Tuesday 23 June 2026

[1] Something highly suspicious is happening in the world of AI.

Leading companies, including Anthropic (led by Dario Amodei) and Microsoft, are actively calling for the advancement of models to be curtailed. Anthropic has said that they want to advocate for greater regulatory oversight and Microsoft CEO Satya Nadella is calling for more user control and gaining society’s approval before advancing models.

DNF is in shock. Thank you, wonderful Satya and Dario, for looking out for us and for using your position to support the greater good. Corporate CEOs putting consumers ahead of bottom lines is so refreshing and your contribution to safely guiding society through these unprecedented technological times is appreciated.

Unless…

Unless Microsoft and Anthropic have realized that they have taken a commanding lead in the AI game and their models are reaching a point where they write most of their code themselves (estimates show that Anthropic’s Claude writes 80% of its own code) and by allowing the unfettered build out of AI models they will soon reach a point where Chat GPT and Claude are replicable by open source code, which will make their platforms obsolete.

In which case their U-turn on AI regulation is nothing more than an attempt to ring-fence their own models and ensure the market share they have built remains captured. But surely they won’t do that, surely they are actually willing to act for the benefit of their consumers instead of chasing every last dollar, right?

[2] If you have not watched the Chornobyl documentary on Netflix, run don’t walk. In 1986, Reactor No. 4 at the Chornobyl Nuclear Plant in Ukraine became the site of what is considered to be the largest nuclear disaster since Hiroshima and Nagasaki in 1945.

Back then, Ukraine was part of the Soviet Union (one of the reasons Putin is trying to recapture the land today is its historic inclusion in what he believes to be the Russian Empire, DNF does not agree with this stance but it remains a fact) and the site was known by its Russian name, Chernobyl.

An explosion in Reactor No. 4 led to a tragedy that was far reaching and would have been even worse had it not been for the attempts of local firefighters to contain the situation. Most of the brave men and women who were involved in the attempt to mitigate the impact died in horrific fashion from exposure to radiation.

Today, the site remains a ticking time (nuclear?) bomb. The roughly 200 metric tons of radioactive material trapped in the reactor will continue to contain dangerous levels of radioactive isotopes for 24,000 years. In February last year, emergency workers were again racing to put out a fire at the site triggered by a Russian attack drone. The destroyed reactor is currently covered by a so-called confinement structure that stands taller than the Statue of Liberty.

Confinement Structure over Reactor No. 4

Source: WSJ

A Russian drone attack again struck territory around Chornobyl, hitting a building close to the facility that stores large amounts of spent nuclear fuel. The reactor remains a potential site of significant Russian escalation in the war.

DNF earnestly hopes that Russia will cease such brazen political games, which will only lead to further disaster and tragedy.

Workers repairing the concrete shelter after it was damaged by a Russian drone

Source: WSJ. Note that this specific event occurred in February 2025.

[3] Trump is obsessed with how things look. Women, principally, but also men (on record as calling Indian Prime Minister Narendra Modi “the most beautiful looking man”, “who looks like an angel” and Santiago Peña, the President of Paraguay a “young, handsome man”), buildings and most recently the Lincoln Memorial Reflecting Pool, which DNF reported on a few editions ago.

He has spent $14.7 million on renovations, but the pool remains plagued by algae and a coating that is sloughing off. Trump blamed vandals, stating that “They took some form of knife or blade and put a 250 foot long gash into the beautiful façade of what took so much work, competence and money to build and complete”. No video or evidence of this allegation exists. In fact, it is complete and utter nonsense. The new surface is not even plastic, like a typical pool lining, but more like a coarse coat of paint.

It seems much more probable that the President spent $14.7 million on renovations which did not work (incidentally, over $1 million of the renovation budget was paid to a company which is owned by Trump’s neighbor at Mar-a-Lago).

A local organization sued the government over the resurfacing job, claiming the administration sidestepped required reviews before starting the project in April. The job was finished before a judge had time to decide whether to step in. Eager to have the pool clean before the 250^th anniversary of America, Trump said that he will be inspecting the pool himself (can someone please get him to the negotiating table).

[4] American and Iranian officials concluded a round of talks in Switzerland. Mediators said there was “encouraging progress” made towards a lasting agreement – meaning absolutely nothing concrete was achieved. Trump warned that “I can do whatever I want”, including “taking over the rest of the country”.

DNF is unsure what he means by “the rest”, considering he has taken over no acreage in Iran.

He also noted, referring to the Strait of Hormuz, “You close it and you won’t have a country. You won’t even make it back to your own fucking country”.

The President of the United States, ladies and gentlemen.

[5] DNF was rather impressed with the voting registration website we reported on yesterday. After all, government infrastructure in South Africa is not exactly an engineering marvel.

We regret to inform readers that our research into other government websites has been… shall we say… surprising. While we all know that home affairs ID machines are built by the same people that design McDonald’s ice cream machines, a website in 2026 is about as easy to build as the starting tower in Jenga.

A few examples, as investigated by GroundUp, include:

· There are two different websites for applying for unemployment insurance payouts. One of them simply sends your application into the void, without telling you.

· Applications for an appointment at a Home Affairs office might only grant you access at a particular time in the early morning.

· The Department of Rural Development and Land Reform, an important topic in SA, has two .gov.za websites, with different content.

· Numerous websites only work if you prefix them with www – including deeds.gov.za, education.gov.za and sita.gov.za. The last one is particularly ironic, considering SITA (the State Information Technology Agency) is responsible for the IT in government…

· If you have a moment, visit https://www.eservices.gov.za/ and try to, well, do basically anything.

Imagine the incompetence if your agency is responsible for the IT governance in a country and your website can only be reached by typing in the full www. address. Claude will rebuild all of these websites in less than a week, SA Government, give it a go before Dario cancels our access.

DNF attempted to access the land reform website and was met with the following:

Source: A concerned citizen

The other option delivered this home page:

Source: Send Help

[6] We reported on Magda from Sygnia being a DNF reader and it now appears that Keir Starmer is as well. The UK PM resigned yesterday, after our rebuke of his management of the UK turned out to be the straw that broke the Starmer’s back.

“The question my party is asking now is whether I am best placed to lead us into the next general election. I have heard the answer of my parliamentary party to that question, and I accept that answer with good grace,” said Keir, speaking to the media outside of 10 Downing Street.

No reaction was seen in gilts (UK Government Bonds) or sterling, indicating that the market was anticipating Starmer’s exit. The next UK PM is equally obvious, as Andy Burnham will almost certainly be the next politician to enter the top spot in the UK.

In a way, Starmer is another casualty of the Epstein association. His decision to appoint Mandelson that we discussed yesterday was certainly part of his demise, although DNF is unaware of any direct links. Regardless, the UK PM cycle continues, poor Mr. Burnham will certainly face a difficult task. We will have a look at his CV for tomorrow’s edition.

[7] Companies must disclose customer concentration on their 10-Q forms (the quarterly presentations mandated by the listing requirements in the USA). They print the amount of revenue generated by a single customer (or more than one) if that customer’s revenue contribution is more than 10% of the total to alert investors of concentration risk.

What they don’t have to disclose, however, is who those customers are.

In Nvidia’s case, their most recent Q1.27 (the 2027 is correct, referring to the last month of the company’s financial year) form 10-Q disclosed that three customers represent 21%, 17% and 16% of total revenue.

Usually, it would be almost impossible to guess who these customers are (by the way, 54% of revenue from three customers is very concentrated).

Excerpt from Nvidia’s Financial Statements

Source: Nvidia form 10-Q Q1.2027

But, considering 21% of Nvidia’s revenue is $17.2 billion (over three months), we are left with only a few possible suspects. It is almost certainly Microsoft.

What is interesting about Nvidia’s (hereafter NVDA) dealings with Microsoft (hereafter MSFT) is the accounting flow of the transactions. When MSFT buys NVDA hardware, they are classified as construction in progress (CIP). This is important because, while being classified as CIP, they are not depreciated and don’t cost MSFT anything, until they put them into service.

NVDA, however, books the transaction out of its inventory. They also book the sale and an accounts receivable that will turn into receipt of cash and hence positive cash flow once MSFT pays.

[8] As the Substack page Cassandra Unchained (run by Dr. Michael Burry) noted, in Q1.27, for the first time in 13 quarters, Customer A’s accounts receivable (AR) share rose while revenue share fell. When AR picks up and revenue dips, it indicates that cash collection is slowing down. Given the accounting wizardry (all legal by the way, just the way GAAP works) in the MSFT/NVDA transactions explained above, we need to follow the cash.

We have two possible scenarios when AR is up and revenue is down: either MSFT pulled inventory it does not really need, simply buying them to keep its priority spot as a customer of NVDA (remember, the cash only flows, decreasing AR, when MSFT puts the chips into use), which would mean that hardware is lying on the warehouse floor unused while also not depreciating on MSFT’s income statement (while rapidly decreasing in value off the books, considering new chips, for example, are launching every year) or NVDA is pushing inventory to make quarterly numbers pop to appease Wall Street, possibly through an existing arrangement with MSFT (highly speculative, not impossible).

Regardless, the increase in AR of Customer A does pose a divergence in the 13-quarter trend, which is something to note.

Add this to our previously disclosed MSFT slowdown in token usage and we are another step closer to what DNF believes will be a stunning bang. Maybe not, though.

Maybe not.

As Burry said, “This is not the smoking gun, but more of a finding of a finger on the trigger”.

Finally, there is clearly not enough electricity to power all this AI data center build out. S&P Global sees widespread grid and power shortages from data centers, as well as a 19 GW power shortage (40% of need) for data centers by 2028. Hmm.

[9] From Open AI: “Tokens are the building blocks of text that Open AI models process. They can be as short as a single character or as long as a full word, depending on the language and context. Spaces, punctuation, and partial words all contribute to token counts. This is how the API internally segments your text before generating a response. Helpful rules of thumb for English:

1 token = 4 characters

1 token = ¾ of a word

100 tokens = 75 words

1-2 sentences = 30 tokens

1 paragraph = 100 tokens

These are obviously approximations.

So, when you type “Hello Chat GPT” that’s 12 characters, or 3 tokens. The model splits the characters into tokens, processes these tokens and returns a sequence of tokens which are converted back into text.

There are, however, more tokens involved than simply input/output, cached tokens are reused in conversation history and reasoning tokens are used in advanced models to input extra thinking steps. Importantly, these tokens are used for billing and usage tracking.

[10] You holding up okay, SpaceX investors? SpaceX share slipped for a third straight day, down 16% yesterday. SpaceX closed at $154.60, after reaching $225+ since its IPO at $135. DNF would like to say we told you so, but that’s unnecessary, considering the volatility was expected by everyone with a rudimentary understanding of the market. At $154.60, the share is still overvalued, a lot.

Have a great day, see you tomorrow!

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