Last call

on the most valuable company in the world

Sit. Sit down. No, here, I saved you the stool. You want one of these? Course you do. Two more of whatever this is, thanks.

Right. So you’re buying Nvidia.

Don’t. Don’t do the face. Everybody does the face. I’ve been doing this twenty years and the face never changes, it’s the same face the guy made in ‘99, the same face the guy made in ‘07, this sort of but the numbers are good face, and you know what, you’re right. The numbers are good. The numbers are spectacular. That’s the whole problem and nobody will sit still long enough to let me explain it to them. You’ll sit, though. You bought me a drink. That’s the deal now, you’re stuck.

Wednesday. You watch Wednesday? The earnings?

Course you didn’t, you were busy buying the thing. Let me tell you about Wednesday. Street wants seventy-nine, they print eighty-one and a half. Street wants a buck seventy-eight, they do a buck eighty-seven. They guide up. They hand everybody a dividend twenty-five hundred percent fatter, which, between us, between you and me and this glass, is a penny turning into a quarter on a two-hundred-dollar stock, so it’s a yield of bugger all, but the room cheered, they actually cheered, twenty-five times more of basically nothing and grown adults stood up and clapped. Revenue up tenfold in three years. Best quarter the most valuable company in the history of money has ever turned in. Flawless. Spotless. Not a hair out of place.

And the stock went down.

Yeah. Down. I had it on the screen behind the bar, I made Tony put it on, and I watched it go red and I thought, Tony, your telly’s broken. It wasn’t broken. Fourth time now. Fourth perfect quarter in a row and the thing just... sags. And everybody’s got the line ready, profit-taking, it’s priced in, and here’s the thing about that line, my friend, that line is true so many times that the one time it’s a lie you’ve already stopped checking. The guy who says priced in is right and right and right and right and then the building’s on fire behind him and he’s still saying it.

Because that’s how it goes. That’s the part you’ll learn the expensive way if you don’t let me buy you the cheap version right now. The top doesn’t ring a bell. There’s no guy with a bell. I keep waiting for the guy with the bell, twenty years, never shows. It looks like exactly this. Perfect everything, and the price just won’t go. You feed the machine the single best meal of its entire life and somehow the whole table walks out poorer. Something changed underneath. And nobody, nobody, sends the memo.

Even the bean-counters clocked it. Read the boring stuff, nobody reads the boring stuff. Every quarter lately the thing barely twitches on the day and then bleeds out over the week, every quarter a triumph, and they gave it a little name so they wouldn’t have to think about it. A trap. A nice trap, a cheerful trap. Which is bean-counter for the good news quit working and we’re all very politely not mentioning it over dinner.

Hey. Hey. You still with me. Good. Drink up, I’m only getting started, and there’s three things wrong here, not one. Three. One screams, one’s in the walls, and one’s been down the cellar this whole time just... eating. Quietly. We’ll get there.

Where’s Tony with the - thank you. Lovely man.

So. The one that screams. Korea. You been watching Korea? No. Nobody watches Korea till it’s on fire.

Picture it. Whole country’s stock market goes from four thousand to eight thousand and change in half a year, and two-thirds of that, two-thirds, is two companies. Two. Memory chips. So it’s not a stock market, is it, it’s two factories in a trench coat pretending to be an economy, and not one person looked under the coat. And the borrowing. Oh, son, the borrowing. Record margin debt, more than ever. There’s a civil servant out there posted his account, two-point-three billion won in one chip company, one-point-seven of it borrowed. There’s a girl, sweeps the trains, twenties, levered up to a hundred and fifty percent, told a reporter she’d “risk complete collapse” before she’d miss the rest of the run.

Risk complete collapse. Said it like she was reading a shopping list. Bread, milk, complete collapse. God love her. God absolutely love her, she has no idea, none of them do, and that’s not their fault, nobody ever sat them down and bought them a drink.

And it’s rotting, see, under the party it’s already going off. The foreigners have been walking out the back nine days straight, quiet, the way the smart money always leaves, coats on, no goodbyes. And who’s buying every share they drop? The borrowers. With money that isn’t theirs. Because the money that was theirs is gone. And the market’s gone all wrong in the air, price going up and the fear going up together, holding hands, which, if you ever see that, if a man ever tells you the price and the panic are rising at the same time, you finish your drink and you go home. That’s a market that’s stopped breathing on its own. Something’s working the bellows.

I’ve been singing this same song six months. Wrote it down even [The faster you grow, the faster you go bankrupt], the whole point being Nvidia’s lovely fat profit is just everybody else’s bleeding turned inside out and polished up, and there’s no second customer hiding backstage to save the show. Korea’s that exact thing with the lights off and the speakers blown. Whole country, hocked to the eyeballs, two factories, one narrow door.

So it cracks. That part I’d put money on.

Does it matter, though, that’s the rub, that’s what I can’t tell you for certain even three deep. Because it’s cracked before and the thing just shrugged. Spring, war scare out the desert, down twelve percent in a day, every alarm in the building going at once, and then up nearly ten the next morning. Fastest bounce it ever had. The mania ate its own heart attack and asked for pudding. One of those alarms went off again just today, by the way, same twitch, same nerve. So no, I’m not going to sit on this stool and swear a wobble in Seoul ends the world. It doesn’t. On its own it’s a fire in one room.

It hurts the chip lads, drags the neighbours a week, frightens the kids, and then it runs into the only question that’s ever mattered in any of these, which is does it spread. And to turn a scare into an actual funeral, the kind nobody talks the corpse back up off the table from, you need the thing that runs through the whole body. Through the blood.

You need credit. That’s the one in the walls. Another? Yeah. Go on. Same again, Tony.

And this bit, this bit actually makes me laugh, and I shouldn’t laugh. The door gets pointed out by the lads reading Nvidia’s own books. The story is the thing’s run out of honest buyers. Run out. So now it does this little number where it presses the money into its customers’ hands first, so they can hand it back as payment, and everyone agrees to call the round trip “sales”. It’s on the books if you can stomach reading them. Their little pile of stakes in baby companies went from twenty-two thousand to forty-two thousand in one quarter. Eighteen grand shoved out the door in ninety days into outfits whose entire plan is to take it and spend it on... go on. Guess. Guess what they spend it on.

Nvidia chips. The hand feeding itself and calling lunch a harvest.

Now look. The really wild reading of that, the cooking-the-books version, that’s one fella with a strong opinion, not gospel, and I hold it the way you hold anything that’s burned you before, at arm’s length, with oven gloves. But the shape of it isn’t some nutter raving into a pint. Their side-bets sailed past forty thousand this year, and even the dull respectable counting-houses have started muttering about a “circle” that’s giving them the willies. One of them said it flat out, no dressing. They’re funding the purchase of their own chips. I drew the whole circle before, [The Trillion-Dollar Oops], went back and counted the fresh graves [The Gazillion-Dollar Oops], so I won’t walk you round the full ring again, you’d fall off the stool.

The new bit. The bit that made me put the glass down for a second, and I don’t put the glass down. The circle’s now straining the wallet of the strongest thing standing inside it. The clever little structure I described all calm a year ago is running hot enough now you can feel it through the wall.

And it dies when the circle spins backwards, that’s all, that’s the whole horrible little engine of it. The baby companies burning all that pressed money have to go back and borrow more, eventually, and eventually the lenders ask the rude one. Where’s the profit. And the answer, from a number that will not lie down and die no matter how many times they bury it, is ninety-five out of every hundred of these grand projects made nothing, nothing, and the whole frenzy’s actual gain after three years rounds to about sod all. Point two nine percent. So one baby can’t roll its loan, or one lender quietly admits a chunk of paper’s worth less than he wrote down and prays it’s not till after the holidays anyone checks, and the circle lurches the other way. Less in to the babies, less back to Nvidia, smaller eggs, worse mark on the very stakes it’s clutching to hold the whole circus up, tighter everywhere at once, round and round, faster each go, wrong way, no hands on the wheel.

Same plumbing that drowned the other house in oh-eight, you remember oh-eight, course you do, only with chips where the bad mortgages used to sit. And it’s on the walls already if you hold the candle close. Lenders charging a bit more for fear than they did in autumn. Over a trillion of this build meant to come from the quiet lenders, the back-room ones, the least-watched corner of the whole estate where nobody admits what anything’s worth till a man with a clipboard and a dead face makes them. The famous doom fella’s bet his whole name on this rhyming with the old crash, exactly because it crawled out the bright public market into them shadowy back rooms, where a thing can sit and rot a good long while before the smell reaches the front hall.

So. You asking me does the whole thing finally come down. Lean in. I’ll tell you straight.

Not from Korea. Korea screams first and loudest and you’ll hear it across the sea. But the thing that kills is in the walls and the thing in the walls doesn’t scream, it works slow. A rate creeps. A loan goes unrenewed. A lender stops pretending and holds his breath for the quarter to turn. Korea gets the sad song sung about it, because the hocked-up always make the prettiest ruin, while the thing that actually did it sat in a wall, in a back room, in a deal that just quietly never closed.

And then. Then. There’s the third one. Down the cellar. The slow cold one’s been down there since before any of this, eating, and it’s the one decides how long the house stands at all.

China stopped buying. Stopped. Not “wasn’t allowed”, stopped - their own boss told the firms keep the Nvidia kit for the overseas branches and buy local at home, and Nvidia’s own people admit they haven’t sold a single one of them newest fancy chips over that border, whole shipment stuck at the gate under two sets of rules that argue with each other and let nothing through. So every time the price jumped on China’ll buy any day now, it jumped on a truck that never left the yard. I called this nine months back, [The chip that pops the AI bubble], said it mightn’t be the knife that opens the vein but it sure proved a knife was in the house.

Knife’s got a name now. And a receipt. Huawei’s chip shipped on time, one big firm dropped five and a half billion on it, two more queued behind, they’re on track for most of China’s top-end by year’s end, and the clever Chinese outfits already do their work on it, not on Nvidia. First time the home stuff and the foreign stuff stand level inside that country.

But here’s what the cheerleaders skip, because the song dies if they don’t. China’s not ahead. It’s good enough. And good enough is the colder one, way colder, because ahead you can chase and catch, good enough just quietly walks off with your business and never looks back. Their chips come off old tools, blunt ones, the maker’s banned the best gear, his success rate at the hard stuff still rotten, each chip a fraction of the best Nvidia makes. So they just bolt loads of them together and eat the power bill. Fine for the everyday work, the small magic for the masses. Not fine, not yet, for the deep dangerous stuff. Their cleverest tried to build their big new thing on the home chips, hit a wall, crawled back to Nvidia to finish it.

Sit with that. They had their own chips right there in the rack. And they came back to Nvidia for the part that mattered.

So no, the moat’s not gone, and I’ll not pretend it is just to make my own gloom tidier, that’s a mug’s game. The crowd shouting the magic’s broken because the Chinese fella bolted on a charm that imitates it, they’re reading the sales brochure out loud and calling it the future. That moat’s twenty years of code and habit and every kid who ever learned the trade on it, baked so deep into how all this stuff gets built that a knockoff limping at half speed doesn’t replace it, just lets you hobble till the real work turns up. The crawl-back’s the proof, in their own hand. The grip on the deep work’s real. Buys ‘em years.

Years. Not forever. And the cellar thing was never about the deep work anyway.

It’s the floor. The everyday. China hoovers up all the cheap volume on chips it bakes itself, second-biggest market on earth strolls out the customer book without a sound, and that gorgeous up-and-to-the-right forever line the whole valuation’s propped on grows a ceiling nobody put in the spreadsheet. Slow death, [When one actually equals three], the patient kind, comes over years through too many chips and prices falling, not one big afternoon of fire. The moat’s the very reason it leaks slow instead of popping. Thinnest comfort there is, when your whole price tag’s built on a line that was only ever allowed to climb.

A scream, a thing in the walls, a slow cold thing in the cellar. East cracks loud and soon. Walls give and settle the lot. Cellar lets the air out over years no matter what. Three of them. Three clocks. One direction. Down. Always down.

Now. You want to know what I’d do, because you’ve been very patient and you bought the drinks. And the rule first, I mean it even three deep: I’m telling you what I’m eyeing, I’m not telling you to do a damn thing, your money’s yours to lose, read your own stars.

...

Right. That’s me. Last train. You go on and buy your Nvidia, son, I’m not your dad. Just - when it goes, and it’ll go quiet, no bell, remember some sad old soak in a bar told you which wall to listen to.

Tony. Close me out.