No Mercy / No Malice: 2026 Predictions

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0:01:54 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:57 The past is immutable.
0:02:01 The future is the most mutable thing.
0:02:02 What will happen?
0:02:04 None of us know.
0:02:06 But that doesn’t stop us.
0:02:12 Our 2026 predictions are meant to inspire a dialogue that helps craft better solutions.
0:02:16 2026 predictions, as read by George Hahn.
0:02:26 Every year, we make predictions.
0:02:31 Our missives on 2025, made in October 24,
0:02:36 registered the most direct hits since we first pulled out our Ouija board a decade ago.
0:02:40 Our objective isn’t to be right, though that helps,
0:02:44 but to inspire a conversation that crafts better solutions.
0:02:46 Okay, enough of that.
0:02:50 Our 2026 predictions.
0:02:54 AI stocks correct.
0:02:58 The question isn’t when the AI bubble will burst,
0:03:01 but what the catalyst will be.
0:03:04 A. China.
0:03:10 Trump has changed U.S. tariffs on China 17 times this year.
0:03:17 They’re tired of having a major trading partner with sclerotic decision-making and the demeanor of a raccoon on meth.
0:03:26 Since 2019, China has decreased its share of exports to the U.S. from 17% to 10%.
0:03:33 Meanwhile, China’s global exports are up 40%, while imports are flat.
0:03:38 Trump’s tariff policy is the definition of stupid.
0:03:41 Hurt others while hurting yourself.
0:03:48 It has not inspired an increase in domestic manufacturing, but a decrease in exports,
0:03:55 as reciprocal tariffs take effect and a rerouting of the global supply chain around the U.S.
0:04:00 higher prices, lower growth makes for a lousy bumper sticker.
0:04:08 If I were advising Xi, I’d counsel him to go for the jugular by engaging in AI dumping,
0:04:12 a repeat of their aughts steel dumping playbook.
0:04:15 It’s already underway and working.
0:04:21 80% of A16Z startups use open-source Chinese models.
0:04:23 Same story at Airbnb.
0:04:29 China is registering similar or better performance as the American LLM leaders,
0:04:32 but with a fraction of the CapEx.
0:04:37 Flooding the market with competitive, less expensive AI models
0:04:41 will put pressure on the margins and pricing power of the MAG-7,
0:04:45 taking down a frighteningly concentrated S&P
0:04:50 and likely sending the U.S., possibly the globe, into recession.
0:04:55 The data center bubble bursts.
0:05:03 OpenAI is promising Oracle $300 billion, money it doesn’t have,
0:05:06 for infrastructure Oracle hasn’t built.
0:05:10 We can’t see the actual contract, but this is BS.
0:05:16 The greatest AI hallucination yet is the assumption that in the next few years
0:05:20 we’re going to build anywhere near the required grid and power capacity.
0:05:27 OpenAI needs 20% of current U.S. electric capacity,
0:05:31 equivalent to 250 nuclear power plants,
0:05:34 at a cost of $10 trillion.
0:05:40 There’s a five- to eight-year wait to connect a new data center to the grid.
0:05:47 Meanwhile, China has more than twice America’s energy capacity at half the cost.
0:05:50 Second greatest AI hallucination?
0:05:52 Job creation.
0:05:56 The average number of full-time employees at a data center
0:06:00 is equivalent to the number of people working at two Applebee’s.
0:06:07 NVIDIA and OpenAI duopoly comes under siege.
0:06:15 Based on its valuation, NVIDIA is telling the market it will add an additional $800 billion
0:06:25 in revenue over the next five years, equivalent to the combined revenue of Apple, IBM, Meta, and Tesla.
0:06:30 OpenAI, which has $20 billion in annual revenue,
0:06:37 is projecting it’ll add $180 billion in revenue over the same period,
0:06:45 equivalent to the combined revenue of Disney, Fox, The New York Times, Paramount, and WBD.
0:06:54 Also, OpenAI’s $1.4 trillion in spending commitments exceeds Argentina’s national debt.
0:06:58 Meanwhile, the competition is heating up.
0:07:03 China is putting out comparable models at a fraction of the price.
0:07:04 See above.
0:07:08 Anthropic has captured the lead for enterprise users,
0:07:14 and, as I predicted last year, the empire, Alphabet, is striking back.
0:07:17 Gemini summaries are improving,
0:07:22 and, arguably, the greatest concentration of AI talent resides at Alphabet.
0:07:26 OpenAI could be our era’s Netscape,
0:07:30 i.e., the disruptor that enjoys a moment in the spotlight
0:07:32 before being eclipsed by an incumbent.
0:07:36 Big Tech Pick
0:07:37 Amazon
0:07:39 I’m bullish on Amazon,
0:07:42 even though it underperformed the Mag-7 this year.
0:07:51 The collision of AI and robotics is the champagne and cocaine cocktail fueling Amazon’s retail margin expansion,
0:08:00 catalyzing a 2x increase in the gross merchandise value of its largest business, retail, by 2033,
0:08:03 without adding any human workers.
0:08:09 Just as Ford’s assembly line slashed automotive production time by 88%,
0:08:17 Amazon’s robotic investments have reduced the time from click to ship by 78%.
0:08:25 The rest of the Mag-7 capitalizes on the elevation of information, bits, over objects, atoms,
0:08:31 while Amazon is leveraging bits to move atoms faster and cheaper.
0:08:35 Notably, the market hasn’t priced this in yet.
0:08:40 In 2025, Amazon’s stock traded at a P-E ratio of 33,
0:08:43 compared to its historic average of 58.
0:08:50 The greatest accretion in shareholder value from AI will be at companies that leverage others’ AI,
0:08:53 specifically, Amazon.
0:08:59 Space, the next big thing.
0:09:04 When technology gets cheaper, startups form.
0:09:11 The ecosystem attracts cheaper and cheaper capital, which spurs innovation, and so on, and so on.
0:09:17 The cost of the personal computer decreased 58% during the 15-year dot-com boom,
0:09:21 and USIT spending increased 200%.
0:09:25 The same pattern is happening now with AI.
0:09:30 The cost of GPU operations has fallen by 74%,
0:09:35 while global AI funding has risen by 280%.
0:09:38 The key metric for space?
0:09:40 Over the past 15 years,
0:09:46 the cost to get a kilogram of payload into orbit is down 89%,
0:09:51 while private US space investment jumped 6x.
0:09:54 SpaceX is dominant,
0:09:58 registering 84% of US space launches in 2024,
0:10:01 up from 18% in 2008.
0:10:04 If I were running investor relations,
0:10:07 I’d position SpaceX as follows.
0:10:11 Google owns 93% of information with search.
0:10:15 Meta controls two-thirds of social connection.
0:10:18 Amazon has half of e-commerce.
0:10:24 SpaceX controls 90% of everything else in the universe.
0:10:30 Everything is a subset of the addressable market that is space.
0:10:36 Best investment you don’t have access to.
0:10:44 TikTok success underscores the biggest mistake marketers make,
0:10:46 believing choice is a good thing.
0:10:47 It isn’t.
0:10:54 Consumers spend five days per year deciding what to watch on Netflix.
0:10:56 TikTok has only one channel,
0:10:59 and it’s the best one you’re ever going to watch.
0:11:06 43% of Americans 18 to 29 get their news from TikTok.
0:11:10 We also spend more time, on average,
0:11:13 with TikTok, 54 minutes per day,
0:11:16 than with friends, 35 minutes.
0:11:20 When I say TikTok is our new best friend,
0:11:23 I mean CCP spy.
0:11:24 But I digress.
0:11:31 The math on TikTok’s forced sale doesn’t math, though,
0:11:33 unless you’re one of the president’s cronies.
0:11:40 TikTok’s U.S. ad revenue was $12 billion in 2024.
0:11:43 Applying a 10x PS ratio,
0:11:48 its U.S. business has an implied value of $120 billion.
0:11:52 Accounting for a revenue share with China,
0:11:56 Trump’s deal values U.S. TikTok at $28 billion.
0:12:01 But I’m a Democrat, so I’m not allowed to invest.
0:12:05 These insider deals reduce people’s faith in the market,
0:12:08 raising the cost of capital for everyone.
0:12:12 U.S. economic policy could best be described
0:12:15 as corrupt but stupid.
0:12:22 Short-form video and AI meteors strike Hollywood.
0:12:26 Hollywood is the new Detroit,
0:12:27 but with better weather.
0:12:30 For creatives, the return on human capital
0:12:33 is inversely correlated to the size of the screen.
0:12:38 78% of Americans age 10 to 24
0:12:43 watch TV and movies on YouTube and TikTok.
0:12:46 The Kids’ Diana Show on YouTube
0:12:50 averages between 2 and 10 minutes per episode,
0:12:53 perfectly calibrated for young people’s
0:12:54 shrinking attention spans.
0:12:59 The show registers 137 million subscribers.
0:13:05 Disney Plus has 128 million subscribers.
0:13:10 The other meteor headed for Hollywood is AI.
0:13:13 What AI will do to Hollywood
0:13:15 is what podcasting is doing to TV.
0:13:18 The Late Show with Stephen Colbert
0:13:20 Colbert employs 200 people,
0:13:22 costs $100 million,
0:13:24 and makes $60 million.
0:13:28 When Colbert shifts to podcasting,
0:13:30 he’ll take eight people with him
0:13:32 and make just $20 million,
0:13:35 but it’ll only cost $5 million to produce.
0:13:39 The means of production are being arbitraged.
0:13:42 There will be outrage from the creative community
0:13:45 who believe they’re too precious to face disruption.
0:13:48 But consumers, much less the Ellisons,
0:13:50 don’t give a shit.
0:14:02 Automobile deaths kill 40,000 Americans annually,
0:14:04 equivalent to prostate cancer,
0:14:06 Parkinson’s disease,
0:14:08 and breast cancer combined.
0:14:12 Autonomous driving may be the equivalent
0:14:15 of a cure for some types of cancer.
0:14:19 A study evaluating tens of millions of miles
0:14:20 driven by Waymo
0:14:23 found that its autonomous cars
0:14:28 were involved in 96% fewer vehicle-to-vehicle crashes,
0:14:33 resulting in 90% fewer bodily injury claims
0:14:37 and 92% fewer pedestrian injuries
0:14:40 compared to cars driven by humans.
0:14:46 Waymo went from 38,000 paid rides per month in 2023
0:14:49 to 1 million just two years later.
0:14:52 The company is lapping the competition,
0:14:56 logging 100 million fully autonomous miles
0:15:00 compared to Tesla’s 1.25 million miles
0:15:01 with human safety monitors.
0:15:05 The second horse to watch is Uber.
0:15:07 It’s technology agnostic,
0:15:10 choosing to pour capital into the consumer experience.
0:15:13 As former CEO Travis Kalanick said,
0:15:16 the most expensive part of the business
0:15:18 is the person in the driver’s seat.
0:15:25 Humanoid robots equal self-driving cars of 2015.
0:15:30 Similar to self-driving cars circa 2015,
0:15:34 humanoid robots are another Musk weapon
0:15:37 of mass distraction designed to draw attention
0:15:41 away from the fact that Tesla is a car company.
0:15:49 Tesla’s market cap per car sold is 77x what it is for GM and Ford,
0:15:54 28x Toyota, and 24x BYD.
0:15:56 According to Musk,
0:16:01 Tesla’s optimist robot will be an infinite money glitch
0:16:04 that ends poverty and performs surgery.
0:16:07 It’s as if he’s on ketamine.
0:16:12 According to MIT robotics professor emeritus Rodney Brooks,
0:16:17 we will have plenty of humanoid robots 15 years from now,
0:16:22 but they will look like neither today’s humanoid robots nor humans.
0:16:27 The current and future opportunities aren’t robots that mimic humans,
0:16:32 but robots that augment and replace humans at industrial scale.
0:16:36 Vice of the Year
0:16:38 Prediction Markets
0:16:43 Prediction markets leverage the wisdom of crowds.
0:16:52 In turn, crowds supercharged by integrations with news brands create a virtual self-propulsion marketing machine.
0:17:01 Participants may be deluded into believing they’re engaging in an intellectual pursuit when they bet on an election’s outcome.
0:17:12 What GLP ones did to fast food prediction markets are doing to fast food prediction markets are doing to the gaming business.
0:17:14 Aristocrat Leisure,
0:17:16 Caesars Entertainment,
0:17:17 DraftKings,
0:17:18 Evolution Gaming,
0:17:19 Flutter Entertainment,
0:17:24 and MGM Resorts are down 22% year-to-date,
0:17:25 on average.
0:17:29 Las Vegas tourism is down 8%.
0:17:33 Nobody will be in Vegas once Vegas is on everyone’s phone.
0:17:37 The externalities are huge.
0:17:42 Half the men in the U.S. between 18 and 49 have a sports betting account.
0:17:44 Among sports bettors,
0:17:47 23% say they’re addicted.
0:17:51 The share jumps to 37% for Gen Z.
0:17:57 One in five people with a gambling addiction attempt suicide.
0:18:07 Personal bankruptcy filings increased by 28% in states that legalized sports betting after a 2018 Supreme Court ruling.
0:18:10 There are also civic externalities,
0:18:14 as prediction markets represent the mother of all insider trading opportunities.
0:18:18 Wagering on what Musk will tweet next,
0:18:20 Trump’s Fed pick,
0:18:21 the speed of a pitch,
0:18:24 or when a candidate will drop out of a race,
0:18:28 invites corruption into every aspect of American life.
0:18:35 Synthetic relationships take center stage.
0:18:41 There’s a use case for AI companions, but it’s uncomfortable.
0:18:44 A sad story about lonely old people.
0:18:50 One quarter of Americans 65 and up are socially isolated,
0:18:56 increasing their risk of stroke and dementia by 30% and 50% respectively.
0:19:04 The share of the population aged 65 and older is projected to reach 21% by the end of the decade.
0:19:09 In one year-long analysis of older Americans living alone,
0:19:14 95% of participants said bots reduced loneliness.
0:19:21 If synthetic relationships can make older people less lonely and stave off dementia,
0:19:22 that’s great.
0:19:24 The problem?
0:19:31 Young people aren’t developing the skills to navigate life’s hardest and most rewarding thing.
0:19:41 Google’s search volume for how to make friends has increased 5x since 2004,
0:19:49 while the share of Americans who say they have no close friends increased 4x from 1990 to 2021.
0:19:55 I believe synthetic companions are the next opioid crisis for young people.
0:20:01 On character AI, 79% of the users are under 35.
0:20:05 The average session is 93 minutes.
0:20:09 In any given week on ChatGPT,
0:20:14 560,000 people show signs of mania or psychosis,
0:20:22 while 1.2 million people engage in conversations that indicate they have a plan to self-harm.
0:20:27 Unfortunately, Congress is the walking dead meets the golden girls.
0:20:30 They see the danger from synthetic relationships
0:20:34 about as clearly as the propaganda threat posed by TikTok.
0:20:40 The college is dead narrative collapses.
0:20:47 Some of the most successful people of our age are college dropouts.
0:20:48 Mark Zuckerberg,
0:20:49 Larry Ellison,
0:20:50 Oprah.
0:20:54 You should assume your son is not Oprah.
0:20:59 Despite the noise about employers removing degree requirements,
0:21:07 the share of workers without a degree increased only 3.5% between 2019 and 2024,
0:21:14 while 45% of all firms made no changes to their hiring practices.
0:21:24 In pure economic terms, the median household income for a college graduate is more than 2x what it is for someone without a degree.
0:21:33 College graduates see better non-financial outcomes, too, in the form of lower rates of obesity, divorce, and suicide.
0:21:43 After declining during the pandemic, enrollment has rebounded.
0:21:48 The issue isn’t value add, but value, i.e. cost.
0:22:01 Adjusted for inflation, tuition rose 53% and 32% at public and private schools, respectively, between 2000 and 2025.
0:22:02 Why?
0:22:06 A. My industry is corrupt.
0:22:12 We artificially sequester supply so we can raise tuition faster than inflation.
0:22:19 Faculty, administrators, and alumni are drunk on exclusivity.
0:22:24 We’ve lost the script and begun believing we’re luxury goods, not educators.
0:22:36 Finally, Team Scotland will reach the semifinals of the World Cup on the back of the Pele-like performance from Scott McTominay.
0:22:38 Hey, I can dream.
0:22:43 The best way to predict the future is to make it.
0:22:48 I hope the new year brings you the perspective and presence of mind to realize that,
0:22:53 if you live in America, are healthy, and have people who let you love them completely,
0:22:57 2026 will be the best year of your life.
0:23:02 Life is so rich.