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Anthropic’s Potential, AI Video Gets Crazy, Market Bubble Approaching?
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- [00:00]
Alex Kantrowitz
Anthropic is raising at a new $170 billion valuation. Let's talk about the company and its potential. Plus, OpenAI hit 700 million ChatGPT users. Is AI video actually underhyped? And is the stock market in bubble territory? That's coming up on a Big Technology Podcast Friday edition right after this. Welcome to Big Technology Podcast Friday Edition where we break down the news in our traditional cool headed and nuanced format. We have a great show for you today. We're going to talk about Anthropic's new massive funding round and big valuation. We'll also cover my interview with Dario Amodei this past week and talk a little bit about the takeaways there, where Anthropic is positioned and what the company's promise is. We'll also talk about OpenAI's 700 million ChatGPT users, a great section on AI video, and whether that format is underhyped and also the stock market Rip roaring. Microsoft joins Nvidia as a $4 trillion company. Is it in bubble territory? Joining us as always on Fridays to do it is Ranjan Roy of Margins. Ranjan, great to see you. Welcome back to the show.
- [01:02]
Ranjan Roy
Good to see you. I missed you last week, but it was nice to listen to the Dario episode on my plane ride back from Tokyo. So excited to talk about this.
- [01:10]
Alex Kantrowitz
Okay, great. So on that note, I just want to welcome all of our new subscribers who've come in. We have a bunch of new people here just to give you a rundown of what we do here on Wednesday, we have a big flagship interview with people like Dario next week. Amjad Massad, the CEO of replit, is coming on. And then on Fridays, Ranjan and I show up here and break down all the week's tech news. So we're very, very glad to have you here. All right, Ranjan, I actually thought it would be good to start this week just to talk a little bit about my takeaways after doing a couple months of reporting on Anthropic and then we can get into their fundraising. So let me just start here. I think that Anthropic is a very impressive company. Like the one thing that I kept coming back to when writing the story about Dario and the company is just that you have this competition coming from all sides. Competition obviously from OpenAI, but also from meta places like Google with DeepMind. And anthropic has found a way to sort of make its way into this conversation, starting really later than OpenAI and without the resources of the big companies. And I think there is a great quote from Eric Schmidt that I didn't include in my story. I had a conversation with the former Google CEO for this profile of Dario and he says this, he says my, my best description of this is that it is an all out brawl. It's really a brawl between very well capitalized companies including my friend Dario's startup. The fact that Dario is in the brawl is extraordinary. And if you ask me what I predicted, if I predicted he'd get there, the answer is no. How would he raise the money? How would he get the partnerships? And somehow he did. And I think it is interesting, despite the fact that anthropic has 11 billion plus dollars in funding from big tech that it's been able to compete in this market. What do you think?
- [02:52]
Ranjan Roy
No, I think I love this all out brawl. I guess I'm not as surprised that Anthropic has been able to kind of compete and raise in this market because again, from a product perspective, we were Claude boys back in the day. Claude Pro. Maybe not subscribing right now, but they.
- [03:10]
Alex Kantrowitz
Made, we were clawed heads and that's right.
- [03:13]
Ranjan Roy
Bing boys.
- [03:14]
Alex Kantrowitz
Details.
- [03:15]
Ranjan Roy
These are, I thrive on accuracy here, but I think the most impressive thing that Anthropic has done is actually pivot into where they see opportunity. We've been talking about this the last few weeks and I'm curious, kind of your takeaway after the conversation around Anthropic is making the pivot towards coding, software engineering, going after technical folks and I think they're strong. Everything you see about Claude code, and this is not me, which is why I'm not using it as much anymore. And I can tell but move finding that very large market opportunity and niche and trying to win there rather than trying to do everything. I think they're do they're, they're pretty impressive right now.
- [03:59]
Alex Kantrowitz
So I think when you're not as well capitalized as a company like Meta, for instance, you have to make really strategic decisions. And I think speaking with Dario and those around him, I think Anthropic has made a couple of really good decisions in terms of where it's going to compete and really strategic areas in terms of where it wants to build its models and its businesses. So first of all, I think one interesting thing Dario said was that they are all in on the business use case for two reasons. I think maybe the first one I'll just impute a little bit is that if you're very good at business, you're going to make a lot of Money, and you need money to run in this type of industry. But the thing that Dario said that was interesting is that if you focus on business use cases, you have an incentive to make your models a lot better. For instance, if you're building a chatbot, you just need to sort of cater to the standard uses. And what he said was basically that if you make your model move from, let's say, undergraduate biology to graduate student biology level, the average chatbot user isn't going to see that, but the average business customer in, let's say the pharmaceutical industry really will. And so that incentivizes them to build better models and it's also good business. And I just found that to be really smart.
- [05:07]
Ranjan Roy
Well, so it's clear, Dario's team model here for, for new listeners.
- [05:12]
Alex Kantrowitz
He is the most hardcore on all of all on team model, but go ahead. Yeah.
- [05:15]
Ranjan Roy
For newer listeners, a regular debate between Alex and myself is I still believe the model is important, but the overall product and experience actually is where you see the real differentiation. So, so that's interesting to me that that is how they're kind of approaching this because remember, Claude artifacts predated ChatGPT canvas. Like, like they kind of invented that. So, so to me, they've, they have innovated on the product side. So it's, it's interesting to me that he's still all in on the model is where this brawl is going to take place.
- [05:48]
Alex Kantrowitz
Definitely. And it's also where you direct the model. So I asked him about the coding use case, which as you mentioned is an exploding use case for Anthropic, although we'll see what happens with GPT5 and we're going to get into that in a bit. But his answer on coding was also really interesting and that was that A, if we build great coding tools every, all the engineers in Anthropic are going to use them, we're going to get faster as a company. And B, if you provide a useful AI tool to engineers, they're going to adopt it really fast. And that's proven to be the case. So it's not just the model, it's sort of the way that you train the model and how that outputs in product. And I think that's also a very wise bet for Anthropic. That's paying off.
- [06:27]
Ranjan Roy
Yeah, I mean, I think that's the success of Cursor. Like the whole epithet that something is a wrapper has always been wrong. To me. The cursor skyrocketed because it just was a better experience. It provided better output relative to the competition at the time, but overall for software developers, it just was an overall better way to develop and code and engineer. So I think it, I think that, yeah, the two are inextricably linked. But, but I'm curious, what did you take away in terms of where Anthropic is going? And we're going to talk about the funding in just a moment. Clearly there's momentum. But, but what does he see, really see as the future in your takeaway?
- [07:09]
Alex Kantrowitz
I mean, I think that one thing that's clear is that Dario, this sort of does link to the funding, believes that he's the firmest believer in the scaling laws, which is that if you add more compute data and increase the model size, you're going to get predictable exponential results. And so I think that's basically the way that they want to move is they have some near term business interests to get them to a point where they can build bigger models and more efficient models and effectively trying to build a supermodel. Like I think everybody is like, it's one thing that's going to come up. I have MG Sigler coming on. We have MG on the first Monday of the month and he writes this great newsletter called Spyglass. Um, and we're going to talk about the fact that all these companies are effectively working towards the same thing. Like call it super intelligence, call it, you know, AGI effectively they're working on scaling up large language models and adding sort of the scaffolding around them to make them useful. So I think that's really where they want to go is they believe that they can build the bot, the models best, they want to raise the money and build the biggest and best models and then what happens from there? We've seen these predictions from Dario that he, he has a belief that there's going to be like real economic value there and also some like potentially scary outcomes. He became somewhat famous for saying that AI in the next couple of years could wipe out 50% of white collar entry level jobs. I don't agree with that. Maybe that's a little bit of marketing for anthropic like we talked about, but I really think labor augmentation and labor replacement is going to be where their business is.
- [08:39]
Ranjan Roy
Well, after the interview, do you feel that was marketing or did you walk away? That he truly believes this, is worried about it, is trying to do something about it.
- [08:49]
Alex Kantrowitz
So yeah, and I'll note it wasn't just the interview. There were 24 plus interviews that I did leading up to this story about him, I, I do believe that, yeah, he both does really, truly believe this. He's seen these scaling laws work in places like Baidu and OpenAI. And now at Anthropic, the data that Dario is looking at all points to this continuing to improve. And in fact, like Demis Asabas from DeepMind said, yes, scaling is really helpful, but we're seeing some diminishing returns or the words that he uses, it's slowing. And the people that I spoke with at Anthropic, like Jared Kaplan, the chief science off chief scientist there, said, no, it's not. If scaling is slowing, it's just because you're building it wrong. Most probably. So I really think that they do really believe in this stuff, that this is going to continue on this exponential. I believe that's an earnestly held belief. I also think that it's undeniable that being loud about that is great marketing. Because if you're like the firmest believer in where the technology is going to go and you're talking about, like, you know, how it's, you know, potentially, like, capable of bio, bioweapons, then if you're a bio, you know, if you're a pharmaceutical company, you know, going to be like, well, I'm talking with some. I can't leave these Anthropic guys out of the conversation.
- [10:07]
Ranjan Roy
They're making bioweapons. I'm just trying to make the next OIC here.
- [10:11]
Alex Kantrowitz
Exactly. OIC plus lose twice the weight and half the time, yeah, I'm going to use AI.
- [10:17]
Ranjan Roy
I'm in. I'm in.
- [10:18]
Alex Kantrowitz
But, yeah, so, so that is. So it can be both. I really think it's both. I think everybody around who's been around them, you know, pro or con, thinks that it's both. But I think the big issue, and this is sort of like takeaway number two for me, and is that there's going to be an issue with inference. And running these models is very expensive. Many of the startups who I've spoken with have said that, like, they like using Anthropic models, but they're down too often as the models get bigger. Right. Because, like, if the scaling laws are a thing, the models are going to get bigger, they're going to be more expensive to run. And if they're more expensive to run, are they more expensive to use? And if they're more expensive to use, does this industry work? I think that's the big open question. Here's Dario. He says we make improvements all the time that make the models 50% more efficient than they were before. We're just at the beginning of optimizing inference. Inference has improved a huge amount from where it was a couple years ago to where it is now. And I think whether they're able to continue that trend of improving inference and making it more efficient, that's the key question or another key question, shall we say here. Because that if you're building for the business use case, you have to make your, your model fit into their ROI calculations and that's really the bottom line.
- [11:29]
Ranjan Roy
Yeah, I think that is the more I've been thinking about has to become more of a conversation because right now, again, you know, most of these companies are just bleeding money right now. The economics of it as you try to make the model more powerful and powerful and saying that's how you're going to get to the eventual productivity that is promised. But in the meantime, no one has modeled out what this costs a business or even an individual. We' all, I mean this is like the mid-2010s when we were all getting free Uber rides. Now we're all just getting. As I was traveling around Asia, I'm sure what chat I was costing, Chat GPT in all my searches was not what I was paying for for the 1995 or whatever it was for ChatGPT. 20 bucks for ChatGPT Plus. So I think the economics of the industry. And you had Ed Zitron on a couple of weeks ago, I firmly stand differently than him in terms of, I do believe generative AI and AI is going to completely transform everything but what that looks like, what it costs, what cost structures look like for people and businesses. I think like this, it's certainly not been figured out yet.
- [12:42]
Alex Kantrowitz
Yeah. And by the way, like in the conversation again, just to point back to it, I brought that up to Dario and was like, what's going on? You're going to potentially lose money on your most enthusiastic customers. And he said, well, that's going to change. And then of course this week, Anthropic introduced stricter rate limits for Claude Code users. So the company is real. And I think all AI companies at this point, they are trying to or they're going to have to navigate the boundaries between like, you know. Yeah, it's like the opposite of social media. Social media, you want people to be like super engaged and never leave your product. And with generative AI, because it is expensive to run, you have to be careful about the amount of use you try to sort of incentivize.
- [13:24]
Ranjan Roy
Yeah. I mean we've talked about this plenty. Generative AI is not traditional software economics. It's not like essentially zero marginal cost. It's not certainly not social media, but not even traditional software. It's a completely different cost structure. It's more industrial in my opinion than traditional software. So which is actually I would say like intellectually one of the more interesting things for me that what the entire world is going to look like in terms of how it leverages generative AI, what these companies are going to look like. And to me, even for Google, that is actually one of the more interesting parts that the entire business has been built around. Kind of like fast adoption, slow like Gmail and Google Workspace in the past was just get it in everyone's hands and start building out more experiences and give them as much usage as possible. Whereas now Gemini is different and you can see that in the way they're all trying to figure out how to price this stuff.
- [14:24]
Alex Kantrowitz
Can I say we have a pretty intense debate going on in our big technology discord about this. There are like two sides of this equation. One side is that just get the usage and all costs will fall to zero because there's so much investment in this space. And the other is talking about how like, you know, I'm losing money on every product I make. I'm just making that up in volume. So you know, it's we will tail.
- [14:48]
Ranjan Roy
As old as time. As time.
- [14:50]
Alex Kantrowitz
Yeah, but I think that's one of the big open questions that I walked away with.
- [14:54]
Ranjan Roy
Yeah, no, agreed. When venture is involved, that's the eternal debate.
- [14:59]
Alex Kantrowitz
Exactly. All right, let me give one last quick thing and that is that one of the main things that I wanted to go into this interview, in this conversation was trying to investigate whether anthropics rise in revenue. We all know they've gone from like 1 billion last year, they're projecting 9 billion this year, which we're going to get to in a moment. I just wanted to know is the thing that is booing the revenue, is that all coding or is it broader? And I learned it's much broader. So they are working with companies and industries like travel, healthcare, financial services, insurance companies like Pfizer, United Airlines and AIG to implement this technology within their workflows and it's not just coding. So I think that the fact that it is broader than coding is a bullish sign for the company.
- [15:45]
Ranjan Roy
Yeah, I mean list of regular listeners will know this to me is the ultimate battleground is is actual business implementation and use cases and within the enterprise and and for all the talk, this is not real yet, especially for the anthropics of the world. So, so I think they're clearly moving into the space. But to me, I don't know, like they have these use cases, they're starting to build out their teams in these spaces. But on the other hand, like does that decrease focus from the pure software development where they could win? And I think that's the question all these companies are going to have to face. They have to do everything. Again, we're going to talk about the funding in just a second. But will anyone truly. Is this winner takes all or will certain competitors, certain people win niches within this space?
- [16:37]
Alex Kantrowitz
That is a great question. So I'm curious what your answer is to that and where you would put anthropic in sort of the ranking of these companies.
- [16:45]
Ranjan Roy
I'm a firm believer that no one is going to win it all. The consumer and enterprise are different. That different. You know, like the act of software engineering is different than the act of marketing. And, and I'm definitely not a God model. One model will win and be able to do everything, do everything well and that company will also have the best product for all types of use cases and for everyone. So, so I definitely think like that is not going to happen. I mean we've seen in tech like social media for a long time, Facebook dominated. Then you start to see some level of competition. But, but the network effects within something like social media I think are very different than the network effects from like scaling.
- [17:33]
Alex Kantrowitz
Let me ask you this, is the risk that there are some economically, clearly economically valuable areas of this world and all these big model companies end up directing their attention there and then splitting the market and then just not having the return on investment that they expected. Let me just give coding as an example. Anthropic obviously has the lead in coding. It's been a good business for them. Google just brought the leadership of Windsurf in apparently in an attempt to get better at AI coding. GPT5, which we're going to talk about in a moment, is expected to be much better at coding. If you have these three multi billion dollar efforts going at the same market, dividing it up, is it a potent, is it potential, is there a potential risk that like no one wins? Right. Because there's not going to be one taking all, is it possible that you just end up getting this spoiler effect where nobody really sees the return they want?
- [18:31]
Ranjan Roy
I think you just defined free market capitalism and competition, Alex. And I like that. I think that's a good thing I think by no one wins. This just goes back to the question around what do the economics of this look like eventually and to me, Mark Zuckerberg doling out 100 million per engineer which we talked about last week and said it is justifiable. But I think we start to move away from that arms race mentality and people have to hire sales teams and go to market teams and build good product and keep like prevent churn and we just get back to the normal way business works. And you started this episode saying if you're good at business you make money. And I think if there's ever a takeaway if you're good at business you make money. And I think that's what it'll do come back to rather than the idea given the rate of competition that it will make the idea that any one company is going to be so far ahead purely from a model standpoint that you'll have to win on the other parts of again like Salesforce didn't win cloud early on because it just was the best at cloud IT one cloud because it was just like a powerhouse in the rest of doing business. So I think again this goes back to like social like Facebook, even Google they created software monopolies solely on incredible software. But these types of businesses have to have the rest of the like Google wouldn't have without its advertising model wouldn't have been that interesting. So it's still not. It's still going to require more.
- [20:19]
Alex Kantrowitz
That's right. And just as that requirement shows up we're starting to see the stakes increase again. So this is from Bloomberg Anthropic nearest funding at 170 billion dollar value as revenue searches the investment is going to be they want to raise as much as 5 billion in a new round by the way. They just raised most recently in January. They've been in discussions with Iconic Capital to lead the Qantar Investment Authority in Singapore sovereign fund about participating. And then the company was generating about 4 billion in annual recurring revenue or annualized recurring revenue earlier this month. But it now expects that revenue could hit 9 billion by the end of the year. This is a new stat from the Bloomberg story. One thing that stuck out, Dario was like listen, I am surprised but we've seen revenue 10x from 0 to 100 million from 100 million to a billion and from 1 billion we're now at 4. He said 4 billion annualized or for maybe 4.5. So they're gonna have to like seriously like the the run rates are going to have to look like they're in the 20s. I think at the end of this year if they're going to hit 9 billion because they're gonna have to make up for those months that they weren't on the four billion dollar run rate. I don't know, maybe it's possible they're gonna get the money to find out.
- [21:39]
Ranjan Roy
What are they going to do with the money? That's again going back to. Is it? I'm so curious. And I know even with 24 interviews and diligent reporting, getting a true answer of how does that investment look like on a proportional level between investment on the model side and investment on the business side, let's say is an answer that's almost impossible to get. But I don't know. Did you get any sense around that?
- [22:06]
Alex Kantrowitz
Oh yeah, I don't think it's that hard to figure out. I think it's going to go towards infrastructure and getting larger data centers.
- [22:14]
Ranjan Roy
So. Yeah. All right then you just answered the question.
- [22:16]
Alex Kantrowitz
Yeah, I mean, I think that's one of the things that's coming up here and why Mark Zuckerberg has been offering all this money. It's actually like a pretty smart thing. It's like, all right, well if I'm spending, you know, 100 billion on data centers, I'm just like throwing a number out there. Why can't I spend 1/10 of that or 1/100 of that on talent?
- [22:35]
Ranjan Roy
Yeah. Okay, so then if that's the case, I mean the assumption there is you're scaling revenue solely on, I mean, virality essentially or just like high level brand marketing by saying things like bioweapons. I guess, but, but to me, I mean, I guess I will say this with a grain of salt because they have shown they're able to scale revenue already with this philosophy and this strategy. But to me, does it keep going or at a certain point, especially at that scale, are you going to start running into the Googles of the world or the Hyperscalers more regularly versus every individual software engineer is ready to pay you 200 bucks a month on their work credit card versus that's a whole other level of competition.
- [23:26]
Alex Kantrowitz
Well, you would imagine it would be harder to 10x every time you 10x just because the law of large numbers comes into play, like going from one.
- [23:35]
Ranjan Roy
Unless you're Nvidia.
- [23:36]
Alex Kantrowitz
Unless you're Nvidia, in which case that law doesn't really apply. You just substitute Jeffin's paradox or whatever. Yeah, fun made up economic term you want and you Just keep printing money. I don't know. Getting from 10 to 100 billion is much, much harder.
- [23:49]
Ranjan Roy
If they get to 10, I'm. I will tip my hat to Dario and team.
- [23:54]
Alex Kantrowitz
Yes, I, I will too. And speaking of 10, OpenAI is expected to surpass that this year actually. So OpenAI hits 12 billion in annualized revenue, breaks 700 million ChatGPT weekly active users. This is from Bloomberg. They roughly doubled their revenue in the first seven months of the year, reaching 12 billion in annualized revenue, says OpenAI. And I think there's this big stat, this is a big statistic. ChatGPT has 700 million weekly active users. I mean, for a product to come on the market in November 2022 and potentially be on the road to a billion users by, let's say, mid-2026, that is insane from a company with no footprint beforehand.
- [24:38]
Ranjan Roy
Yeah, to me the most impressive part of that is there's no entrenched virality in the product. Like yes, there's share your conversation, which actually I saw this post today and it was really interesting that apparently Google is Now indexing shared ChatGPT conversations and they're searchable conversation for another day perhaps.
- [25:01]
Alex Kantrowitz
But no, let's talk about that now actually because I found that to be kind of weird and concerning that like, I mean, maybe because there's also been issues with like meta's conversations showing up and you can like, there's almost nothing weirder than like getting a chance to access people's private conversations or seemingly thinking private conversations with these bots. They, people will say the weirdest things to these chat bots, talking about their problems, their marriage and the fact that like you can, you can, you know, I guess when you hit that share button, is there any clear messaging that this is like sharing to the entire. I mean you should, you should intuitively know that you're going to share this to the entire Internet because if you drop it, somebody else it's going to show up. But like the idea that this could end up being blasted to, you know, indexable Google is kind of crazy to me.
- [25:51]
Ranjan Roy
Well, there's two points on that one. It also, it just kind of brings me back to I love the brawl as, as, you know, like Google being like, let's index that stuff, like realizing, oh well, we'll take some of their information right now and make it available and interesting through our own platform form. But I think, yeah, the other part. So again like if you create a public share URL, it gets indexed. If you're like sharing the conversation by itself and not creating that URL. It does not. Same with meta. There was like a big brouhaha like a month ago and it was terrifying. Like I was going through meta AI and seeing some really weird conversations that were being publicly posted in Feedback. But again people had meta even more so it felt like accidentally hit share. But I think but, but I think so two parts of that there's getting to 700 million where virality is not entrenched is incredibly impressive. But this is where still how this stuff lives in our life, especially at the individual and consumer level. I think there's so much that's going to happen and so much that needs to be figured out at the business and enterprise level even more so I think these things are a Constant reminder from OpenAI that like ChatGPT suddenly imagine here if your conversations that your employees are sharing are suddenly index. But even remember there's a story a few weeks ago where I forget which company was ipoing and someone asked for like internal financial documents and ChatGPT made up this entire, you know, like I have these documents, I got them from an investor who was part of the like testing waters discussions and then, you know, the company denied it that they were real. So seemingly was hallucinated. But what's getting indexed where, what's getting trained on where what's going to show up where. I think that there's, there's definitely at the speed we're moving a lot that's going to need to be figured out.
- [27:59]
Alex Kantrowitz
Okay, so this brings me. We talked a lot about GPT5 last week, but I'm actually, I haven't gotten your perspective on it yet since you were out. It seems like GPT5 is going to come pretty soon. My guess is, I don't know, sooner rather than later. So what do you think about GPT5 or. You're obviously the product guy, not the model guy. Are you excited at all here?
- [28:23]
Ranjan Roy
No, no.
- [28:25]
Alex Kantrowitz
You're like the only person who has been focused on AI who doesn't have any bit of anticipation for this new model.
- [28:31]
Ranjan Roy
I don't know what step change to expect or see. The last few model releases have felt like iPhone releases for me. So I think. And again, this is going back to team product over team model. But do you think GPT5 is going to be our AGI and what does that mean to you?
- [28:50]
Alex Kantrowitz
Well, last week on the show I said I think that once they release this, Sam Altman is going to call it AGI.
- [28:56]
Ranjan Roy
Of course.
- [28:57]
Alex Kantrowitz
I mean, maybe it happens, maybe it does. But I've since sort of taken a step back and thought about like what could be the downsides here because it is going to be this very big swing that they've been waiting to take and waiting to release for a long time. And Sam has also inflated the expectations, I would say quite, quite dramatically. So clearly they think they have a better model that they're going to hand over, which is, which is I think interesting and would be cool to see. But the other side is like, maybe the expectations are too high and people will sort of put this up as like a test for whether they're following the scaling laws and whether the improvement is as exponential or even linear that, you know, in the way that they've been talking about. And I read a post this week by Ryan Greenblatt, who is a researcher, an AI researcher who, who asked should we update against seeing relatively fast AI progress in 2025 and 2026? It's very simple post. He's basically saying GPT5 is expected to be released within three weeks and rumors focused, I.e. it is substantially more focused on practical agentic software engineering. My expectation is that GPT5 will be a decent amount better than O3 on a Gentic software engineering, but won't be substantially above trend. So we could end up getting a situation where we see a better model. It seems clear that this model is going to focus on an economically valuable area which is coding. But if it doesn't continue the trend, I think we're going to see a secondary news cycle here which is that people will be like, well you know, we were promised a AGI. It is not following the trend, it is showing those diminishing returns. And therefore we're going to, you know, go all of a sudden into skeptic mode for the rest of 2025 and 2026, that things will dramatically improve from here. And so I'm curious what you think about that.
- [30:52]
Ranjan Roy
Yeah, I think it's, it's going to be like kind of a seminal moment. There's been something around the like allure of GPT5 because it's been dangled in cryptic tweets for like code names for so long by Sam Altman that they have to deliver something magical. And agentix software engineering step up, verse, step change. And also seeing the word software engineering there again isn't as interesting to me. Like is this another Sora or is this GPT3? I don't know. Like I, I still am trying to envision because they've never given us an idea or a picture of what it will be. And I get it that that credit helps create the hype, but by not kind of clearly defining that direction for everyone and just trying to make it this kind of like mystical thing, it, I think it inflates expectations too much and I think it can certainly lead to skeptic mode.
- [31:55]
Alex Kantrowitz
So here's my prediction. There's going to be an overreaction and maybe two overreactions. I, I'm almost 100% sure that we'll see at least one and maybe two overreactions to whatever happens.
- [32:08]
Ranjan Roy
Wait, what are the two overreactions?
- [32:09]
Alex Kantrowitz
The first one is, the first one is while we reached ASI or AGI and the second one is like, oh, this does not actually continue the trend.
- [32:16]
Ranjan Roy
Do you think he's going to say asi?
- [32:19]
Alex Kantrowitz
No, definitely not. Too early for that. I, I still, I still would be surprised but not shocked if they say it's AGI. But I think super intelligence is not going to be, I don't know, just.
- [32:30]
Ranjan Roy
Just to go after Ilya a bit, he just made his whole new startup.
- [32:34]
Alex Kantrowitz
Safe Superintelligence be like, well, we've released Unsafe Superintelligence.
- [32:38]
Ranjan Roy
Try us and we're okay with it. Usi, that's the future.
- [32:44]
Alex Kantrowitz
It's going to be very interesting. And for the nuanced non overreactions, please continue listening to us because we'll do our best to break it down with the proper context and understanding. Well, one thing I think may not be overhyped because there's almost little hype about it is AI video and the rapid capabilities that are advancing in that area. So let's talk about that and whether we're in a market bubble right after this. And we're back here on big Technology podcast Friday Edition with Ranjan Roy of Margins talking about all things AI this week. And Ranjan, one of the interesting things that happened this week is you and I both dropped pretty fun stories about actual progress with AI video or dreams of AI Video in our doc independently. So why don't you lead with yours and then I'll tell you mine.
- [33:31]
Ranjan Roy
All right, so the first thing I had come across, and again what you had just mentioned, the lack of AI hype in this space I think really is fascinating. Fable Studio, an Emmy winning startup, just raised money including from Amazon for it's. They have an AI platform called Showrunner. So the idea here is you pay 10 to $40 per month and you get to create your own animated shows or build on others existing IP and you can do things like insert yourself as a character into the show or actually define the entire direction of the show. I think this is incredibly fascinating because even for my son, like two years ago or a year and a half ago or whenever ChatGPT released voice mode, we started doing stories and I would be like, you know, inserting him into it and telling me a story about a magical land and dragons and use the name John Jay. And he loved it. And I like this whole world of kind of created entertainment and what kind of opportunities and experiences it'll open. I think this is where you'll see how to use like, you know, it's one thing to just use, use chat GPT and become a slightly like, more productive in life, but to actually create these kind of things I think is incredibly fascinating. But the other interesting part of this, though, is Fable is pitching studios to put their IP on its own platform. And even in the article that was on Business Insider, you know, they claimed that Disney might be interested and like the idea that, you know, will they ever give you? Certainly Disney I cannot imagine would be, but. But, you know, like, imagine having access to making my own little south park character and then making a story around. Seems like that kind of creative energy. That's the fun stuff that will really push this technology to the mainstream or just create things that would have been unimaginable before. Do you think this is real?
- [35:30]
Alex Kantrowitz
Yes.
- [35:30]
Ranjan Roy
And do you think it's going to work in this model?
- [35:34]
Alex Kantrowitz
Yes. But I will make a prediction here, and that is that this is. People are going to say this is going to displace Hollywood. And I think this is just an entirely new category in and of itself. Because I think one of the things, one of the great enjoyments of watching good entertainment is not being too involved in the creation process, sitting back and being surprised by the brilliance of the people that are creating the content that you're watching. Same with video games. Like, part of the enjoyment of video games is, you know, not necessarily like creating your own path is just like following the, you know, brilliant output of thousands of games designers. If you're playing something like Assassin's Creed and not having to really worry about doing that yourself. Like, I think our brains have two different modes. We have, like kind of doing and consuming, so to speak. And this type of AI creation actually puts the consuming bucket in a more of a creation place, if that makes sense. So I think that if we're going to basically transpose the entertainment side of our lives into the creation part of our lives, it doesn't displace entertainment, it just creates a new category that sits maybe right between those two.
- [36:53]
Ranjan Roy
Okay, I'm in. I buy that. I think because if you think about like the entire creator economy, even the idea in like 20 years ago that you could essentially create your own two to three minute TV show that would get distributed to millions of people was unimaginable. And now every single reel on your Instagram feed is that. And that's like someone giving access, given tools, given distribution to do that. And so you're right, but it hasn't displaced movies. I, all of us watch more like high production Netflix than ever before. So yeah, I, I think that's a fair idea that it, it's a different category. Maybe to me it's almost that more it'll displace like creators and like, or it's a new category of creator and it'll compete with kind of like influencer type reels versus it's, it's not gonna ruin Avengers 26.
- [37:54]
Alex Kantrowitz
But no, it's very interesting the way that you're thinking about this because the way that I came at this is like, are you gonna want to create your own personalized stuff and watch that as opposed to do you want to take these tools and create derivative work that is viewed by lots of people? And that is actually, I think more of a threat to the traditional entertainment industry than the first use case because it is something that's created by someone else but viewed by, viewed by many. The one thing I'll say is creating content is like really hard. And you might be able to entertain yourself on these platforms for a while, but it's much more difficult to again like have that storytelling capability. Even if you could like legitimately just prompt a Disney movie to have that story capability, telling capability that will sort of engage so many people. Now maybe you wrote an amazing prompt and the AI is good enough that it can, you know, have a, can be like a one line prompt that turns into a blockbuster hit. But I'm less bullish that that is something that we're going to see anytime soon.
- [38:58]
Ranjan Roy
Well, I'll add the caveat. Creating good content is incredibly hard in reality, creating content has gotten easier and easier and easier that it's like harder to find that good content. But okay, I think I am now kind of after talking about this, maybe this lives in that like you can get personalized books or engraved or monogrammed like gifts or maybe it lives in that realm more so than having any other major impact. But I still, I don't know. Do you know what's nuts? In 2009, Electronic Arts had a feature for FIFA where you could take a photo of yourself from like five different angles and upload it and create a player that actually was on the field. And I still actually, this was one of my first blog posts ever. Back Deep cut. Yeah, no, but I literally, it was magical. I was like on the field with Fernando Torres and Liverpool and like scored a goal and was like hugging the team and these like pixelated faces in the background are at. And it's crazy to me that that never took off. So clearly I was in the niche and not everyone was asking for that. But I don't. I still remember that. And that's why like, there has to be some things that are just really fun and cool and make people excited to kind of experiment and do stuff. Like yeah, in the video game, imagine you are the player. You see yourself in there. That's. That's kind of fun.
- [40:28]
Alex Kantrowitz
Let me give you a crazy stat. So streaming over the past year has been up 6%. Netflix has not increased share despite the fact that streaming as a, as a percentage of all TV or screen viewing has gone up. And the thing that is growing is YouTube. So that's maybe a counter argument to my earlier statement.
- [40:48]
Ranjan Roy
Yeah, yeah, yeah, yeah. I think even more so. Yeah, you don't have to. Still creating good content that gets discovered and surfaced is. It's probably harder than ever if you're actually, if that's the model. But I don't know. I'm actually, I am excited about this. I think like this is just going to be fun. This is. And maybe it lives in the world of you're buying some credits and sending it to your friends and like doing stupid stuff and, or funny stuff or stuff with your family. And it's emotional. But I still think there's something here that's going to really define entertainment five years from now in ways that we didn't expect.
- [41:25]
Alex Kantrowitz
You might be right. And I'll just share my cool video AI video story of the week this from TechCrunch. Google's Notebook LM rolls out video Overviews Google announced on Tuesday that it's rolling out video overviews to Notebook lm. It's AI based note taking and research assistant. With the new capability, Notebook LM is taking more of a visual approach to helping users understand different topics and the ideas. The feature creates new visuals while pulling in diagrams, images, quotes and numbers from uploaded documents to explain the content. Google says the feature is good for explaining data, demonstrating Processes and making abstract concepts easier to understand. I don't think people understand how freaking crazy this product is. You legitimately upload documents, articles, whatever it is, and it will make you a video filled with like, little animations and visuals that breaks down the topic you're trying to understand and like, will like, show it to you visually. Just the amount of it just doesn't even seem like a real product. It's crazy to me.
- [42:30]
Ranjan Roy
Well, and remember Notebook LM kind of went viral for the first time with basically making a podcast out of the content, the text content that you feed it. And what was so like, I'm just gonna say incredible about it is, is like the inflections of. And we say this as two guys talking on a podcast to each other. Like, like, it almost made a mockery of us and everyone else podcasting because it, it really felt like a podcast and two people talking to each other and their inflection and their, the, the, the pauses and the kind of language that they were using. And so that's what went viral there. So I'm very interested in what it's going to do on the video side. But to me, one of the more interesting questions I'm really curious what you think about is, is like, I saw Joe Wiesenthal, I saw a tweet around. It was like, the general trend is clear that all forms of passive media consumption are dying. Everything is some kind of conversation. With NotebookLM, you don't read a PDF, you create an AI generated podcast to listen to you ask questions. He's saying oral culture accelerates. Like, do you think actually going back to our previous conversation is passive media? I'm guessing you're going to say not dead, but so much of Instagram, I guess, has become more passive. Twitter is very interactive. Like, where do you see this going?
- [43:58]
Alex Kantrowitz
I think Joe is so wrong on this take for the reason that I said earlier.
- [44:02]
Ranjan Roy
Hear that, Joe?
- [44:03]
Alex Kantrowitz
Joe, if you're listening, totally wrong take here. Why do people go to entertainment? It's, it's escapism in a way. It's like I want to just like take. Leave my world for a moment and go into this crazy world that I would never be able to visit except the fact that like, Netflix has made this game about, like, you know, this video about the squid game and I want to watch that and that you transport yourself there. You imagine yourself as the character as you watch, you're entertained. You get like adrenaline boosts by watching these things. Maybe. So, yeah, I don't, I don't Think people are going to want to let that go?
- [44:37]
Ranjan Roy
No, but, but see this is actually when I watch now, I go to Reddit after and read threads. I like ask Google or ChatGPT in real time who are the characters, who are the actors and what else have they been in? You know, like it's no longer unless I'm in the theater, completely passive. There's always kind of like ancillary actions or activities taking place around the content, which is good, which kind of like deep, more deeply immerses you in it. At least for me. Maybe I have attention span problems at home, but I think that's a common behavior.
- [45:11]
Alex Kantrowitz
I think you're right and I think this is why our society is unhappy. Okay, let's talk about, let's talk about the market. We are in the thick of big tech earnings. We have about five minutes left but I definitely want to touch on it. Bloomberg the S P 500 is a touch away from triggering cell signal. Bank of America says. This is from bank of America's Michael Hartnett. Overbought markets can stay overbought as greed is harder to conquer than fear. He says that 80, 88% of the country's stock indexes are above their 50 to 200 day moving averages. Oh, when, when they are 88% above these moving averages, it's time to sell. Currently 82% of them are above their moving averages which is of course this technical behavior or a technical tracking that they do of the markets. But obviously like it would seem like we have a lot of froth. We have Nvidia at 4. 4 trillion. We have Microsoft which just became the second 4 trillion dollar company which is crazy. But then again you do have earnings from these companies and everybody's beating earnings expectations by a lot this quarter. What do you think this all means, Ron?
- [46:23]
Ranjan Roy
John these everyone is Nvidia now. Like I mean and as we speak Facebook is Meta is up 11% pre market. Microsoft is up 9%. And these are multi trillion dollar companies. But Microsoft's Q4 revenue was up 18% at 76 billion 18%. Like I mean having been in the business world a long time, like hitting near 20% growth when you're a startup or you're like a mid level mid scale company is hard, it's hard to sell. So like to do that at that scale is shocking and I mean makes it not unreasonable. And when your net income and your Profit margin is 24%, 27 billion like these numbers are nearly unfathomable. The same way I would feel when you would see those Nvidia earnings about a year ago. So things are humming. I mean, there's no taking that away. Do you see this continuing?
- [47:29]
Alex Kantrowitz
Well, every time I said, I don't know if they can continue to grow, they've continued to grow and it looks like the tariff threat is not going to be anywhere near as bad. And remember, the economy was humming coming into that, so I think that it will continue. Now it's funny because like I read.
- [47:46]
Ranjan Roy
The death blow right there.
- [47:48]
Alex Kantrowitz
Right? Death blow, right, I read that. But the thing is that I read that headline and I was like, did the people in 2000 know that the, you know, know, massive growth that they were seeing was the beginning of a, you know, a crash, a bubble in a crash? Probably not. But then again the earnings are there. Like the money is coming in and it is like the entire economy basically spending money on these services to try to get better at what they do. Right. Cloud revenue at Microsoft, I think we might have mentioned this. 30, 39% year over year. Azure 39% and the full year revenue topping 75 billion. And Microsoft's cloud revenue for the quarter reaching 46.7 billion. It's real money. It's real money. So it seems like this can keep going, but maybe we're missing something.
- [48:41]
Ranjan Roy
Those are the only words to put it. I'm near speechless. It seems like it can keep going. Maybe we're missing something. What could we be missing? I'm curious if others have thoughts, but it's. They're good numbers. They're good numbers and they're not slowing down again. Meta as well. Up 22% on top line, up 36% on the bottom line. Yeah, these are, these are good numbers for any company at any scale, much less a multi trillion dollar company.
- [49:10]
Alex Kantrowitz
Yeah. And capital expenditures are going up across the board. Big Tech is expected to spend 330 billion this year building largely data centers.
- [49:18]
Ranjan Roy
Gotta spend money to make money, right? If you're good at business.
- [49:22]
Alex Kantrowitz
If you're good at business, you make money. Get a business, you make money. Folks, if you, you know, I've heard we don't learn things on Big Technology podcast. We've just, you know, given one of the best business lessons I would say in the history of this show. Good at business, you're gonna make money.
- [49:38]
Ranjan Roy
I think that's the only way to end right there.
- [49:40]
Alex Kantrowitz
Put this thing on masterclass class, put it in the books. All right. It's worth the subscription anyway. Ron, John, it's great to see you as always. Thanks for coming on the show.
- [49:48]
Ranjan Roy
All right. See you next week.
- [49:49]
Alex Kantrowitz
All right, see you next week. Thank you, everybody, for listening. Thanks again to all of our new and existing listeners and viewers. It's always great to be on this journey with you. And thanks again for listening. On Wednesday, Replit CEO Amjad Massad is coming in to talk all about vibe coding. So I hope you'll stick with us for that. And also MG Siegler will be here on Monday for his monthly Monday spot to talk about Mark Zuckerberg's personal superintelligence. Thank you, Ron John. Thank you, everybody, for listening. And we'll see you next time on BIG Technology Podcast.