Matt Stoller Has Concerns about AI Corporate Entities

Investment Analysis Clubs Macro Economic Trends and Risks
1

Stoller admits he is no expert:
I don’t know AI technology except on a superficial level.

His concerns:

This week, four of the most important companies in the stock market - Google Meta, Amazon, and Microsoft released earnings. All four companies delivered their numbers not just on the same day, but, as Bloomberg noted, “within the span of two minutes.” That, my contact said, is very weird.

Here’s why. Wall Street analysts are given responsibility by sector

The same analyst or team responsible for understanding Microsoft is often also responsible for Meta, Amazon, and Google. And there is simply no way he or she can analyze four earnings releases on the same day, let alone at the same time. And yet they still have to tell their clients what those earnings mean.

The net result is that these analysts have to take what the companies say at face value, without more analysis. The investment narrative is thus more easily controlled by big tech. Within a few days, the smarter players have figured out what the results mean, but by then the conventional wisdom in the markets are set.
Stock market manipulation?

the big tech hyperscalers all said they are going to spend a kajillion quintillion dollars on data centers, and their free cash flow is virtually gone. Morgan Stanley is projecting $1.1 trillion of capital investment from the big four, plus Oracle.

As Jordan Terry noted, “They can’t deploy that much capital, we don’t have the infrastructure to support it, does nobody check these things?” No, no they don’t.

I’m increasingly skeptical that all of this compute is even necessary. As AI scientist Gary Marcus notes, there are fundamental limits on how much scale can really do for reasoning, though scale is what finance is good at.

Nvidia CEO Jensen Huang. One of Nvidia’s partners, Anthropic, has a really nifty new AI model, Mythos, that scared all the big important financial people because of how powerful it is. Well, Huang was asked on a the Dwarkesh podcast why he wants to export chips to China, considering China could build something as powerful as Mythos and potentially threaten America. His response was as follows:

First of all, Mythos was trained on fairly mundane capacity, and a fairly mundane amount of it. By an extraordinary company. The amount of capacity and the type of compute it was trained on is abundantly available in China.

The best model out there was trained on “fairly mundane capacity.” So what, exactly, is all this compute really for? I mean, even the Pentagon is saying that companies are often using Chinese open source models, so it’s clear the giant compute advantage the U.S. has isn’t translating into performance.

One possible answer is that these companies are not actually selling AI, they are selling tokens, aka cloud computing. So the more inefficient their model, the more revenue they get from corporate America buying their cloud computing. It’s a bit like oil companies making cars - of course they want to make gas guzzlers, not Honda Civics. And once American companies are locked into one AI system, it’s hard to move to something cheaper and more efficient. I don’t know if that’s true, but the one big spender on data centers that doesn’t have a cloud computing arm - Meta - was punished by the market.

There’s other stuff that feels really sketchy.

  • S&P Dow Jones Indices is considering fast-tracking megacap companies into the S&P 500 and waiving profitability requirements, a rule change that could see SpaceX, OpenAI and Anthropic join the index shortly after listing.

S&P Dow Jones Indices launches review of megacap eligibility rules, potentially halving the listing period to 6 months and waiving profitability requirements. SpaceX, OpenAI and Anthropic among potential beneficiaries as IPOs loom.

The S&P 500 has been shaken up by a heavy concentration of tech stocks.

https://www.etf.com/sections/features/15-stocks-driving-sp-500s-gain-2026
The 15 Stocks Driving the S&P 500’s Gain in 2026

The stock market rally is broader than 2024 and 2025. But it’s also almost entirely an AI infrastructure story.

Now I rode the wave of the BIG 6 in 2024 to March 2026.
At that time I sold off Vanguard VGT 44% in the Big 6 and Vanguard VONE 23.5% in the Big 6. I kept Vanguard VIG 8% in the BIG 6. I redeployed the sold ETFs to Vanguard VTV [11% tech stock but no BIG 6 stocks] and 2 Vanguard international ETFs.
I wondered if that move was a mistake now given Stoller’s article.
But upon reflection I assume a broad swath of corporations in most sectors will yield more profits as employees are layed off due to the promise of AI. Though I don’t believe the employees cuts will not be as large as predicted. And the data center build out will be a bust as too many will be built. So hopefully I will be OK. We make our choices and place our bets.

3 Likes
2

Hard to read the posts on this thread what with all the foamy bubbles bursting before my eyes? The need to speed up and loosen requirements because hurry hurry to keep up with stunning advancements of tech in the hands of brilliant corps…. pardon me while i scurry off to “wash my hands”.

1 Like
3

Unlikely. Even though they reported within two minutes, the markets were closed. It doesn’t take that long to analyze a quarterly report.

I don’t follow Microsoft of Meta, but I reviewed Alphabet and Amazon and they both had blowout earnings. If you want to do a gish gallop in an effort to obscure the findings, you don’t do it when the findings are favorable.

5 Likes
4

Blockbuster earnings growth from semiconductor and mega-cap tech companies have lifted benchmark indexes

Four of the last five closing records for the S&P 500 Index occurred even as decliners in the index outnumbered gainers. In the month of April, just 23 per cent of S&P 500 members beat the index, which Bank of America Global Research strategists says is the fourth-lowest monthly reading in the bank’s database going back to 1986.

The lack of breadth behind the new index records is raising concerns across Wall Street.

Rob Anderson, U.S. sector strategist at Ned Davis Research, wrote in an April 30 note.

Adding to the concerns about breadth, Anderson pointed out that only six of the S&P 500’s 11 sectors are within five per cent of their record highs.

Move along people. Nothing to see here!

1 Like
5

And well it should; as well for Main Street - but doesn’t and shouldn’t mean that your original premise (“stock market manipulation”) is in any way valid.

The S&P500 is not an equally weighted index. Now more than ever, it doesn’t represent the entire economy due to that concentration.

But, here’s the thing, the performance of the EW index is almost identical YTD. 6% vs 6.15%. We can likely thank Tesla for that fact.

6

Since Jack Welch; I always have worried about how corporate profit reports might have been massaged.

7

Let’s assume that all of them are.

What are your choices? Sit in cash, or invest the best way you can with the knowledge (and wisdom) you have?

My hypothesis has long been that there are people in the world with much deeper pockets who have access to much more data than I do. When those people are putting their money at risk, then it stands to reason I should be doing the same.

Note, this was made more difficult last year when round lot reporting largely went away but we can still look up the depth of the market.

Courtesy of Gemini:

As of late April 2026, S&P 500 futures liquidity has significantly improved, with top-of-book depth reaching \(\approx\$10.8\) million, a \(+440\%\) increase from the previous month’s lows, marking a high since January 2026. This liquidity level, reflecting the volume of buy/sell orders, is now higher than \(84.6\%\) of observations over the past two years, indicating strong market stability and capacity for large trades. [1]

The Relative Strength Index (RSI) stands at 67.87, down from 71.19 at the start of the week but remaining above neutral territory and signaling sustained bullish momentum.

Risk on!

2 Likes
8

I stayed what I have done investment wise in OP.

9

Is The Entire AI Boom Built On Fake Revenues?

Let the AI investor beware. It could end like Dot-Com bubble. A musical chair game where the stocks collapse and investors race to the exit door selling. Some did not make it. I personally broke even on Dot-Com stocks.

Last month, Scott Stevenson, co-founder and CEO of the legal AI startup Spellbook, took to X in an effort to expose what he called a “huge scam” among AI startups: inflation of the revenue figures that they announce publicly.

“The reason many AI startups are crushing revenue records is because they are using a dishonest metric. The biggest funds in the world are supporting this and misleading journalists for PR coverage,” he wrote in his tweet.

Stevenson isn’t the first to claim that annual recurring revenue (ARR) — a metric historically used to sum up annual revenue of active customers under contract — is being manipulated by some AI companies beyond recognition. Certain aspects of ARR shenanigans have been the subject of multiple other news reports and social media posts.

Money leaves the left pocket and enters the right pocket as ‘Revenue’. A deep forensic analysis of the circular capital flows between NVIDIA, Microsoft, and their AI satellites. Is this the Dot-com Bubble 2.0?

In ancient mythology, the Ouroboros is a serpent eating its own tail. It symbolizes infinity, the cycle of life and death. In the 2025 Artificial Intelligence economy, it symbolizes something far more dangerous: Artificial Revenue.

There is a mechanism currently powering the trillion-dollar valuations of Silicon Valley. It is not complex engineering. It is not breakthrough science. It is a simple accounting trick that would make Enron’s Jeff Skilling blush, yet it is currently legal.

It works like this:

1. The Investment: A Tech Giant (Microsoft, NVIDIA, Google) wires $1 Billion to an AI Startup.
2. The Capture: The Startup is contractually or technically obligated to spend that $1 Billion on the Tech Giant’s own products (Chips, Cloud Credits).
3. The Revenue: The Tech Giant records that $1 Billion returning to them as “Revenue.”
4. The Pump: Wall Street sees $1 Billion in “Organic Growth” and adds $100 Billion to the Tech Giant’s market cap.

This is not a conspiracy theory. This is the Ouroboros Economy.

4 Likes