AI’s $30 trillion sales pitch

Nvidia's earnings report on Wednesday is expected to influence tech debt markets, as investors grow wary of bonds issued by major technology companies. The cost of credit-default swaps (CDS) against tech debt has risen, with Oracle's insurance cost increasing fivefold and Broadcom and Nvidia's CDS costs accelerating since June. A poor Nvidia result could intensify pressure on tech firms borrowing for AI infrastructure, amid a backdrop of higher-than-expected inflation (PCE at 3.7%, core at 3.3%).

AI’s $30 trillion sales pitch But until those numbers drop, let's talk tech debt, Chinese models, and MiniMax earnings Welcome to . Cautious Optimism https://www.cautiousoptimism.news/ , a newsletter on tech, business, and power. Modestly upbeat Wednesday. It’s Nvidia earnings day, which means the tech world will hold its collective breath and hope that the GPU giant doesn’t shit the bed. On the macroeconomic side, the personal consumption expenditures price index https://www.bea.gov/news/2026/personal-income-and-outlays-july-2026 or PCE rose 3.7% in the last year, while core PCE less volatile food and energy prices advanced by 3.3%. Overall, the inflation print was slightly ahead of expectations https://www.cnbc.com/2026/08/26/feds-preferred-inflation-gauge-shows-core-prices-rose-3point3percent-annually-in-july.html , and miles above the 2% target. Today, we’re talking about tech debt, Ox Alpha, TAM, and MiniMax’s earnings To work — Alex 📈 Trending Up: Monaco the startup https://x.com/samdblond/status/2092279738396201023 … chip wars https://www.bloomberg.com/news/articles/2026-08-26/huawei-egypt-ai-ascend-chips-test-us-tech-diplomacy-nvidia-amd-microsoft … competition in the stablecoin game https://www.bloomberg.com/news/articles/2026-08-26/revolut-joins-global-stablecoin-race-with-euro-backed-token … search tools for agents https://techcrunch.com/2026/08/25/accel-backed-keenable-is-indexing-the-web-for-ai-agents/ a few https://www.valyu.ai/ other names https://seltz.ai/blog/seed-round-announcement … one-shot robotics https://x.com/SkildAI/status/2092300842900865389 … 📉 https://finance.yahoo.com/news/servicenow-pledges-1-5bn-investment-110000403.html Trending Down: OpenAI’s executive team https://www.wsj.com/tech/ai/openais-head-of-data-centers-has-left-company-6d24fd83?st=r8H2rW … Mechanical Turk https://www.cnbc.com/2026/08/25/amazon-service-that-jeff-bezos-called-artificial-ai-is-shutting-down.html … transparent government https://www.texastribune.org/2026/08/24/texas-railroad-commission-cancels-public-comment-meetings-policy/ … US GDP growth https://www.wsj.com/economy/u-s-2q-gdp-growth-unchanged-at-1-5-in-second-estimate-9358397e … Tech has a debt problem Much rides on Nvidia’s quarterly results that drop today after the bell. There’s risk of the debt market revolting, as investors are already skeptical about the health of bonds issued by major technology companies. A misfire by Nvidia, which has over the past few years become the dictator of the market’s sentiment around AI, could increase pressure on technology companies raising funds to invest in data centers and other capital projects. The market is sufficiently concerned that tech companies have had to sweeten the deal by paying higher yields to continue borrowing and developing AI infra. And the price of credit-default swaps CDS against technology debt is rising. If you don’t recall the mechanics of CDS from the Great Financial Crisis, the instrument operates as a form of insurance, paying out if the underlying bond defaults. The greater the cost of a CDS measured in percentage of the face of the bond in question , the higher the chances that the market thinks the debt won’t be repaid. CDS costs have been trending higher for some time. Here’s coverage from earlier this month https://www.abc.net.au/news/2026-08-06/credit-default-swaps-at-record-high-risk-big-tech-superannuation/106999378 . Barron’s reported that the cost of insuring certain Oracle debt https://www.barrons.com/articles/the-ai-bond-bonanza-could-be-a-big-problem-for-the-stock-market-54f1d621 has risen by a factor of five. More recent data https://x.com/zerohedge/status/2092372650286780485 indicates that the cost of insuring Broadcom and Nvidia’s debt began rising in June and has accelerated in recent days. The jitters are jittering harder with time. A bad print from Nvidia could turbocharge that trend, leading to sharply higher borrowing costs for the companies currently leading our national GDP growth. No pressure, Jensen A small aside: Is anyone else worried about the climate impact of the data center boom? I remain a data center fan I love compute , but the pace at which we’re building new gas generation plants sucks https://www.wired.com/story/us-data-centers-drive-gas-power-expansion/ . It was Z.ai all along Bloomberg confirmed https://www.bloomberg.com/news/articles/2026-08-26/china-s-z-ai-made-ox-alpha-stealth-model-that-rivals-deepseek that the mysterious AI model trending over the weekend, “Ox Alpha” was indeed developed by Chinese AI lab Z.ai. It’s the Flash fast variant of its GLM-5.3 model https://z.ai/blog/glm-5.3-flash . That Z.ai was behind the Ox is not a massive shock to those who had gone sleuthing, but I’m sure Google AI stans will be disappointed. Ox Alpha soared to the top of OpenRouter’s charts thanks to temporarily offering inference for free. The model has single-handedly raised the overall token growth curve at router, implying ample latent demand for AI inference at lower price points. Z.ai said it intends to release the model’s weights shortly. Notably, Z.ai doesn’t currently require third-party inference providers to share revenue generated by its models, unlike Moonshot https://www.reuters.com/business/retail-consumer/chinas-moonshot-talks-with-microsoft-amazon-google-over-k3-revenue-sharing-2026-08-26/ . AI rumors: Worried that American AI labs are falling behind? I hear you. Rumors are running wild that the pace of progress inside OpenAI and Anthropic has accelerated https://x.com/willdepue/status/2092349925610676482 , that two new Anthropic models are coming as soon as this week https://x.com/Lentils80/status/2092448909633126690 , and that OpenAI has finished a new pre-training system https://x.com/synthwavedd/status/2092326145270456377 that could support releases that follow its upcoming Astra model. In defense of Big TAM When SpaceX went public, it told investors https://www.sec.gov/Archives/edgar/data/1181412/000162828026036936/spaceexplorationtechnologi.htm that its total addressable market TAM was $28.5 trillion, of which $2.4 trillion would come from AI infrastructure, and $22.7 trillion from enterprise AI. The numbers boggled the mind, but given that Elon Musk has a history of making large claims, the market didn’t mind those bold projections. Now, Anthropic is prepping something similar in its own IPO filing: A claim that its TAM is $30 trillion https://www.reuters.com/business/media-telecom/anthropic-expected-tell-investors-it-sees-over-30-trillion-potential-revenue-wsj-2026-08-25/ . For reference, the nominal GDP of the United States is about $30.8 trillion, while the EU and China sport GDP totals of $21.2 trillion and $19.5 trillion, respectively. So, Anthropic reckons its market is about the size of the entire United States economy. Much laughter ensued https://x.com/kimmonismus/status/2092297861350244456 . But at least one brave venture capitalist took the other side of the jokes. Notable Capital’s Jeff Richards argued https://x.com/jrichlive/status/2092437628507607506 that if “you’d said the TAM for AI applications was over $100 billion” back in 2023, you would have been “laughed out of the room.” Subscribe to Cautious Optimism to unlock the rest. Become a paying subscriber of Cautious Optimism to get access to this post and other subscriber-only content. Subscribe https://www.cautiousoptimism.news/subscribe/?utm source=Cautious+Optimism&utm medium=website&utm campaign=article-paywall