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Nearly a year ago, I wrote that Coreweave was a timebomb — a rickety tower of debt and bad deals that was primed to blow. I could have made that argument about hyperscalers, NVIDIA and OpenAI. Everybody is waiting for somebody else to make AI a success. www.wheresyoured.at/premium-timebomb/

The AI bubble is slowly turning cash-rich, margin-heavy hyperscalers into something far worse. Far from being the asset-light, high-margin software companies they once were, they’re now bloated, filled with tens of billions of dollars in GPUs and data centers. www.wheresyoured.at/premium-timebomb/

It all comes down to accounting. When a company buys a new GPU, it goes onto their balance sheet. These companies bought a lot of GPUs. And the slow rollout of Blackwell means that every single quarter, depreciation charges balloon by billions of dollars. www.wheresyoured.at/premium-timebomb/

And if something happens - like OpenAI dying - the odds of those companies (especially Microsoft) having to make an impairment - a massive writedown for all of these GPUs to the tune of $10bn+ as the demand disappears - further adding to the pain. www.wheresyoured.at/premium-timebomb/

The problem isn't just that OpenAI might die - Microsoft's AI revenues can't beat its ballooning depreciation. Sources tell me that in the latter half of 2025, Azure GPU rentals were at around $5bn ARR, and by end of 2025, Github Copilot had around $1.08bn ARR. www.wheresyoured.at/premium-timebomb/

23/1/26, 6:23 pm11 reposts68 likes

Every hyperscaler has set up the conditions for ongoing depreciation-powered pain, having increased their PP&E by incredible amounts over a short amount of time, in some cases doubling or tripling it. www.wheresyoured.at/premium-timebomb/

These companies aren’t dumb to the problem at their feet. And that’s why, since the start of the bubble, they’ve used accounting tricks to limit the quarterly blow of depreciation on their balance sheets, extending "the useful life" of chips they'd yet to buy. www.wheresyoured.at/premium-timebomb/

It’s worth noting that many hyperscalers changed their depreciation schedules right around the time when Blackwell became available, intentionally trying to smooth out the ruinous cost and long-term balance sheet drag of Nvidia’s expensive new silicon. www.wheresyoured.at/premium-timebomb/

The slow, expensive rollout of NVIDIA's Blackwell GPUs means that hyperscalers are guaranteed to have big chunks of depreciation cut into profits every quarter. The only way to stop the bleed is to stop buying the GPUs. www.wheresyoured.at/premium-timebomb/

Meatwad Bod

@meatwad17.bsky.social