Prof G Markets Red Flags at OpenAI — How One Company Could Burst the AI Bubble
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Nov 10, 2025 Scott Galloway and Ed Elson explore alarming red flags at OpenAI, questioning its governance and financial stability. They discuss the implications of a potential IPO and possible market corrections if debt levels rise. The duo shifts to the Supreme Court’s tariff case, revealing investment opportunities amid legal uncertainties. They also delve into the explosion of prediction markets and the ethical lines between financial innovation and gambling, citing tragic real-life consequences. The episode wraps up with insights into upcoming earnings and market strategies.
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OpenAI's Financing Gap Threatens AI Market
- OpenAI's financial commitments far exceed current revenues and lack clear financing plans, creating systemic market risk.
- Scott and Ed argue this mismatch could catalyze a broad AI-driven market downturn if funding collapses.
Public Funding Built Tech Foundations, Not Bailouts
- Big tech has historically benefited from public R&D and subsidies, but that differs from direct bailouts or backstops.
- Scott notes government-funded foundational tech (e.g., GPS) enabled private-scale products but isn't equivalent to loan guarantees.
Use Small Shorts As Market Insurance
- Hedge concentrated exposure to the Magnificent 7 by allocating a small short position as insurance.
- Scott recommends using inverse or targeted short ETFs for a modest hedge, e.g., 1% of net worth.
