900 Gigawatts, 90 Gigawatts of Grid

Hunt, Mike, and Jason walk the Cash Flow Memo through an oil tape driven by Hormuz headlines, a power grid that has started saying no to data centers, and the valuation question underneath the Tesla-SpaceX merger.The Cashflow MemoKey Takeaways* Oil is trading the Hormuz headline, not the fundamentals: Saudi Aramco earned $33B in Q2 because price more than offset shipped volume, and its CEO says ~2 mmbbl/d of Saudi supply covers customers with or without the Strait open. Hunt’s pattern holds (roughly $90 on missile strikes, high-$70s to $80 when calm, ~$20 of backwardation to the 12-month strip at ~$70-72), and he reads the market as pricing this better than the commentators do.* Natural gas is holding $3.50 on LNG alone (13 Bcf/d in 2024, 16 in 2025, 18+ this year, 20 next) with gas-for-power flat since 2025; the swing factor is data centers forcing on-site turbines, which would restore ~1.5 Bcf/d/yr of power demand and firm gas toward $4. Supply growth is 10 of the last 15 Bcf/d from Permian associated gas, so incremental supply keys off the oil price, not the gas price.* Siting, not chips, is now the binding constraint on the buildout: New York has a one-year hold, Virginia is saturated (Google will not propose more), and the Texas governor just ordered audits (effectively ~12 months) of 900 GW of proposals against ~90 GW of installed state capacity. Combined cycle cannot be built fast enough and turbines are sold out, so on-site generation is the only path.* SpaceX is the episode’s central valuation debate: hosts expect Tesla merged into SpaceX on a trailing-45-day price basis after the China operations are spun out, and treat the equity as a data center business that buys land-free siting. Jason underwrites just south of $90 (~8 GW next year at ~$35B/GW, 20 GW target, 15% IRR), Hunt anchors $50 at roughly half the current price, and Mike flags lockup expiries and launch or regulatory stumbles as the cheaper entry. Launch economics gate the space leg: $1,000/kg makes a gigawatt cost $31B to loft, $150/kg makes it $4.7B, and Starship has flown four times.* Healthcare AI expands capability rather than cutting cost, with one exception. Lilly’s Isomorphic Labs partnership is about a year old with nothing to show yet, and scientists at Lilly, Regeneron, and Pfizer will assault IT budgets for tokens rather than save money. UnitedHealth is the real cost-out: $1.5B of IT spend, one-third to make Optum Insight AI-first and two-thirds to insurance systems, with a pre-auth pilot cutting missing-information denials 68% and appeals nearly 90%. Energy IT departments (Exxon, midstream, EOG) get genuine savings, and the token spend routes through Amazon, Microsoft, and Google because no one gets fired for running a Chinese open-weight model on a hyperscaler.Show Notes[00:00] Intro & Cash Flow Memo Download the memo at telltales.us; 30 minutes on energy, technology, and healthcare cash flows.[00:27] Iran, Hormuz, and $90 Oil Saudi Aramco earned $33B in Q2 as price offset lost volume, and management says ~2 mmbbl/d covers customers either way. Oil runs to roughly $90 on strikes and back to the high-$70s when things calm, with ~$20 of backwardation to the 12-month strip.[03:19] Exhibit B: Gas, LNG, and Permian Supply Gas holds $3.50 on LNG growth from 13 Bcf/d in 2024 to 20 next year, while gas-for-power has been flat since 2025. Ten of the last 15 Bcf/d of supply growth is Permian associated gas, so supply follows the oil price.[05:01] The Grid Says No: New York, Texas, Virginia New York’s one-year hold, Virginia’s saturation, and the Texas governor’s audit letter against 900 GW of proposals versus ~90 GW of state capacity. Combined cycle is too slow and turbines are sold out, so on-site generation wins.[10:40] Tesla into SpaceX: What Is It Worth The hosts expect a trailing-45-day merger after a China spin-out, then split on price: Jason just south of $90 on 8 GW next year at ~$35B/GW and a 15% IRR, Hunt at $50, Mike waiting on lockups and launch risk. Launch cost decides the space leg at $31B versus $4.7B per gigawatt.[18:18] AI in Healthcare: Harrow, Lilly, UnitedHealth Harrow is a commercialization business where AI is not decisive. Lilly’s Isomorphic Labs tie-up is a year old with no results yet. UnitedHealth is spending $1.5B, with a pre-auth pilot cutting missing-information denials 68% and appeals nearly 90%.[22:53] Token Budgets at Pfizer and Regeneron Scientists will consume the IT budget rather than shrink it. Expect more candidates and fewer late failures, not cost savings.[24:20] Energy IT: Exxon, Midstream, EOG Upstream and midstream have run machine learning for years and get real cost savings here. EOG’s decade-old well-file system is the template.[26:12] Open Weights and Why the Hyperscalers Win Open-weight models cut token cost, but IT departments would rather buy from Amazon, Microsoft, and Google than defend a Chinese model to their board. That routes the savings through the hyperscalers.[28:06] Apple’s Siri Problem Apple still has no AI-enabled phone and a software team behind the eight ball. Ecosystem lock-in buys time; it does not buy stagnation.Subscribe for the weekly Cash Flow Memo walkthrough, download the memo at telltales.us, and join us next Wednesday.Cashtags$AAPL $AMZN $EOG $GOOGL $HROW $ILMN $KMI $LLY $MSFT $PFE $REGN $SPCX $TSLA $UNH $XOM This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit telltales.substack.com