wrap” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Real Eisman Playbook, this episode and its artwork belong to Steve Eisman. Octagon is not affiliated with the show; this page is an independent summary.
