Last week I watched a short video by minoqtopus called "Are AI Companies Lying To You?", and I kept thinking about it for days. The format is straightforward. It's a skit set up like a board meeting, where the AI labs, Microsoft, Nvidia and the power grid each get a seat at the table and start blaming each other. It is amusing. However, nearly every number within it corresponds to a tangible entity, prompting me to examine them individually.
This article presents the findings I have gathered. I am not an analyst, and this information should not be considered investment advice. I would like to inquire if the jokes were based on factual information.
A race that cannot be decelerated
The video opens with the AI labs explaining themselves. In the skit, Anthropic states that it operates as an independent entity due to its founders' departure from OpenAI, stemming from a lack of confidence in the organization's management practices. Google is also participating in the competition. Chinese laboratories continue to produce robust models utilizing significantly less computing power. Kimi serves as the example utilized in the video.
The point the skit makes here is the one I keep coming back to. Every lab believes that slowing down won't make the technology any safer. Another individual will likely arrive at that location before you. Consequently, there is no reduction in speed. To construct the subsequent, larger model, an increase in the number of chips, data centers, and electricity consumption is essential. That requires a partner with substantial financial resources.
In the skit, the partner is identified as Microsoft.
The Financial bill
The video indicates that Microsoft allocated $37.5 billion toward AI infrastructure within a three-month period. That is accurate. In the quarter concluding in December 2025, Microsoft reported capital spending reaching a record $37.5 billion, reflecting a 66% increase compared to the previous year. Investors didn't like it. The stock experienced a decline of approximately 10% within a single trading day, resulting in a loss of roughly $357 billion in market capitalization. This marks its most significant drop since March 2020.
The skit humorously depicts the finance chief being required to stand and clarify that demand was not the issue at hand. Microsoft simply couldn't build data centers fast enough to plug in the chips it already owned. That statement is nearly accurate to what was originally expressed. Satya Nadella acknowledged that without the ability to connect the chips, there is a risk of having inventory remain idle in a warehouse.
The figure of $329 billion presented in the video is accurate as well. As of June 30, 2026, Microsoft's total for data center leases signed but not yet initiated was recorded. As of the conclusion of September, the total had increased to $364.6 billion. Numerous buildings have yet to be constructed.
When the seller remits payment to the buyer
Subsequently, Nvidia assumes the spotlight, resulting in a more refined presentation. Nvidia receives payment as soon as the chips are dispatched from the factory. Any subsequent actions taken by the customer regarding these items are the responsibility of the customer.
However, Nvidia is not limited to selling alone. It additionally allocates resources toward its own customer base. In February 2026, Nvidia executed a $30 billion equity stake in OpenAI, superseding a prior proposal of up to $100 billion. OpenAI is anticipated to allocate a significant portion of its new funding toward Nvidia hardware. Nvidia has committed to purchasing any computing capacity that CoreWeave, a cloud company it supports, is unable to sell to other customers, extending through April 2032.
The video presents an analogy involving a shoe company that provides financial incentives for customers to purchase its shoes, subsequently repurchasing any unsold inventory. The correct terminology is vendor financing, a practice extensively utilized by telecom equipment manufacturers during the late 1990s. It presents sales figures as robust in documentation, regardless of the actual demand at the conclusion of the supply chain.
Nvidia rejects the interpretation of circular financing. It is stated that strategic investments constitute a minor portion of overall revenue, and that AI startups primarily secure funding from alternative investors. It is important to consider. However, the structure remains noteworthy for observation.
Financial resources are insufficient to acquire a transformer
This segment of the video is particularly noteworthy, as it tends to receive minimal discussion among viewers. The grid's character states clearly: unlimited cash does not generate electricity.
In Northern Virginia, recognized as the largest data center hub globally, Dominion Energy announced in 2022 that newly established data centers would experience a four-year delay in obtaining full power supply. In 2024, it was extended to seven.
Texas exhibits a unique and unconventional character. ERCOT, the grid operator for the state, is currently monitoring approximately 474 GW of large-load connection requests, with around 90% of these requests originating from data centers. Prior to this summer, the grid recorded an all-time peak of 85.5 GW, established in August 2023. Despite achieving a new record of approximately 91 GW in July, the current queue exceeds five times the maximum usage recorded in Texas. Experts believe that a significant portion of the queue may be speculative or duplicated. In response, Governor Abbott has mandated an audit, which ERCOT plans to complete by December.
Next, we will discuss the hardware components. Large transformers currently require a delivery timeframe of approximately 2.3 to 4 years. Their cores require grain-oriented electrical steel, and the United States has a singular domestic source: Cleveland-Cliffs' Butler Works mill, located approximately 30 miles north of Pittsburgh. As of 2019, over 80% of large power transformers were sourced from international markets.
Are you interested in bypassing the traditional grid system to construct your own gas plant? The major turbine manufacturers, including GE Vernova, Mitsubishi, and Siemens, have reached full capacity for sales extending beyond the year 2030.
Additionally, the wiring of the building remains a necessary task to be completed. Approximately 20,000 electricians retire annually, with nearly 30% of union electricians falling within the age range of 50 to 70 years. In Abilene, Texas, a small electrical contractor has stated that the hourly wage is $20, whereas a nearby data center provides a compensation rate of $35 per hour, in addition to overtime pay.
In the video, a moment occurs where an individual expresses a sigh and poses the question of why they did not pursue a career as an electrician. That is a valid inquiry.
The accounting method
The video decelerates at this point, and I will do the same.
Consider the acquisition of an AI chip at a cost of $30,000, with an anticipated operational lifespan of four years. Depreciation amounts to $7,500 annually, representing an expense that directly reduces your profit. It is now determined, in written form, that the same chip will have a lifespan of six years. The annual expenditure decreases to $5,000. There were no alterations to the physical state. The chip cost the same and wears out the same way. But $2,500 a year of expense just moved into the future, and today's profit looks better. Do that across tens of billions of dollars of chips and the effect gets very large.
What are the reasons for considering this as suspicious? Nvidia introduces a significantly faster chip approximately every one to two years, resulting in a rapid depreciation of older chip models. Michael Burry, the investor who anticipated the 2008 housing crash, characterized the practice as "one of the more common frauds of the modern era. He estimates that the major cloud companies will underreport depreciation by $176 billion during the period from 2026 to 2028.
The video handles this part fairly, and I want to as well. Extending an asset's useful life is legal. No regulator or auditor has called it fraud. Burry's claim constitutes an accusation rather than a definitive verdict. There exists a substantial counterargument: Nvidia provided Wall Street with a seven-page memorandum indicating that its A100 chips, released in 2020, continue to be widely utilized and remain profitable. If old chips really keep paying for themselves, longer lives might be justified.
The liabilities that are not reflected on the balance sheet
The second accounting move demonstrates a higher level of ingenuity. The video utilizes Microsoft as a reference point; however, it primarily focuses on Meta's Hyperion data center located in Louisiana.
Here is the operational procedure. Rather than directly borrowing $27 billion, Meta established a joint venture. Blue Owl acquired an 80% ownership interest, while Meta retained a 20% ownership interest. The venture successfully raised $27 billion through the issuance of bonds, which are scheduled to mature in 2049. Notably, Pimco acquired $18 billion of these bonds. The debt is recorded on the venture's financial statements, rather than those of Meta. Meta subsequently leases the completed campus under a four-year agreement, which includes options for extension.
The bonds have a duration of approximately 25 years, whereas the lease is subject to renewal every four years. What happens if Meta walks away? The video omits one detail at this point: Meta has committed to ensuring that bondholders are fully compensated if such a situation arises. The risk is not as apparent as the skit suggests. Critics maintain that a guaranty of this nature constitutes a long-term commitment and should be regarded as a form of debt.
Who possesses these bonds? Insurance companies and pension funds primarily, as they provide an approximate return of 6.6%. In August 2025, an executive order directed regulators to facilitate the inclusion of private credit and other alternative assets within 401(k) retirement plans. The primary concern presented in the video is the potential impact on the savings of ordinary workers, which may become increasingly linked to properties with uncertain lease renewals.
We have viewed this film
The skit references historical events on two occasions.
The initial focus is on Britain's Railroad Mania during the 1840s. George Hudson, recognized as the Railroad King, distributed payments to shareholders using investors' capital rather than actual profits. Between 1845 and 1849, one index of railroad shares experienced a decline of 64%, resulting in significant financial losses for numerous families. Railroads significantly transformed global dynamics. Both statements were accurate simultaneously.
The second event is the telecommunications boom that occurred around the year 2000. WorldCom classified routine operating expenses as long-term investments, deferring current costs to future periods. The CEO, Bernie Ebbers, received a sentence of 25 years in prison. The video indicates that 95% of the fiber installed during that period remains unused. I was unable to verify that specific figure; however, a significant portion remained inactive for an extended period.
This represents a challenging comparison. Stretching depreciation differs significantly from the actions taken by WorldCom. However, both approaches improve the current situation by deferring costs to a later date.
One headline suffices
On June 5, 2026, a report from Broadcom indicating weak demand for AI chips triggered a selloff in the market. US chipmakers experienced a loss of approximately $1.3 trillion within a single day, with Nvidia, despite not having reported, incurring a loss exceeding $300 billion. It has successfully recovered. Observe the factors that initiated it. Neither a blackout nor a malfunctioning transformer. There is a minor concern that demand may be slightly lower than previously anticipated.
Seven technology companies currently constitute approximately one-third of the S&P 500 index, highlighting their significant impact on the overall market. If an individual possesses an S&P 500 index fund, approximately one-third of their investment is allocated to seven specific companies, regardless of their selection in the matter.
Is there a possibility that they are not being truthful?
After considering all factors, my candid response is: primarily, no. Not related to the technology. The models are rapidly improving, and financial resources are being allocated to tangible assets. Authentic chips, genuine structures, actual power generation facilities.
However, the video concludes with a question that I believe holds greater significance than the title. Is the technology authentic? Do the financial statements provide a complete and accurate representation of the financial position? These are two distinct inquiries. Nearly all individuals are occupied with responding to the initial inquiry. Only a limited number of individuals are inquiring about the second.
I also do not possess the answer. However, I will monitor the second question with increased scrutiny moving forward.