Here’s the truth in a single, caffeinated sentence: the MAGA–hyperscaler cuddle is not a mystery. It is sprint-capitalism finding its favorite strongman and asking him to hold the door.
This is an alliance of convenience where compute fever meets state capture. The calendar is the weapon. AI capital runs on quarters. MAGA runs on crisis. Both scream the same thing: if not now, never.
The “liberal tech” fairy tale dies here. Silicon Valley’s blue-tinge was never virtue. It was local politics, customer vibes, and a hoodie dress code masquerading as ethics. That costume got peeled off the minute trillion-dollar capex for AI made timelines murderous and regulators inconvenient.
Palantir and VC bloviators are the hype mascots. The real tectonics come from Microsoft, Alphabet, Amazon, Meta, with Nvidia shoveling coal into the compute furnace. Their mood is “misplace a few hundred billion, who will notice.” Their clock is months, not decades. Your rights do not post quarterly earnings.
Trump brings deregulation, anti-antitrust lethargy, tax goodies, and photo-ops with gold curtains. Tech brings a boom narrative that fogs the view while the institutional demolition proceeds. He wants the market to cheer. They want Washington to nap. Everyone smiles for the cameras, then knuckles crack behind the scenes.
Contradictions are the plan. H1B whiplash hurts talent. The renewables tantrum makes power pricier. Fine. Hyperscalers route around pain with Gulf cash, private wires, and rate cases that you will never see unless you file the records request. When you hear “innovation needs freedom,” translate it to “immunity from law” and TAXES - AI didn’t copy Apple’s “Double Irish.” It stacked Dublin shells, R&D credits, FDII breaks, and state subsidies: same playbook, bigger servers, pricier lawyers.
We were told patient capital sees far while politicians chase the next election. Nope. In 2025 the biggest guns of capital are radically impatient, and the White House is happy to sell patience by the pound. The future is being mortgaged to this quarter’s capex. Your kids’ rights are collateral. What the hell are we doing‽
If the future “will be decided by 2028,” then you decide to become the speed bump that wrecks their timeline. They can buy senators. They cannot buy back time once you take it.
"Tech’s alignment with Trump is posed as a puzzle because Silicon Valley’s previous reputation was liberal. It was always a mistake to think of this as something inherent, having to do with tech’s virtue, or Apple’s good looks. The alignment actually had more prosaic origins in the politics of the American West Coast, the sociology and culture of the tech workforce and the attitudes of the most influential customer groups. But prosaic though it may have been, the alignment was real."
Oh, Adam, we both know the tech Oligarchs were never liberal and certainly not "left". They are billionaire capitalists just like Trump. Most are racist genocidal Zios, just like Trump. The reality is that, just like the entire Imperialist genocidal Democratic Party they previously pandered to, they were merely virtue signalling by endorsing identity and lifestyle politics which were never any threat to the Capitalist ruling class. In fact, the idpol phase was really a great boon to the ruling class in that it served to divide the working class against itself. Now, we've reached the conquer part of the equation, so it's mask off. There hasn't been any organized left politics in the US for many, many decades now and you know it. The world knows it. The choice is fascism hard or fascism with virtue signalling in official politics today.
I could be wrong, but I think the end result of this maniacal investment bubble will be very much like the 2000 internet collapse. These "hyper scalers" are so driven by FOMO, or first mover advantage, or cash burning a hole in their pockets that they cannot afford to stop and recognize that they have no clue what they are doing. I think that in the end there will be one or two big winners who we cannot now identify (like Amazon in 2000), but for the most part AI will be pretty fungible across platforms so most will have no advantage at all and will have wasted their investment.
There will of course, be one big loser; the rest of us. We will live in a surveillance society the likes of which we never could have imagined.
I forgot to mention that there is one huge difference between today's AI bubble and 2000. That is, back in 2000, internet firms had to raise equity or debt to get the cash to invest. Today's hyperscalers are generating huge cash flow in their core businesses which had been applied to share buybacks. So if this is a bubble, it may last a while.
Malign convenience. I've had so many tech execs and investors claim that 'the world is different now, get used to it' as their paper wealth has exploded during the second Trump regime. Meanwhile, Bain forecasts an $800 bill per year revenue deficit for AI firms by 2030 (revenue reguired to earn a reasonable return on planned data center/LLM spending). And the new Nvidia/OpenAI deal will require 'at least 10 GW for data centers' -- enough power for 7 million to 8 million homes. And a record 49% of consumer spending is coming from the top 10% of earners, while the top 10 stocks in the S&P 500 account for a record 41% of its value. Certainly doesn't feel like this center can hold....
All this A.I., mega-electric power, higher stock market values, etc., can't reliably be done unless the stock of money increases, which will require a compliant Congress and Fed. How better to lock in compliance than to turn the future government over to an authoritarian? The catch? This authoritarian hasn't proven loyal to partners. And he won't prepare for an orderly succession.
The hyperscalers are indeed tied at the hip to Trump. And Trump's (our) Treasury may be the only source of capital large enough to keep them going through 2028 at their burn rate.
After his speech at the UN, his attack on Tylenol and his war with a TV comedian (madness) the hyperscalers might learn the lesson Musk semi learned earlier and will soon learn in full.
OK, I'm European. We are tied to your wheels. My guess is America has the wrong relative cost structure. The Machine has taken over, recruits who it can, but lacks understanding and strategic intelligence. Key tech players go back to the Transhumanists of the 90s, and shall we say, were always more than a little odd. Can you get more fantastic than terraforming Mars or uploading your personality to an electronic cloud?
Is there a race that can be won? Depends on the fundamental nature of reality I suppose, but a more prosaic risk assessment of this 'wager' could see the bringing on somewhat earlier of the inevitable downslope of the carbon pulse and the consequences for the biosphere, which none of us can foresee yet in any detail?
Malign convenience is a political administration bent on dismantling the country and a set of hyper-scalers
who have no apparent allegiance to their own country, or in fact to any country at all. That is not sustainable, in my view, and only a net benefit for the Chinese.
30+ years in finance work in the company I've learnt one infallible truism - when people start talking about something as a "sure thing" & "don't worry about the ROI, it'll all work out ok in the end", then you need to start planning for it to be anything but that outcome.
The big tech companies are financing this explosion of capex with debt. This is a new for them as their monopoly profits have allowed them to self finance … till now.
1. I don't see an issue if there is no return on investment. Investors just lose out as they so often have in the past. For example all that gas investment or much of the investment prior to the 2001 internet peak.
2. The return doesn't come from the investment directly anyway. That will come from those using AI, not those selling it. You can alwasy get "as good as last year AI" for aout 2% of the price from China.
The profits will be made by those using AI to design and build Businesses and Systems. Just as Amazon, Facebook and Google made fortunes out of other people's internet investment long before any of them got into providing networks.
The key is smart people not AI itself. The gap between ordinary workers and highly talented workers and owners will widen enormously as the tools get more powerful.
3. So the key shortage is talent - people with IQs over lets say 140. The huge majority of these are in China. US only has one way of competing with China - AGI - getting to Artificial Intelligence that matches 140+IQ talent in quality and exceeds it in quantity.
4. The race to AGI is the core of the Tech Bros & Trump working together.
The plan was NVIDIA and TMSC take a lead in chips that China can't match. VCs supply cash investment that China can't match. Trump supplies an infrastructure (electricity) administrative support and permits rule breaking in a way that China can't match.
But: The chips turns out to be a red herring - Deepseek has shown that similar AI quality can be reached much cheaper with smarter AI engineers doing the training. China can organise money pretty well in state/oligarch partnerships. And it is a lot easier for China to accelerate existing electrical power plans to meet even faster electrical power growth. US has seen negative power growth and has no plans to accelerate.
US industrial expertise was always about dominating and monopolising markets. Chinese expertise is about production, the Supply Chain and State assistance in industries deeme important.
Note it appears US has already given up on Taiwan and is switching its navies to local waters - Venezuela for example.
Related topic: Fusion Power. Not pretending to be an expert but my impression is that China has a real chance of making Fusion power a commercial product in 5-10 chance. US doesn't.
I very much agree with the diagnosis of a malignant “presentism”. I have written a short commentary on this more from a technical-engineering perspective rather than political economy but there may be some interesting overlaps… https://link.springer.com/article/10.1007/s44206-025-00190-x
Nice article with some serious throat clearing. Who in the right mind would elect an individual like Trump to be president? But this bar set sooo low could of course not be jumped over with what dems have done and insisted on doing.
I am amazed at how caught in their own spinning these people are. And then comes China with its DeepSeek for instance.
One doesn't need LLMs for good engineering or good medicine or good teaching or good agriculture or other many many tasks out there.
All the while Trump claims at UNGA that climate change is a hoax.
Only greed can not be a motivator for the American public at large and imposing a direction via brute force or threats, like a good old Stalin will elicit in the end such a blowback, that we might see a mini Butlerian Jihad in the making in the US.
Glad to see Adam is still mostly addressing the big ones.
I don't think Trump has much to do with any of this except that MAGA (2016) was an early recognition that America is no longer great and a huge truth recognised by many as differentiating Trump from the standard BS we get from media and politications.
Much as complaints about immigration are the nearest to a reference to inequality that any politician dare give.
Here’s the truth in a single, caffeinated sentence: the MAGA–hyperscaler cuddle is not a mystery. It is sprint-capitalism finding its favorite strongman and asking him to hold the door.
This is an alliance of convenience where compute fever meets state capture. The calendar is the weapon. AI capital runs on quarters. MAGA runs on crisis. Both scream the same thing: if not now, never.
The “liberal tech” fairy tale dies here. Silicon Valley’s blue-tinge was never virtue. It was local politics, customer vibes, and a hoodie dress code masquerading as ethics. That costume got peeled off the minute trillion-dollar capex for AI made timelines murderous and regulators inconvenient.
Palantir and VC bloviators are the hype mascots. The real tectonics come from Microsoft, Alphabet, Amazon, Meta, with Nvidia shoveling coal into the compute furnace. Their mood is “misplace a few hundred billion, who will notice.” Their clock is months, not decades. Your rights do not post quarterly earnings.
Trump brings deregulation, anti-antitrust lethargy, tax goodies, and photo-ops with gold curtains. Tech brings a boom narrative that fogs the view while the institutional demolition proceeds. He wants the market to cheer. They want Washington to nap. Everyone smiles for the cameras, then knuckles crack behind the scenes.
Contradictions are the plan. H1B whiplash hurts talent. The renewables tantrum makes power pricier. Fine. Hyperscalers route around pain with Gulf cash, private wires, and rate cases that you will never see unless you file the records request. When you hear “innovation needs freedom,” translate it to “immunity from law” and TAXES - AI didn’t copy Apple’s “Double Irish.” It stacked Dublin shells, R&D credits, FDII breaks, and state subsidies: same playbook, bigger servers, pricier lawyers.
We were told patient capital sees far while politicians chase the next election. Nope. In 2025 the biggest guns of capital are radically impatient, and the White House is happy to sell patience by the pound. The future is being mortgaged to this quarter’s capex. Your kids’ rights are collateral. What the hell are we doing‽
If the future “will be decided by 2028,” then you decide to become the speed bump that wrecks their timeline. They can buy senators. They cannot buy back time once you take it.
"Tech’s alignment with Trump is posed as a puzzle because Silicon Valley’s previous reputation was liberal. It was always a mistake to think of this as something inherent, having to do with tech’s virtue, or Apple’s good looks. The alignment actually had more prosaic origins in the politics of the American West Coast, the sociology and culture of the tech workforce and the attitudes of the most influential customer groups. But prosaic though it may have been, the alignment was real."
Oh, Adam, we both know the tech Oligarchs were never liberal and certainly not "left". They are billionaire capitalists just like Trump. Most are racist genocidal Zios, just like Trump. The reality is that, just like the entire Imperialist genocidal Democratic Party they previously pandered to, they were merely virtue signalling by endorsing identity and lifestyle politics which were never any threat to the Capitalist ruling class. In fact, the idpol phase was really a great boon to the ruling class in that it served to divide the working class against itself. Now, we've reached the conquer part of the equation, so it's mask off. There hasn't been any organized left politics in the US for many, many decades now and you know it. The world knows it. The choice is fascism hard or fascism with virtue signalling in official politics today.
I could be wrong, but I think the end result of this maniacal investment bubble will be very much like the 2000 internet collapse. These "hyper scalers" are so driven by FOMO, or first mover advantage, or cash burning a hole in their pockets that they cannot afford to stop and recognize that they have no clue what they are doing. I think that in the end there will be one or two big winners who we cannot now identify (like Amazon in 2000), but for the most part AI will be pretty fungible across platforms so most will have no advantage at all and will have wasted their investment.
There will of course, be one big loser; the rest of us. We will live in a surveillance society the likes of which we never could have imagined.
I forgot to mention that there is one huge difference between today's AI bubble and 2000. That is, back in 2000, internet firms had to raise equity or debt to get the cash to invest. Today's hyperscalers are generating huge cash flow in their core businesses which had been applied to share buybacks. So if this is a bubble, it may last a while.
Malign convenience. I've had so many tech execs and investors claim that 'the world is different now, get used to it' as their paper wealth has exploded during the second Trump regime. Meanwhile, Bain forecasts an $800 bill per year revenue deficit for AI firms by 2030 (revenue reguired to earn a reasonable return on planned data center/LLM spending). And the new Nvidia/OpenAI deal will require 'at least 10 GW for data centers' -- enough power for 7 million to 8 million homes. And a record 49% of consumer spending is coming from the top 10% of earners, while the top 10 stocks in the S&P 500 account for a record 41% of its value. Certainly doesn't feel like this center can hold....
Add 4.0C to matrix.
All this A.I., mega-electric power, higher stock market values, etc., can't reliably be done unless the stock of money increases, which will require a compliant Congress and Fed. How better to lock in compliance than to turn the future government over to an authoritarian? The catch? This authoritarian hasn't proven loyal to partners. And he won't prepare for an orderly succession.
Depressing to read.
The hyperscalers are indeed tied at the hip to Trump. And Trump's (our) Treasury may be the only source of capital large enough to keep them going through 2028 at their burn rate.
After his speech at the UN, his attack on Tylenol and his war with a TV comedian (madness) the hyperscalers might learn the lesson Musk semi learned earlier and will soon learn in full.
Everything Trump touches, dies.
OK, I'm European. We are tied to your wheels. My guess is America has the wrong relative cost structure. The Machine has taken over, recruits who it can, but lacks understanding and strategic intelligence. Key tech players go back to the Transhumanists of the 90s, and shall we say, were always more than a little odd. Can you get more fantastic than terraforming Mars or uploading your personality to an electronic cloud?
Is there a race that can be won? Depends on the fundamental nature of reality I suppose, but a more prosaic risk assessment of this 'wager' could see the bringing on somewhat earlier of the inevitable downslope of the carbon pulse and the consequences for the biosphere, which none of us can foresee yet in any detail?
Malign convenience is a political administration bent on dismantling the country and a set of hyper-scalers
who have no apparent allegiance to their own country, or in fact to any country at all. That is not sustainable, in my view, and only a net benefit for the Chinese.
30+ years in finance work in the company I've learnt one infallible truism - when people start talking about something as a "sure thing" & "don't worry about the ROI, it'll all work out ok in the end", then you need to start planning for it to be anything but that outcome.
The big tech companies are financing this explosion of capex with debt. This is a new for them as their monopoly profits have allowed them to self finance … till now.
1. I don't see an issue if there is no return on investment. Investors just lose out as they so often have in the past. For example all that gas investment or much of the investment prior to the 2001 internet peak.
2. The return doesn't come from the investment directly anyway. That will come from those using AI, not those selling it. You can alwasy get "as good as last year AI" for aout 2% of the price from China.
The profits will be made by those using AI to design and build Businesses and Systems. Just as Amazon, Facebook and Google made fortunes out of other people's internet investment long before any of them got into providing networks.
The key is smart people not AI itself. The gap between ordinary workers and highly talented workers and owners will widen enormously as the tools get more powerful.
3. So the key shortage is talent - people with IQs over lets say 140. The huge majority of these are in China. US only has one way of competing with China - AGI - getting to Artificial Intelligence that matches 140+IQ talent in quality and exceeds it in quantity.
4. The race to AGI is the core of the Tech Bros & Trump working together.
The plan was NVIDIA and TMSC take a lead in chips that China can't match. VCs supply cash investment that China can't match. Trump supplies an infrastructure (electricity) administrative support and permits rule breaking in a way that China can't match.
But: The chips turns out to be a red herring - Deepseek has shown that similar AI quality can be reached much cheaper with smarter AI engineers doing the training. China can organise money pretty well in state/oligarch partnerships. And it is a lot easier for China to accelerate existing electrical power plans to meet even faster electrical power growth. US has seen negative power growth and has no plans to accelerate.
US industrial expertise was always about dominating and monopolising markets. Chinese expertise is about production, the Supply Chain and State assistance in industries deeme important.
Note it appears US has already given up on Taiwan and is switching its navies to local waters - Venezuela for example.
Related topic: Fusion Power. Not pretending to be an expert but my impression is that China has a real chance of making Fusion power a commercial product in 5-10 chance. US doesn't.
I very much agree with the diagnosis of a malignant “presentism”. I have written a short commentary on this more from a technical-engineering perspective rather than political economy but there may be some interesting overlaps… https://link.springer.com/article/10.1007/s44206-025-00190-x
Nice article with some serious throat clearing. Who in the right mind would elect an individual like Trump to be president? But this bar set sooo low could of course not be jumped over with what dems have done and insisted on doing.
I am amazed at how caught in their own spinning these people are. And then comes China with its DeepSeek for instance.
One doesn't need LLMs for good engineering or good medicine or good teaching or good agriculture or other many many tasks out there.
All the while Trump claims at UNGA that climate change is a hoax.
Only greed can not be a motivator for the American public at large and imposing a direction via brute force or threats, like a good old Stalin will elicit in the end such a blowback, that we might see a mini Butlerian Jihad in the making in the US.
The Key issues in 2020s (no order)
1. China replacing US
2. Inequality within countries in West
3. AI
4. Climate Change (and maybe fusion power)
Glad to see Adam is still mostly addressing the big ones.
I don't think Trump has much to do with any of this except that MAGA (2016) was an early recognition that America is no longer great and a huge truth recognised by many as differentiating Trump from the standard BS we get from media and politications.
Much as complaints about immigration are the nearest to a reference to inequality that any politician dare give.